Texas 2011 - 82nd Regular

Texas House Bill HB2593 Compare Versions

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1	1	82R19314 ATP-F
2	2	By: Truitt H.B. No. 2593
3	3	Substitute the following for H.B. No. 2593:
4	4	By: Truitt C.S.H.B. No. 2593
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to certain restrictions on deferred presentment
10	10	transactions and motor vehicle certificate of title loans that a
11	11	credit services organization obtains for a consumer or assists a
12	12	consumer in obtaining.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Chapter 393, Finance Code, is amended by adding
15	15	Subchapter H to read as follows:
16	16	SUBCHAPTER H. CERTAIN EXTENSIONS OF CONSUMER CREDIT OBTAINED BY
17	17	CERTAIN CREDIT SERVICES ORGANIZATIONS
18	18	Sec. 393.651. DEFINITIONS. In this subchapter:
19	19	(1) "Commissioner" means the consumer credit
20	20	commissioner.
21	21	(2) "Credit access business" means a credit services
22	22	organization that obtains for a consumer or assists a consumer in
23	23	obtaining an extension of consumer credit in the form of a deferred
24	24	presentment transaction or a motor vehicle certificate of title
25	25	loan.
26	26	(3) "Deferred presentment transaction" has the
27	27	meaning assigned by Section 341.001.
28	28	(4) "Finance commission" means the Finance Commission
29	29	of Texas.
30	30	(5) "Motor vehicle certificate of title loan" means a
31	31	loan in which a motor vehicle certificate of title is given as
32	32	security for the loan. The term does not include a retail
33	33	installment transaction under Chapter 348 or another loan made to
34	34	finance the purchase of a motor vehicle.
35	35	(6) "Office" means the Office of Consumer Credit
36	36	Commissioner.
37	37	Sec. 393.652. APPLICABILITY. This subchapter applies only
38	38	to an extension of consumer credit in the form of a deferred
39	39	presentment transaction or motor vehicle certificate of title loan
40	40	that a credit access business obtains for a consumer or that a
41	41	credit access business assists a consumer in obtaining.
42	42	Sec. 393.653. PAYMENT FOR CERTAIN EXTENSIONS OF CONSUMER
43	43	CREDIT. (a) An extension of consumer credit to which this
44	44	subchapter applies must be payable in two-week or one-month
45	45	increments or payable in a single payment.
46	46	(b) A credit access business may not obtain or assist in
47	47	obtaining for a consumer an extension of consumer credit in the form
48	48	of a deferred presentment transaction or motor vehicle certificate
49	49	of title loan for which partial payment of the principal amount is
50	50	not accepted.
51	51	Sec. 393.654. ADVANCE AMOUNT RESTRICTED. (a) The cash
52	52	advanced under an extension of consumer credit that is in the form
53	53	of a deferred presentment transaction may not exceed:
54	54	(1) 25 percent of the borrower's gross monthly family
55	55	income, if the borrower's gross monthly family income is not more
56	56	than 100 percent of the federal poverty level for a family of four;
57	57	or
58	58	(2) 32 percent of the borrower's gross monthly family
59	59	income, if the borrower's gross monthly family income exceeds 100
60	60	percent of the federal poverty level for a family of four.
61	61	(b) The cash advanced under an extension of consumer credit
62	62	that is in the form of a motor vehicle certificate of title loan may
63	63	not exceed the lesser of:
64	64	(1) as applicable, either:
65	65	(A) three percent of the borrower's gross annual
66	66	family income, if the borrower's gross annual family income is not
67	67	more than 100 percent of the federal poverty level for a family of
68	68	four; or
69	69	(B) five percent of the borrower's gross annual
70	70	family income, if the borrower's gross annual family income exceeds
71	71	100 percent of the federal poverty level for a family of four; or
72	72	(2) 70 percent of the retail value of the motor
73	73	vehicle.
74	74	(c) A credit access business shall keep a record of the
75	75	document used to establish a borrower's family income under this
76	76	section. A credit access business may use an affidavit signed by
77	77	the borrower to establish the borrower's family income if a
78	78	paycheck or other documentation establishing income is
79	79	unavailable. An affidavit used for purposes of this subsection
80	80	must state in bold letters the applicable advance limits provided
81	81	by this section.
82	82	Sec. 393.655. RENEWAL OR REFINANCE. For purposes of this
83	83	subchapter, an extension of consumer credit described by Section
84	84	393.652 that is made by a person to a consumer not later than the
85	85	seventh day after a previous extension of consumer credit made by
86	86	the same person is paid by the consumer is considered to be a
87	87	renewal or refinance of the previous extension of credit.
88	88	Sec. 393.656. RESTRICTIONS APPLICABLE TO EXTENSIONS OF
89	89	CONSUMER CREDIT SECURED BY CERTIFICATE OF TITLE. (a) This section
90	90	applies only to an extension of consumer credit in the form of a
91	91	motor vehicle certificate of title loan.
92	92	(b) The extension of consumer credit may not be refinanced
93	93	or renewed or payable in installments more than:
94	94	(1) five times, if the debt is payable monthly or has a
95	95	term of one month; or
96	96	(2) eight times, if the debt is payable biweekly, or
97	97	has a term of two weeks.
98	98	(c) For purposes of Subsection (b), the charging of a fee on
99	99	late payment of the debt or on failure to make a payment is
100	100	considered to be a refinance of the extension of consumer credit.
101	101	(d) A credit access business may obtain for a consumer or
102	102	assist a consumer in obtaining an extended repayment plan for the
103	103	extension of consumer credit if the debt is not paid in full after
104	104	the applicable number of refinances, renewals, or installment
105	105	payments provided by Subsection (b), but may not charge the
106	106	consumer fees in connection with the making of payments of
107	107	principal and interest under an extended repayment plan.
108	108	(e) A single consumer may enter into only one extended
109	109	repayment plan in a 14-month period with respect to an extension of
110	110	consumer credit to which this section applies. If a credit access
111	111	business enters into an agreement to obtain or assist in the
112	112	obtaining of an extension of consumer credit with a consumer who
113	113	during the preceding 14 months has entered into an extended
114	114	repayment plan with respect to the debt and obtains for the consumer
115	115	or assists the consumer in obtaining extensions of consumer credit
116	116	in the form of refinances, renewals, or installment payments of the
117	117	extension up to the maximum limits provided by Subsection (b), the
118	118	lender has forfeited any claim to the principal amount of the debt
119	119	and must return the certificate of title to the consumer.
120	120	(f) An extended repayment plan must provide for four equal
121	121	or nearly equal payments of principal and interest, with all
122	122	principal and interest to be paid in full in the fourth payment.
123	123	The intervals between payments must be the same as the initial term
124	124	of the original extension of consumer credit. A borrower is
125	125	considered to have defaulted if the borrower fails to make any
126	126	scheduled payment under the extended repayment plan.
127	127	(g) A credit access business may seek reimbursement from a
128	128	consumer on behalf of a lender for reasonable and documented costs
129	129	and fees in association with the sale of a vehicle surrendered in
130	130	connection with the consumer's default on a debt, except to the
131	131	extent limited or prohibited by finance commission rule. The
132	132	finance commission by rule may limit or prohibit unreasonable fees
133	133	associated with the cost of selling such a vehicle. Notwithstanding
134	134	any other provision of law, the proceeds of the sale of a motor
135	135	vehicle, the certificate of title of which is given as security for
136	136	an extension of consumer credit under this section, shall satisfy
137	137	all outstanding and unpaid indebtedness under that extension of
138	138	credit, and the borrower is not liable for any deficiency resulting
139	139	from the sale. The lender shall pay to the borrower any surplus
140	140	arising from the sale, as required by Chapter 9, Business & Commerce
141	141	Code.
142	142	(h) The finance commission by rule may require that an
143	143	automobile club membership offer made in connection with an
144	144	extension of consumer credit to which this section applies be
145	145	accompanied by a disclaimer plainly stating the benefits and
146	146	limitations of the offer and that the customer's signature must be
147	147	present on any contract documenting the customer's agreement to
148	148	purchase an automobile club membership.
149	149	(i) It is a violation of this chapter to fail to return the
150	150	motor vehicle certificate of title after an extension of consumer
151	151	credit to which this section applies is paid in full.
152	152	Sec. 393.657. RESTRICTIONS APPLICABLE TO DEFERRED
153	153	PRESENTMENT TRANSACTIONS. (a) This section applies only to an
154	154	extension of consumer credit in the form of a deferred presentment
155	155	transaction.
156	156	(b) The extension of consumer credit may not be refinanced
157	157	or renewed or payable in installments more than:
158	158	(1) four times, if the debt is payable monthly or has a
159	159	term of one month; or
160	160	(2) six times, if the debt is payable biweekly, or has
161	161	a term of two weeks.
162	162	(c) For purposes of Subsection (b), the charging of a fee on
163	163	late payment of the debt or on failure to make a payment is
164	164	considered to be a refinance of the extension of consumer credit.
165	165	(d) A credit access business may obtain for a consumer or
166	166	assist a consumer in obtaining an extended repayment plan if the
167	167	extension of consumer credit under this section is not paid in full
168	168	after the applicable number of refinances, renewals, or installment
169	169	payments provided by Subsection (b), but may not charge the
170	170	consumer fees in connection with the making of payments of
171	171	principal and interest to a lender under an extended repayment
172	172	plan.
173	173	(e) A single consumer may enter into only one extended
174	174	repayment plan in a 12-month period with respect to an extension of
175	175	consumer credit to which this section applies. If a credit access
176	176	business enters into an agreement to obtain or assist in the
177	177	obtaining of an extension of consumer credit with a consumer who
178	178	during the preceding 12 months has entered into an extended
179	179	repayment plan with respect to the debt and obtains for the consumer
180	180	or assists the consumer in obtaining extensions of consumer credit
181	181	in the form of refinances, renewals, or installment payments of the
182	182	debt up to the maximum limit provided by Subsection (b), the person
183	183	making the cash advance has forfeited any claim to the principal
184	184	amount of the debt.
185	185	(f) An extended repayment plan must provide for four equal
186	186	or nearly equal payments of principal and interest, with all
187	187	principal and interest to be paid in full in the fourth payment.
188	188	The intervals between payments must be the same as the initial term
189	189	of the original extension of consumer credit. A borrower is
190	190	considered to have defaulted if the borrower fails to make any
191	191	scheduled payment under the extended repayment plan.
192	192	SECTION 2. This Act takes effect September 1, 2011.