Texas 2015 - 84th Regular

Texas House Bill HB3812 Compare Versions

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1	1	By: Thompson of Harris H.B. No. 3812
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to extensions of consumer credit in the form of a
7	7	motor vehicle title loan that a credit access business obtains for a
8	8	consumer or assists a consumer in obtaining; providing a civil
9	9	penalty.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 393.601, Finance Code, is amended by
12	12	amending Subdivision (5) and adding Subdivisions (5-a) and (7) to
13	13	read as follows:
14	14	(5) "Motor vehicle title loan" means a single-payment
15	15	or multiple-payment loan in which an unencumbered motor vehicle is
16	16	given as the only security for the loan, except as provided by
17	17	Section 393.702. The term does not include a retail installment
18	18	transaction under Chapter 348 or another loan made to finance the
19	19	purchase of a motor vehicle.
20	20	(5-a) "Multiple-payment motor vehicle title loan"
21	21	means a motor vehicle title loan that is not a single-payment motor
22	22	vehicle title loan.
23	23	(7) "Single-payment motor vehicle title loan" means a
24	24	motor vehicle title loan for which the entire principal, interest,
25	25	and fees are required under the terms of the loan to be payable in a
26	26	single payment.
27	27	SECTION 2. Chapter 393, Finance Code, is amended by adding
28	28	Subchapter G-1 to read as follows:
29	29	SUBCHAPTER G-1. REGULATIONS IN CONNECTION WITH MOTOR
30	30	VEHICLE TITLE LOANS
31	31	Sec. 393.701. DEFINITIONS. In this subchapter:
32	32	(1) "Finance commission" means the Finance Commission
33	33	of Texas.
34	34	(2) "Military borrower" includes a "covered member" or
35	35	a "dependent" with respect to a covered member, as those terms are
36	36	defined by 10 U.S.C. Section 987 or a successor statute.
37	37	(3) "Motor vehicle title loan" has the meaning
38	38	assigned by Section 393.601.
39	39	(4) "Multiple-payment motor vehicle title loan" has
40	40	the meaning assigned by Section 393.601.
41	41	(5) "Refinance" means a rollover, renewal, or other
42	42	type of transaction in which all or a portion of the principal,
43	43	fees, or interest due under an outstanding motor vehicle title loan
44	44	becomes due on a later date. The term does not include an extended
45	45	payment plan described by Section 393.709. The term includes a new
46	46	extension of consumer credit that:
47	47	(A) consists of debt arising from principal,
48	48	fees, or interest that was not paid in full under an outstanding or
49	49	previous extension of consumer credit; or
50	50	(B) is made on or before the fifth day after the
51	51	date a previous extension of consumer credit that a credit access
52	52	business obtained for a consumer or assisted a consumer in
53	53	obtaining was paid in full.
54	54	(6) "Single-payment motor vehicle title loan" has the
55	55	meaning assigned by Section 393.601.
56	56	Sec. 393.702. PAYMENT METHOD. (a) A credit access business
57	57	shall accept a payment made in cash or by electronic transfer,
58	58	cashier's check, teller's check, or money order offered by the
59	59	consumer or another party, to retire or otherwise pay down debt
60	60	incurred under an extension of consumer credit in the form of a
61	61	single-payment motor vehicle title loan or a multiple-payment motor
62	62	vehicle title loan that a credit access business obtained for a
63	63	consumer or assisted a consumer in obtaining under this chapter.
64	64	(b) For a single-payment or multiple-payment motor vehicle
65	65	title loan, a consumer may also grant a security interest in an
66	66	authorized debit of a bank account.
67	67	Sec. 393.703. TERM OF LOAN FOR MILITARY BORROWERS. The term
68	68	of an extension of consumer credit in the form of a motor vehicle
69	69	title loan, including all refinances, obtained for a military
70	70	borrower by a credit access business or that a credit access
71	71	business assists a military borrower in obtaining may not exceed
72	72	180 days.
73	73	Sec. 393.704. LIMITATION ON OUTSTANDING DEBT. (a) At any
74	74	one time, a consumer may have only one outstanding debt from a motor
75	75	vehicle title loan that a credit access business obtained for the
76	76	consumer or assisted the consumer in obtaining.
77	77	(b) A credit access business that violates this section is
78	78	subject to a civil penalty in an amount not to exceed $1,000 for
79	79	each violation.
80	80	Sec. 393.705. LIMITATIONS RELATING TO MOTOR VEHICLE
81	81	SECURING DEBT. (a) The proceeds of the sale of a repossessed motor
82	82	vehicle that secured a motor vehicle title loan shall satisfy all
83	83	outstanding and unpaid indebtedness under that extension of
84	84	consumer credit, and the consumer is not liable for any deficiency
85	85	resulting from the sale unless the consumer has committed fraud or
86	86	has committed a wilful act of misconduct that damages or impairs the
87	87	value of the motor vehicle.
88	88	(b) Any fee charged to a consumer for the repossession of a
89	89	motor vehicle given as security for a motor vehicle title loan must
90	90	be reasonable and may not exceed the amount actually paid by the
91	91	credit access business or the lender to a third party for the
92	92	repossession.
93	93	(c) A repossession under this chapter must comply with
94	94	Chapter 9, Business & Commerce Code, except as otherwise provided
95	95	by this section.
96	96	Sec. 393.706. ESTABLISHMENT OF CONSUMER'S INCOME OR VEHICLE
97	97	VALUE; REFERENCE AMOUNT. (a) A credit access business must require
98	98	documentation to establish a consumer's income for purposes of this
99	99	subchapter. Acceptable forms of documentation include paper,
100	100	facsimile, or electronic copies of:
101	101	(1) a payroll document;
102	102	(2) a paycheck;
103	103	(3) a bank statement;
104	104	(4) a report from a nationally or regionally
105	105	recognized credit and data reporting company;
106	106	(5) Internal Revenue Service Form W-2 from the
107	107	preceding year;
108	108	(6) the income tax return from the preceding tax year;
109	109	(7) a signed letter from the consumer's employer at the
110	110	time the single-payment motor vehicle title loan or
111	111	multiple-payment motor vehicle title loan is sought;
112	112	(8) an executed certification on a form adopted by
113	113	finance commission rule that attests to the consumer's monthly or
114	114	annual income; or
115	115	(9) any other document approved by finance commission
116	116	rule.
117	117	(b) A credit access business shall retain a copy of the
118	118	documentation used to establish a consumer's income under
119	119	Subsection (a) according to the business's standard records
120	120	retention policy and any applicable rule or regulation establishing
121	121	a record retention period.
122	122	(c) A credit access business that relies in good faith on a
123	123	document presented by the consumer under Subsection (a) to
124	124	establish a consumer's income has complied with this section to the
125	125	extent the income established under that document meets the
126	126	applicable requirements under this subchapter.
127	127	(d) A credit access business that obtains for a consumer or
128	128	assists a consumer in obtaining an extension of consumer credit in
129	129	the form of a single-payment motor vehicle title loan or a
130	130	multiple-payment motor vehicle title loan through the Internet or
131	131	other electronic means may rely on nationally or regionally
132	132	recognized database reporting systems and may maintain a record of
133	133	the database reporting system results used to comply with
134	134	Subsections (a) and (b).
135	135	(e) To establish the retail value of a motor vehicle for
136	136	purposes of this subchapter, a credit access business must:
137	137	(1) rely on a nationally or regionally recognized
138	138	vehicle appraisal guide or agree in good faith with the consumer to
139	139	the vehicle's retail value; and
140	140	(2) record the recognized or agreed-on value.
141	141	(f) For purposes of this subchapter, $28,000 is the initial
142	142	reference amount with respect to a consumer's income, and the
143	143	consumer credit commissioner shall adjust this amount annually in
144	144	accordance with the Consumer Price Index.
145	145	Sec. 393.707. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. (a)
146	146	The amount advanced to a consumer under an extension of consumer
147	147	credit in the form of a single-payment motor vehicle title loan that
148	148	a credit access business obtains for a consumer or assists a
149	149	consumer in obtaining, excluding fees, may not exceed the lesser
150	150	of:
151	151	(1) six percent of the consumer's gross annual income,
152	152	if the consumer's gross annual income is less than the reference
153	153	amount;
154	154	(2) eight percent of the consumer's gross annual
155	155	income, if the consumer is not described by Subdivision (1) and is
156	156	not a military borrower to whom a different limit applies under
157	157	federal law; or
158	158	(3) 70 percent of the retail value of the motor vehicle
159	159	securing the debt.
160	160	(b) The term of an original or refinanced extension of
161	161	consumer credit in the form of a single-payment motor vehicle title
162	162	loan that a credit access business obtains for a consumer or assists
163	163	a consumer in obtaining may not be less than 30 days or longer than
164	164	60 days.
165	165	(c) An extension of consumer credit in the form of a
166	166	single-payment motor vehicle title loan that a credit access
167	167	business obtains for a consumer or assists a consumer in obtaining
168	168	may not be refinanced more than six times.
169	169	(d) If a consumer who has not entered into an extended
170	170	payment plan with the credit access business in the preceding 12
171	171	months refinances a single-payment motor vehicle title loan for the
172	172	sixth time:
173	173	(1) the credit access business must offer at least one
174	174	extended payment plan to the consumer before initiating any
175	175	activities to repossess the vehicle securing the debt;
176	176	(2) the consumer may request, before the offer
177	177	required by Subdivision (1) is made, an extended payment plan at any
178	178	time on or after the date the consumer refinances the motor vehicle
179	179	title loan for the sixth time and on or before the fifth day after
180	180	the date on which the sixth refinance must be repaid in full;
181	181	(3) to comply with the requirement of Subdivision (1),
182	182	the credit access business shall send a written notice to the
183	183	consumer disclosing the following:
184	184	(A) the amount due under the current terms of the
185	185	extension of consumer credit if the consumer declines an extended
186	186	payment plan;
187	187	(B) the amounts due on each of the installment
188	188	dates of an extended payment plan; and
189	189	(C) the date by which the consumer must accept
190	190	the extended payment plan in writing, which date shall be at least
191	191	five days after the date of such notice;
192	192	(4) the credit access business may not repossess the
193	193	vehicle securing the debt unless:
194	194	(A) the consumer fails to accept the extended
195	195	payment plan in writing on or before the deadline contained in the
196	196	notice required by Subdivision (3);
197	197	(B) the consumer declines the extended payment
198	198	plan; or
199	199	(C) the consumer fails to make a payment required
200	200	by an extended payment plan that the consumer accepted; and
201	201	(5) if the consumer declines an extended payment plan
202	202	that a credit access business is required to offer under
203	203	Subdivision (1), the consumer must sign an extended payment plan
204	204	waiver on a form prescribed by the finance commission.
205	205	(e) An extended payment plan required to be offered under
206	206	Subsection (d) must comply with Section 393.709.
207	207	(f) A credit access business may offer a consumer an
208	208	extended payment plan that provides the consumer with additional
209	209	time to repay the debts obtained through a single-payment motor
210	210	vehicle title loan, either before or after the consumer refinances
211	211	the single-payment motor vehicle title loan for the sixth time,
212	212	more than once in a 12-month period so long as the credit access
213	213	business does not assess additional fees under the extended payment
214	214	plan and the credit access business fully describes the terms of the
215	215	extended payment plan, including all due dates and the amount due on
216	216	each due date, to the consumer before the consumer enters into the
217	217	extended payment plan. An extended payment plan offered under this
218	218	subsection is not required to comply with Section 393.709.
219	219	Sec. 393.708. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN.
220	220	(a) The amount advanced to a consumer under an extension of consumer
221	221	credit in the form of a multiple-payment motor vehicle title loan
222	222	that a credit access business obtains for a consumer or assists a
223	223	consumer in obtaining, excluding fees, may not exceed 70 percent of
224	224	the retail value of the motor vehicle securing the debt.
225	225	(b) The sum of all fees, principal, interest, and other
226	226	amounts due under any scheduled payment of an extension of consumer
227	227	credit in the form of a multiple-payment motor vehicle title loan
228	228	that a credit access business obtains for a consumer or assists a
229	229	consumer in obtaining may not exceed:
230	230	(1) 20 percent of the consumer's gross monthly income,
231	231	if the consumer's gross annual income is less than the reference
232	232	amount; or
233	233	(2) 30 percent of the consumer's gross monthly income,
234	234	if the consumer is not described by Subdivision (1) and is not a
235	235	military borrower to whom a different limit applies under federal
236	236	law.
237	237	(c) An extension of consumer credit in the form of a
238	238	multiple-payment motor vehicle title loan that a credit access
239	239	business obtains for a consumer or assists a consumer in obtaining
240	240	must be payable on a fully amortizing, declining-principal-balance
241	241	basis with substantially equal payments. If a credit access
242	242	business precomputes its fees under a multiple-payment motor
243	243	vehicle title loan and a consumer prepays the loan in full, the
244	244	credit access business shall refund any unearned fees to the
245	245	consumer.
246	246	(d) An extension of consumer credit in the form of a
247	247	multiple-payment motor vehicle title loan that a credit access
248	248	business obtains for a consumer or assists a consumer in obtaining
249	249	may not be payable by the consumer in more than 12 installments, and
250	250	the loan agreement must specify the number, date, and total amount
251	251	due with regard to each installment.
252	252	(e) The first installment of an extension of consumer credit
253	253	in the form of a multiple-payment motor vehicle title loan that a
254	254	credit access business obtains for a consumer or assists a consumer
255	255	in obtaining may not be due before the 10th day after the date the
256	256	consumer enters into the loan agreement. A subsequent installment
257	257	may not be due before the 28th day after the date the previous
258	258	installment of the loan is due.
259	259	(f) An extension of consumer credit in the form of a
260	260	multiple-payment motor vehicle title loan that a credit access
261	261	business obtains for a consumer or assists a consumer in obtaining
262	262	may not be refinanced and the loan term may not exceed 365 days,
263	263	except as provided by Subsection (g).
264	264	(g) A credit access business may not initiate any activities
265	265	to repossess the vehicle securing the debt under a multiple-payment
266	266	motor vehicle title loan that a credit access business obtains for a
267	267	consumer or assists a consumer in obtaining before offering the
268	268	consumer at least one extended payment plan. An extended payment
269	269	plan may cause the extension of consumer credit to extend beyond 365
270	270	days so long as the extended payment plan complies with Section
271	271	393.709 and the credit access business fully describes the terms of
272	272	the extended payment plan, including all due dates and the amount
273	273	due on each due date, to the consumer before the consumer enters
274	274	into the extended payment plan.
275	275	(h) If the credit access business is required to offer a
276	276	consumer an extended payment plan under Subsection (g), the credit
277	277	access business shall send a written notice to the consumer
278	278	disclosing the following:
279	279	(1) the amount due under the current terms of the
280	280	extension of consumer credit if the consumer declines an extended
281	281	payment plan;
282	282	(2) the amounts due on each of the installment dates of
283	283	an extended payment plan; and
284	284	(3) the date by which the consumer must accept the
285	285	extended payment plan in writing, which date shall be at least five
286	286	days after the date of such notice.
287	287	(i) The credit access business may not repossess the vehicle
288	288	securing the debt unless:
289	289	(1) the consumer fails to accept the extended payment
290	290	plan in writing on or before the deadline contained in the notice
291	291	required by Subsection (h)(3);
292	292	(2) the consumer declines the extended payment plan;
293	293	or
294	294	(3) the consumer fails to make a payment required by an
295	295	extended payment plan that the consumer accepted.
296	296	(j) If the consumer declines the extended payment plan, the
297	297	consumer must sign an extended payment plan waiver on a form
298	298	prescribed by the finance commission.
299	299	Sec. 393.709. EXTENDED PAYMENT PLAN REQUIREMENTS. (a) This
300	300	section applies to extended payment plans required to be offered
301	301	under Sections 393.707(d) and 393.708.
302	302	(b) An extended payment plan must provide for payment in at
303	303	least:
304	304	(1) four substantially equal installments, after
305	305	which the outstanding balance will be paid in full, with respect to
306	306	a single-payment motor vehicle title loan; or
307	307	(2) two substantially equal installments added to the
308	308	original and refinanced term of the extension of consumer credit,
309	309	after which the outstanding balance, including only the fees that
310	310	would have been due under the original extension of consumer
311	311	credit, will be paid in full, with respect to a multiple-payment
312	312	motor vehicle title loan.
313	313	(c) The period between installment payments on an extended
314	314	payment plan may not be shorter than 30 days, with respect to a
315	315	single-payment motor vehicle title loan or a multiple-payment motor
316	316	vehicle title loan.
317	317	(d) The first payment owed under an extended payment plan
318	318	may not be due before the 10th day after the date the consumer
319	319	requests an extended payment plan.
320	320	(e) A credit access business may not assess additional fees
321	321	or assist a consumer in obtaining additional extensions of consumer
322	322	credit if the consumer is paying an extension of credit under an
323	323	extended payment plan.
324	324	(f) A consumer may pay in full a debt subject to an extended
325	325	payment plan at any time without prepayment penalties.
326	326	(g) A person may not engage in debt collection or vehicle
327	327	repossession activities for a debt subject to an extended payment
328	328	plan if the consumer is in compliance with the extended payment
329	329	plan.
330	330	(h) A person may not use a device, subterfuge, or pretense
331	331	to evade the extended payment plan requirements and limitations
332	332	imposed on a credit access business under this subchapter.
333	333	Sec. 393.710. REFINANCES. (a) Any refinance of an extension
334	334	of consumer credit in the form of a single-payment motor vehicle
335	335	title loan or multiple-payment motor vehicle title loan that a
336	336	credit access business obtains for a consumer or assists a consumer
337	337	in obtaining:
338	338	(1) must be authorized under this subchapter;
339	339	(2) must be in the same form as the original extension
340	340	of consumer credit; and
341	341	(3) must meet all the requirements applicable to the
342	342	original extension of consumer credit, including the duration,
343	343	transaction, and extended payment plan requirements under this
344	344	subchapter, including the applicable income-based or vehicle
345	345	value-based limitations under Section 393.707(a) or 393.708(b),
346	346	except as otherwise provided by this chapter.
347	347	(b) The terms of a refinanced extension of consumer credit
348	348	may be the same as or different from the terms of the original
349	349	extension of consumer credit.
350	350	(c) A person may not use a device, subterfuge, or pretense
351	351	to evade the refinance requirements and limitations imposed on a
352	352	credit access business with respect to a single-payment motor
353	353	vehicle title loan or multiple-payment motor vehicle title loan
354	354	under this subchapter.
355	355	Sec. 393.711. RULES. The finance commission shall adopt any
356	356	rules necessary to implement this subchapter.
357	357	SECTION 3. The changes in law made by this Act apply only to
358	358	an extension of consumer credit made on or after the
359	359	effective date
360	360	of this Act. An extension of consumer credit made before the
361	361	effective date of this Act is governed by the law in effect on the
362	362	date the extension of consumer credit was made, and the former law
363	363	is continued in effect for that purpose. For purposes of this
364	364	section, a refinance of an extension of consumer credit is
365	365	considered made on the date the extension of consumer credit being
366	366	refinanced was made.
367	367	SECTION 4. This Act takes effect September 1, 2015.