82R13499 ATP-D
By: Truitt H.B. No. 2593
A BILL TO BE ENTITLED
AN ACT
relating to restrictions on amounts, fees, renewals, and payment of
deferred presentment transactions and certain loans secured by
motor vehicle certificates of title.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter M, Chapter 342, Finance Code, is
amended by adding Sections 342.607, 342.608, and 342.609 to read as
follows:
Sec. 342.607. ADVANCED AMOUNT RESTRICTED. An authorized
lender may not enter into a deferred presentment transaction in
which the amount of cash advanced exceeds the lesser of:
(1) $2,000; or
(2) 35 percent of the borrower's gross monthly income.
Sec. 342.608. REAUTHORIZATION. (a) In this section,
"consecutive reauthorization" means a transaction in which a
borrower refinances or pays all or part of the finance charges and
advance of a deferred presentment transaction with a new deferred
presentment transaction.
(b) An authorized lender may not make more than three
consecutive reauthorizations of a deferred presentment
transaction.
Sec. 342.609. ACCEPTANCE OF PARTIAL PAYMENT. (a) An
authorized lender shall accept partial payment of an amount owed
under a deferred presentment transaction and shall apply any
partial payment to the principal amount owed.
(b) On payment of 25 percent or more of the principal amount
owed under a deferred presentment transaction, the lender may not
charge additional fees or other charges related to the transaction.
(c) This section does not:
(1) prohibit a lender from charging interest
authorized by law and the deferred presentment transaction
agreement; or
(2) require a lender to accept a final payment that
does not include the total amount of interest owed to the lender.
SECTION 2. Chapter 342, Finance Code, is amended by adding
Subchapter N to read as follows:
SUBCHAPTER N. MOTOR VEHICLE CERTIFICATE OF TITLE LOANS
Sec. 342.651. DEFINITION. In this subchapter, "motor
vehicle certificate of title loan" means a loan in which a motor
vehicle certificate of title is given by the borrower as security
for the loan. The term does not include a retail installment
transaction under Chapter 348 or another loan made to finance the
purchase of a motor vehicle.
Sec. 342.652. LOAN AMOUNT RESTRICTED. An authorized lender
may not make a motor vehicle certificate of title loan in an amount
that exceeds the lesser of:
(1) $2,500; or
(2) 50 percent of the borrower's gross monthly income.
Sec. 342.653. REAUTHORIZATION OF LOAN. (a) In this
section, "consecutive reauthorization" means a transaction in
which a borrower refinances or pays all or part of the finance
charges and advance under a loan with a new loan.
(b) An authorized lender may not make more than three
consecutive reauthorizations of a motor vehicle certificate of
title loan.
Sec. 342.654. ACCEPTANCE OF PARTIAL PAYMENT. (a) An
authorized lender shall accept partial payment of a motor vehicle
certificate of title loan and shall apply any partial payment to the
principal amount of the loan.
(b) On payment of 33 percent or more of the loan principal,
the lender may not charge additional fees related to the loan.
(c) This section does not:
(1) prohibit a lender from charging interest
authorized by law and the loan agreement; or
(2) require a lender to accept a final payment that
does not include the total amount of interest owed to the lender.
SECTION 3. Chapter 393, Finance Code, is amended by adding
Subchapters D-1 and D-2 to read as follows:
SUBCHAPTER D-1. RESTRICTIONS RELATING TO MOTOR VEHICLE
CERTIFICATES OF TITLE
Sec. 393.351. APPLICABILITY OF SUBCHAPTER. This subchapter
does not apply to an extension of consumer credit for the express
purpose of financing the purchase of a motor vehicle used as
security for the debt.
Sec. 393.352. DEBT AMOUNT RESTRICTED. A credit services
organization may not obtain, facilitate, or otherwise assist in
obtaining for a consumer an extension of consumer credit in which a
motor vehicle certificate of title is given by the consumer as
security for the debt that is in an amount that exceeds the lesser
of:
(1) $2,500; or
(2) 50 percent of the consumer's gross monthly income.
Sec. 393.353. REAUTHORIZATION OF DEBT. (a) In this
section, "consecutive reauthorization" means a transaction in
which a consumer refinances or pays all or part of any finance
charges and advance under an extension of consumer credit with a new
extension of consumer credit.
(b) A credit services organization may not obtain,
facilitate, or otherwise assist in obtaining for a consumer more
than three consecutive reauthorizations of an extension of consumer
credit in which a motor vehicle certificate of title is given by the
consumer as security for the debt.
Sec. 393.354. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a)
A credit services organization may not obtain, facilitate, or
otherwise assist in obtaining for a consumer an extension of
consumer credit in which a motor vehicle certificate of title is
given by the consumer as security for the debt and for which partial
payment of the principal amount is not accepted.
(b) On payment of 33 percent or more of the principal amount
of the extension of consumer credit described by this section, the
credit services organization may not charge the consumer additional
fees related to the extension of consumer credit.
SUBCHAPTER D-2. RESTRICTIONS RELATING TO DEFERRED
PRESENTMENT TRANSACTIONS
Sec. 393.371. DEFINITION. In this subchapter, "deferred
presentment transaction" has the meaning assigned by Section
341.001.
Sec. 393.372. DEBT AMOUNT RESTRICTED. A credit services
organization may not obtain, facilitate, or otherwise assist in
obtaining for a consumer an extension of consumer credit in the form
of a deferred presentment transaction that is in an amount that
exceeds the lesser of:
(1) $2,000; or
(2) 35 percent of the consumer's gross monthly income.
Sec. 393.373. REAUTHORIZATION OF DEBT. (a) In this
section, "consecutive reauthorization" means a transaction in
which a consumer refinances or pays all or part of any finance
charges and advance under an extension of consumer credit with a new
extension of consumer credit.
(b) A credit services organization may not obtain,
facilitate, or otherwise assist in obtaining for a consumer more
than three consecutive reauthorizations of an extension of consumer
credit in the form of a deferred presentment transaction.
Sec. 393.374. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a)
A credit services organization may not obtain, facilitate, or
otherwise assist in obtaining for a consumer an extension of
consumer credit in the form of a deferred presentment transaction
for which partial payment of the principal amount is not accepted.
(b) On payment of 25 percent or more of the principal amount
of the extension of consumer credit described by this section, the
credit services organization may not charge the consumer additional
fees or other charges related to the extension of consumer credit.
SECTION 4. This Act takes effect September 1, 2011.