Texas House Bill HB3226

Texas 2011 - 82nd Regular

• Introduced: 3/10/11
• Refer: 3/18/11

Caption

Relating to the regulation of, including fee and installment plan assistance, certain small loans made to consumers.

Impact

If passed, HB 3226 will amend Chapter 342 of the Finance Code, establishing standards for small loans and enhancing consumer protection measures. The new regulations would apply only to loans entered into after the bill's effective date, allowing existing loans to remain under prior statutes. A key feature of the bill is the mandatory creation of a small loan information system, which would facilitate tracking borrowers' outstanding debts and ensure compliance with state regulations. This system is designed to be secure and accessible to both lenders and regulatory authorities, promoting accountability in lending practices.

Summary

House Bill 3226 seeks to introduce regulations concerning small loans made to consumers in Texas. The bill defines a 'small loan' as any loan not exceeding $700 or 30% of the borrower's gross monthly income. It outlines the lending practices related to small loans, emphasizing that borrowers should not accumulate debt beyond these limits and imposing restrictions on lenders to prevent multiple loans leading to excessive indebtedness. Importantly, the bill also mandates that lenders must offer installment plans for borrowers unable to repay a loan at the due date, aiming to provide clearer pathways for consumers struggling with repayments.

Sentiment

General sentiment around HB 3226 appears to support consumer protection in a financial market that often leaves vulnerable borrowers at risk of exploitation through predatory lending practices. Proponents of the bill argue that clearer regulations can safeguard against excessive debt accumulation and offer more manageable repayment options to borrowers. However, there could be contention from lenders and financial institutions concerned about the restrictions imposed on their lending practices, suggesting a potential pushback regarding the bill's limitations on small loan issuance.

Contention

Notable points of contention likely stem from the financial industry's reaction to the limitations set forth by HB 3226. Critics, especially in the lending community, may contend that the restrictions on the issuance of multiple small loans could hinder access to credit for consumers who may need it. Additionally, there may be concerns regarding the cost of implementing the proposed small loan information system, both for the state and for license holders obligated to operate within the new framework. The balance between consumer protection and the need for accessible lending options will remain a significant aspect of discussions around this bill.