Texas 2015 - 84th Regular

Texas House Bill HB3824 Compare Versions

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1	1	84R12811 EES-F
2	2	By: Capriglione H.B. No. 3824
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of certain short-term consumer loans;
8	8	imposing an assessment and fees; adding provisions subject to a
9	9	criminal penalty; requiring an occupational license.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle B, Title 4, Finance Code, is amended by
12	12	adding Chapter 354 to read as follows:
13	13	CHAPTER 354. SHORT-TERM LOANS
14	14	SUBCHAPTER A. GENERAL PROVISIONS; APPLICABILITY OF CHAPTER
15	15	Sec. 354.001. DEFINITIONS. In this chapter:
16	16	(1) "Authorized lender" means a person licensed under
17	17	this chapter, a bank, or a savings association, notwithstanding
18	18	Section 341.001.
19	19	(2) "License holder" means a person who holds a
20	20	license issued under this chapter.
21	21	(3) "Motor vehicle title loan" means a loan in which an
22	22	unencumbered motor vehicle is given as security for the loan and in
23	23	which the lender accepts multiple installments and charges a
24	24	monitoring fee in connection with each installment. The term does
25	25	not include a retail installment transaction under Chapter 348 or
26	26	another loan made to finance the purchase of a motor vehicle.
27	27	(4) "Regular transaction" means a loan:
28	28	(A) that is payable in installments that are
29	29	consecutive, monthly or biweekly, and substantially equal in
30	30	amount; and
31	31	(B) the first scheduled installment of which is
32	32	due within one month and 15 days after the date of the loan.
33	33	Sec. 354.002. INTEREST COMPUTATION METHOD. (a) The
34	34	scheduled installment earnings method is a method to compute an
35	35	interest charge by applying a daily rate to the unpaid balance of
36	36	the principal amount as if each payment will be made on its
37	37	scheduled installment date. A payment received before or after the
38	38	due date does not affect the amount of the scheduled principal
39	39	reduction.
40	40	(b) For the purposes of Subsection (a), the daily rate is
41	41	1/365th of the equivalent contract rate.
42	42	(c) Interest under the scheduled installment earnings
43	43	method may not be compounded.
44	44	(d) Loans under this chapter must use the scheduled
45	45	installment earnings method to compute interest.
46	46	Sec. 354.003. APPLICABILITY OF CHAPTER. A loan is subject
47	47	to this chapter if the loan:
48	48	(1) provides for an effective rate of interest above
49	49	10 percent a year;
50	50	(2) is extended primarily for personal, family, or
51	51	household use;
52	52	(3) is made by a person engaged in the business of
53	53	making, arranging, or negotiating those types of loans; and
54	54	(4) is either:
55	55	(A) a multi-installment short-term loan secured
56	56	by a motor vehicle that includes a recurring monitoring fee; or
57	57	(B) a multi-installment unsecured short-term
58	58	loan that includes a recurring customary fee.
59	59	Sec. 354.004. ATTEMPT TO EVADE LAW. A person who is a party
60	60	to a loan subject to this chapter may not evade the application of
61	61	this chapter or a rule adopted under this chapter by use of any
62	62	device, subterfuge, or pretense.
63	63	SUBCHAPTER B. AUTHORIZED ACTIVITIES; LICENSE
64	64	Sec. 354.051. LICENSE REQUIRED. (a) A person must hold a
65	65	license issued under this chapter to:
66	66	(1) engage in the business of making, transacting, or
67	67	negotiating loans subject to this chapter; or
68	68	(2) contract for, charge, or receive, directly or
69	69	indirectly, in connection with a loan subject to this chapter, a
70	70	charge, including interest, compensation, consideration, or
71	71	another expense, authorized under this chapter that in the
72	72	aggregate exceeds the charges authorized under other law, including
73	73	Subtitle A of this title and Chapter 342.
74	74	(b) A person may not use any device, subterfuge, or pretense
75	75	to evade the application of this section.
76	76	(c) A person is not required to obtain a license under
77	77	Subsection (a) if the person is a bank, savings bank, or savings and
78	78	loan association organized under the laws of the United States or
79	79	under the laws of the institution's state of domicile.
80	80	Sec. 354.052. ISSUANCE OF MORE THAN ONE LICENSE FOR A
81	81	PERSON. (a) The commissioner may issue more than one license to a
82	82	person in compliance with this chapter for each license.
83	83	(b) A person who is required to hold a license under this
84	84	chapter must hold a separate license for each office at which loans
85	85	are made, negotiated, serviced, held, or collected under this
86	86	chapter.
87	87	(c) A license is not required under this chapter for a place
88	88	of business:
89	89	(1) devoted to accounting or other recordkeeping; and
90	90	(2) at which loans are not made, negotiated, serviced,
91	91	held, or collected under this chapter.
92	92	SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
93	93	Sec. 354.101. APPLICATION FOR LICENSE. (a) An application
94	94	for a license under this chapter must:
95	95	(1) be under oath;
96	96	(2) give the approximate location from which the
97	97	business is to be conducted;
98	98	(3) identify the business's principal parties in
99	99	interest; and
100	100	(4) contain other relevant information that the
101	101	commissioner requires.
102	102	(b) On the filing of one or more license applications, the
103	103	applicant shall pay to the commissioner an investigation fee of
104	104	$200. Except for good cause as determined by the finance
105	105	commission, a separate investigation fee is not required for
106	106	multiple license applications.
107	107	(c) On the filing of each license application, the applicant
108	108	shall pay to the commissioner for the license's year of issuance a
109	109	license fee in an amount determined as provided by Section 14.107.
110	110	Sec. 354.102. INVESTIGATION OF APPLICATION. On the filing
111	111	of an application and, if required, a bond, and on payment of the
112	112	required fees, the commissioner shall conduct an investigation to
113	113	determine whether to issue the license.
114	114	Sec. 354.103. APPROVAL OR DENIAL OF APPLICATION. (a) The
115	115	commissioner shall approve the application and issue to the
116	116	applicant a license to make loans under this chapter if the
117	117	commissioner finds that:
118	118	(1) the financial responsibility, experience,
119	119	character, and general fitness of the applicant are sufficient to:
120	120	(A) command the confidence of the public; and
121	121	(B) warrant the belief that the business will be
122	122	operated lawfully and fairly, within the purposes of this chapter;
123	123	and
124	124	(2) the applicant has net assets of at least $25,000
125	125	available for the operation of the business or is able to post a
126	126	surety bond that provides the same protection as the net assets
127	127	described in this subdivision.
128	128	(b) If the commissioner does not find the eligibility
129	129	requirements of Subsection (a) have been met, the commissioner
130	130	shall notify the applicant.
131	131	(c) If an applicant requests a hearing on the application
132	132	not later than the 30th day after the date of notification under
133	133	Subsection (b), the applicant is entitled to a hearing not later
134	134	than the 60th day after the date of the request.
135	135	(d) The commissioner shall approve or deny the application
136	136	not later than the 60th day after the date of the filing of a
137	137	completed application with payment of the required fees, or if a
138	138	hearing is held, after the date of the completion of the hearing on
139	139	the application. The commissioner and the applicant may agree to a
140	140	later date in writing.
141	141	Sec. 354.104. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
142	142	If the commissioner denies the application, the commissioner shall
143	143	retain the investigation fee and shall return to the applicant the
144	144	license fee submitted with the application.
145	145	SUBCHAPTER D. LICENSE
146	146	Sec. 354.151. NAME AND PLACE ON LICENSE. (a) A license
147	147	must state:
148	148	(1) the name of the license holder; and
149	149	(2) the address of the office from which the business
150	150	is to be conducted.
151	151	(b) A license holder may not conduct business under this
152	152	chapter under a name or at a place of business in this state other
153	153	than the name or office stated on the license.
154	154	Sec. 354.152. LICENSE DISPLAY. A license holder shall
155	155	display a copy of its license at the place of business stated on the
156	156	license.
157	157	Sec. 354.153. MINIMUM ASSETS OR BOND FOR LICENSE. (a)
158	158	Except as provided by Subsection (b), a license holder shall
159	159	maintain net assets used or readily available for use in conducting
160	160	the business of the offices for which licenses are held under this
161	161	chapter in an amount that is not less than the lesser of:
162	162	(1) $25,000 for each office; or
163	163	(2) $2,500,000 in the aggregate.
164	164	(b) A license holder is not required to maintain the net
165	165	assets described by Subsection (a) if, with the approval of the
166	166	commissioner, the license holder posts a surety bond that provides
167	167	the same protection as the net assets.
168	168	Sec. 354.154. ANNUAL LICENSE FEE. Not later than December
169	169	1, a license holder shall pay to the commissioner for each license
170	170	held an annual fee for the year beginning the next January 1, in an
171	171	amount determined as provided by Section 14.107.
172	172	Sec. 354.155. EXPIRATION OF LICENSE ON FAILURE TO PAY
173	173	ANNUAL FEE. If the annual fee for a license is not paid before the
174	174	16th day after the date on which a written notice of delinquency of
175	175	payment has been given to the license holder, the license expires on
176	176	the later of:
177	177	(1) the 16th day after the date the notice is given; or
178	178	(2) December 31 of the last year for which an annual
179	179	fee was paid.
180	180	Sec. 354.156. LICENSE SUSPENSION OR REVOCATION. After
181	181	notice and a hearing the commissioner may suspend or revoke a
182	182	license if the commissioner finds that:
183	183	(1) the license holder failed to pay the annual
184	184	license fee, an examination fee, an investigation fee, or another
185	185	charge imposed by the commissioner under this chapter;
186	186	(2) the license holder, knowingly or without the
187	187	exercise of due care, violated this chapter or a rule adopted or
188	188	order issued under this chapter; or
189	189	(3) a fact or condition exists that, if it had existed
190	190	or had been known to exist at the time of the original application
191	191	for the license, clearly would have justified the commissioner's
192	192	denial of the application.
193	193	Sec. 354.157. CORPORATE CHARTER FORFEITURE. (a) A license
194	194	holder that violates this chapter is subject to revocation of the
195	195	holder's license and, if the license holder is a corporation,
196	196	forfeiture of its charter.
197	197	(b) When the attorney general is notified of a violation of
198	198	this chapter and revocation of a license, the attorney general
199	199	shall file suit in a district court in Travis County, if the license
200	200	holder is a corporation, for forfeiture of the license holder's
201	201	charter.
202	202	Sec. 354.158. LICENSE SUSPENSION OR REVOCATION FILED WITH
203	203	PUBLIC RECORDS. The decision of the commissioner on the suspension
204	204	or revocation of a license and the evidence considered by the
205	205	commissioner in making the decision shall be filed in the public
206	206	records of the commissioner.
207	207	Sec. 354.159. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE
208	208	OF NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
209	209	suspended license or issue a new license on application to a person
210	210	whose license has been revoked if at the time of the reinstatement
211	211	or issuance no fact or condition exists that clearly would have
212	212	justified the commissioner's denial of an original application for
213	213	the license.
214	214	Sec. 354.160. SURRENDER OF LICENSE. (a) A license holder
215	215	may surrender a license issued under this chapter by delivering to
216	216	the commissioner:
217	217	(1) the license; and
218	218	(2) a written notice of the license's surrender.
219	219	(b) If an enforcement action has been initiated against a
220	220	license holder, the license may be surrendered only with the
221	221	written authorization of the general counsel of the finance
222	222	commission.
223	223	Sec. 354.161. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
224	224	SURRENDER. (a) The suspension, revocation, or surrender of a
225	225	license issued under this chapter does not affect the obligation of
226	226	a contract between the license holder and a borrower entered into
227	227	before the suspension, revocation, or surrender.
228	228	(b) Surrender of a license does not affect the license
229	229	holder's civil or criminal liability for an act committed before
230	230	surrender.
231	231	Sec. 354.162. MOVING AN OFFICE. A license holder shall give
232	232	written notice to the commissioner before the 30th day preceding
233	233	the date the license holder moves an office from the location
234	234	provided on the license. The commissioner shall amend a license
235	235	holder's license accordingly.
236	236	Sec. 354.163. TRANSFER OR ASSIGNMENT OF LICENSE. A license
237	237	may be transferred or assigned only with the approval of the
238	238	commissioner. The commissioner shall approve or deny a transfer or
239	239	assignment of a license not later than the 60th day after the date
240	240	of the filing of a completed application for the transfer or
241	241	assignment with payment of the required fees, or if a hearing is
242	242	held, after the date of the completion of the hearing on the
243	243	application. The commissioner and the applicant may agree to a
244	244	later date in writing.
245	245	SUBCHAPTER E. INTEREST CHARGES ON SECURED LOANS
246	246	Sec. 354.201. MAXIMUM INTEREST CHARGE. (a) A loan contract
247	247	for a regular transaction that is secured by a lien on a motor
248	248	vehicle may provide for an interest charge on the cash advance that
249	249	does not exceed 12 percent a year if the term of the loan does not
250	250	exceed one year.
251	251	(b) A loan contract under this subchapter may provide for
252	252	automatic debits to the borrower's bank account in compliance with
253	253	state and federal law, including the Electronic Fund Transfer Act
254	254	(15 U.S.C. Section 1693 et seq.) and 12 C.F.R. Part 1005 (Regulation
255	255	E).
256	256	Sec. 354.202. MONITORING FEE. (a) A loan contract under
257	257	this subchapter may provide for a monitoring fee to defray the
258	258	ordinary costs of operating, administering, and terminating a loan,
259	259	including costs associated with:
260	260	(1) maintaining loan information;
261	261	(2) offering electronic and telephone access to loan
262	262	records;
263	263	(3) processing payments;
264	264	(4) responding to borrower inquiries;
265	265	(5) providing periodic billing statements;
266	266	(6) inspecting and verifying the collateral and
267	267	establishing, perfecting, and releasing the security interest; and
268	268	(7) verifying of insurance, registration, and annual
269	269	vehicle inspection requirements of the collateral.
270	270	(b) The monitoring fee may not be considered interest for
271	271	any purpose of law, must be agreed on by the parties, and may not
272	272	exceed a daily rate of seven-tenths of one percent of the original
273	273	principal balance of the loan.
274	274	(c) The total number and total amount of monitoring fees
275	275	must be disclosed in the loan contract.
276	276	(d) The monitoring fee is not interest and the authorized
277	277	lender may not charge interest on the monitoring fee.
278	278	(e) An authorized lender may not charge a monitoring fee if
279	279	the motor vehicle is repossessed or the balance of the account is
280	280	accelerated, unless the loan is reinstated.
281	281	Sec. 354.203. REFUND. (a) If a loan under this subchapter
282	282	is prepaid in full, including payment in cash or by a new loan or
283	283	renewal of the loan, the authorized lender earns interest for the
284	284	period beginning on the date of the loan and ending on the date of
285	285	the prepayment or demand.
286	286	(b) If prepayment in full or demand for payment in full
287	287	occurs during an installment period, the authorized lender may
288	288	retain, in addition to interest that accrued during any elapsed
289	289	installment periods, an amount computed by:
290	290	(1) multiplying the simple annual interest rate under
291	291	the contract by the unpaid principal balance of the loan determined
292	292	according to the schedule of payments to be outstanding on the
293	293	preceding installment due date;
294	294	(2) dividing 365 into the product obtained under
295	295	Subdivision (1); and
296	296	(3) multiplying the number of days in the period
297	297	beginning on the day after the installment due date and ending on
298	298	the date of the prepayment or demand, as appropriate, by the result
299	299	obtained under Subdivision (2).
300	300	(c) An authorized lender may not earn interest on any
301	301	addition to principal added to the loan after the date of the loan
302	302	contract, including the monitoring fee.
303	303	(d) An authorized lender is prohibited from using any other
304	304	refunding method for a loan subject to this subchapter.
305	305	SUBCHAPTER F. INTEREST CHARGES ON UNSECURED LOANS
306	306	Sec. 354.251. MAXIMUM INTEREST CHARGE. (a) A loan contract
307	307	for an unsecured regular transaction may provide for an interest
308	308	charge on the cash advance that does not exceed 12 percent a year if
309	309	the term of the loan does not exceed six months.
310	310	(b) A loan contract under this subchapter may provide for
311	311	automatic debits to the borrower's bank account in compliance with
312	312	state and federal law, including the Electronic Fund Transfer Act
313	313	(15 U.S.C. Section 1693 et seq.) and 12 C.F.R. Part 1005 (Regulation
314	314	E).
315	315	Sec. 354.252. CUSTOMARY FEE. (a) A loan contract under
316	316	this subchapter may provide for a customary fee to defray the
317	317	ordinary costs of operating, administering, and terminating a loan,
318	318	including costs associated with:
319	319	(1) maintaining loan information;
320	320	(2) offering electronic and telephone access to loan
321	321	records;
322	322	(3) processing payments;
323	323	(4) responding to borrower inquiries;
324	324	(5) providing periodic billing statements; and
325	325	(6) verifying of continued employment.
326	326	(b) The customary fee may not be considered interest for any
327	327	purpose of law, must be agreed on by the parties, and may not exceed
328	328	a daily rate of 1.4 percent of the original principal balance of the
329	329	loan.
330	330	(c) The total number and total amount of customary fees must
331	331	be disclosed in the loan contract.
332	332	(d) The customary fee is not interest and the authorized
333	333	lender may not charge interest on the customary fee.
334	334	(e) An authorized lender may not charge a customary fee if
335	335	the balance of the account is accelerated, unless the loan is
336	336	reinstated.
337	337	Sec. 354.253. REFUND. (a) If a loan under this subchapter
338	338	is prepaid in full, including payment in cash or by a new loan or
339	339	renewal of the loan, the authorized lender earns interest for the
340	340	period beginning on the date of the loan and ending on the date of
341	341	the prepayment or demand.
342	342	(b) If prepayment in full or demand for payment in full
343	343	occurs during an installment period, the authorized lender may
344	344	retain, in addition to interest that accrued during any elapsed
345	345	installment periods, an amount computed by:
346	346	(1) multiplying the simple annual interest rate under
347	347	the contract by the unpaid principal balance of the loan determined
348	348	according to the schedule of payments to be outstanding on the
349	349	preceding installment due date;
350	350	(2) dividing 365 into the product obtained under
351	351	Subdivision (1); and
352	352	(3) multiplying the number of days in the period
353	353	beginning on the day after the installment due date and ending on
354	354	the date of the prepayment or demand, as appropriate, by the result
355	355	obtained under Subdivision (2).
356	356	(c) An authorized lender may not earn interest on any
357	357	addition to principal added to the loan after the date of the loan
358	358	contract, including the customary fee.
359	359	(d) An authorized lender is prohibited from using any other
360	360	refunding method for a loan subject to this subchapter.
361	361	SUBCHAPTER G. INSURANCE
362	362	Sec. 354.301. REQUIRED PROPERTY INSURANCE. (a) On a loan
363	363	secured by a motor vehicle that is subject to this chapter, an
364	364	authorized lender may require a borrower to insure the motor
365	365	vehicle offered as security for the loan.
366	366	(b) The insurance coverage and the premiums or charges for
367	367	the coverage must bear a reasonable relationship to:
368	368	(1) the amount, term, and conditions of the loan;
369	369	(2) the value of the collateral; and
370	370	(3) the existing hazards or risk of loss, damage, or
371	371	destruction.
372	372	(c) The insurance may not:
373	373	(1) cover unusual or exceptional risks; or
374	374	(2) provide coverage not ordinarily included in
375	375	policies issued to the public.
376	376	(d) An authorized lender may not require the purchase of
377	377	duplicate insurance if the authorized lender has knowledge that the
378	378	borrower:
379	379	(1) has valid and collectible insurance covering the
380	380	motor vehicle; and
381	381	(2) has provided a loss payable endorsement sufficient
382	382	to protect the authorized lender.
383	383	Sec. 354.302. AGENT OR BROKER PROHIBITED. An authorized
384	384	lender may not by any direct or indirect method require the purchase
385	385	of insurance from an agent or broker designated by the authorized
386	386	lender. An authorized lender or an agent of an authorized lender
387	387	may not sell or contract to sell to a borrower any insurance in
388	388	connection with a loan. An authorized lender may not own or
389	389	partially own an insurance company or an insurance agency that
390	390	provides insurance products in connection with a loan subject to
391	391	this chapter.
392	392	Sec. 354.303. DECLINATION OF EQUAL INSURANCE COVERAGE
393	393	PROHIBITED. An authorized lender may not decline at any time
394	394	existing insurance coverage providing substantially equal benefits
395	395	that comply with this subchapter.
396	396	Sec. 354.304. NONFILING INSURANCE. An authorized lender
397	397	may not include in a loan contract a charge for a nonfiling
398	398	insurance premium.
399	399	SUBCHAPTER H. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
400	400	Sec. 354.401. DELIVERY OF INFORMATION TO BORROWER. (a)
401	401	When a loan is made under this chapter, the authorized lender shall
402	402	deliver to the borrower, or to one borrower if there is more than
403	403	one, a copy of each document signed by the borrower, including the
404	404	note or loan contract, and a written statement in English that
405	405	contains the names and addresses of the borrower and the authorized
406	406	lender.
407	407	(b) If the note or loan contract shows the information
408	408	required by Subsection (a), the written statement is not required.
409	409	Sec. 354.402. RECEIPT FOR CASH PAYMENT. An authorized
410	410	lender shall give a receipt to a person making a cash payment on a
411	411	loan.
412	412	Sec. 354.403. ACCEPTANCE OF PREPAYMENT. At any time during
413	413	regular business hours, the authorized lender shall accept partial
414	414	prepayment or prepayment of a loan in full. An authorized lender
415	415	shall accept any amount from a borrower in partial prepayment of an
416	416	installment or loan.
417	417	Sec. 354.404. CANCELLATION OF FUTURE PAYMENTS. A borrower
418	418	is entitled to cancel all payments under a loan contract before the
419	419	fourth business day after the date of the loan contract. In order
420	420	to cancel all payments, the borrower must return the amount of the
421	421	cash advance to the authorized lender or the authorized lender's
422	422	agent with a statement signed by the borrower.
423	423	Sec. 354.405. ADMINISTRATIVE CHARGE. An authorized lender
424	424	may charge a borrower an administrative charge on a loan under this
425	425	chapter in an amount to be negotiated by the parties but not to
426	426	exceed the lesser of 10 percent of the original principal or $100.
427	427	An administrative charge is considered earned when a loan is made or
428	428	refinanced and is not subject to refund but is not required to be
429	429	repaid if the loan is rescinded. An administrative charge is not
430	430	interest, and an authorized lender may not charge interest on an
431	431	administrative charge.
432	432	Sec. 354.406. POSTING OF INTEREST RATES AND FEES. An
433	433	authorized lender shall conspicuously post at each office at which
434	434	loans are made, negotiated, serviced, held, or collected under this
435	435	chapter the interest rates charged for those loans and the amount of
436	436	any fees related to the loans, including any monitoring or
437	437	customary fees.
438	438	Sec. 354.407. FINANCIAL LITERACY FUND. (a) As part of the
439	439	licensing fees and procedures described under this chapter, each
440	440	license holder shall pay to the commissioner an annual assessment
441	441	to improve consumer credit, financial education, and
442	442	asset-building opportunities in this state. The annual assessment
443	443	may not exceed $200 for each license as specified by the finance
444	444	commission.
445	445	(b) The commissioner shall remit to the comptroller amounts
446	446	received under Subsection (a) for deposit in an interest-bearing
447	447	deposit account in the Texas Treasury Safekeeping Trust Company.
448	448	Money in the account may be spent by the finance commission only for
449	449	the purposes provided by this section. Amounts in the account may
450	450	be invested and reinvested in the same manner as funds of the
451	451	Employees Retirement System of Texas, and the interest from those
452	452	investments and reinvestments shall be deposited to the credit of
453	453	the account.
454	454	(c) The Financial Literacy Fund shall be administered by the
455	455	finance commission to support statewide financial education and
456	456	consumer credit-building activities and programs, including:
457	457	(1) production and dissemination of approved
458	458	financial education materials at licensed locations;
459	459	(2) advertising, marketing, and public awareness
460	460	campaigns to improve the credit profiles and credit scores of
461	461	consumers in this state;
462	462	(3) school- and youth-based financial literacy and
463	463	capability;
464	464	(4) credit building and credit repair;
465	465	(5) financial coaching and consumer counseling;
466	466	(6) bank account enrollment and incentives for
467	467	personal savings; and
468	468	(7) other consumer financial education and
469	469	asset-building initiatives as considered appropriate by the
470	470	finance commission.
471	471	(d) In implementing this section, the finance commission
472	472	may solicit gifts, grants, and donations.
473	473	(e) The finance commission may partner with other state
474	474	agencies and entities to implement this section.
475	475	(f) The finance commission shall adopt rules to administer
476	476	this section.
477	477	Sec. 354.408. DATABASE. The commissioner shall create a
478	478	database for each license holder to use to submit information to the
479	479	commissioner. Each license holder shall provide the commissioner
480	480	with the interest rates and fees that the license holder charges for
481	481	each type of loan under this chapter. Each license holder shall pay
482	482	to the commissioner a fee for the creation and operation of the
483	483	database. License holders shall update information submitted to
484	484	the database at least once every six months. The commissioner shall
485	485	post the database on the commissioner's website for the benefit of
486	486	the public.
487	487	SUBCHAPTER I. LIMITATIONS ON AUTHORIZED LENDER
488	488	Sec. 354.451. OBLIGATION UNDER MORE THAN ONE CONTRACT. An
489	489	authorized lender may not induce or permit a person or a husband and
490	490	wife to be directly or indirectly obligated under more than one loan
491	491	contract at any time for the purpose or with the effect of obtaining
492	492	an amount of interest or fees greater than the amount of interest or
493	493	fees otherwise authorized under this chapter.
494	494	Sec. 354.452. AMOUNT AUTHORIZED. (a) An authorized lender
495	495	may not knowingly directly or indirectly charge, contract for, or
496	496	receive an amount that is not authorized under this chapter in
497	497	connection with a loan to which this chapter applies, including any
498	498	fee, compensation, bonus, commission, brokerage, discount, and
499	499	expense, and any other charge of any nature, whether or not listed
500	500	by this subsection.
501	501	(b) On a loan subject to this chapter, an authorized lender
502	502	may assess and collect from the borrower an amount incurred by the
503	503	authorized lender for:
504	504	(1) court costs and attorney's fees assessed by a court
505	505	only if the borrower is found to have committed forgery, fraud, or
506	506	theft in connection with the loan;
507	507	(2) a fee authorized by law for filing, recording, or
508	508	releasing in a public office a security for a loan; or
509	509	(3) a fee for recording a lien on or transferring a
510	510	certificate of title to a motor vehicle offered as security for a
511	511	loan made under this chapter.
512	512	(c) On a loan subject to this chapter an authorized lender
513	513	may assess and collect a fee that does not exceed the amount
514	514	prescribed by Section 3.506, Business & Commerce Code, for the
515	515	return by a depository institution of a dishonored check,
516	516	negotiable order of withdrawal, or share draft offered in full or
517	517	partial payment of a loan.
518	518	Sec. 354.453. CONFESSION OF JUDGMENT; POWER OF ATTORNEY.
519	519	An authorized lender may not take a confession of judgment or a
520	520	power of attorney authorizing the authorized lender or a third
521	521	person to confess judgment or to appear for a borrower in a judicial
522	522	proceeding.
523	523	Sec. 354.454. DISCLOSURE OF AMOUNT FINANCED AND SCHEDULE OF
524	524	PAYMENTS. An authorized lender may not take, or require a borrower
525	525	to sign, a promise to pay or loan obligation that does not disclose
526	526	the amount financed and the schedule of payments.
527	527	Sec. 354.455. INSTRUMENT WITH BLANK PROHIBITED. An
528	528	authorized lender may not take, or require a borrower to sign, an
529	529	instrument in which a blank is left to be filled in after the loan is
530	530	made.
531	531	Sec. 354.456. WAIVER OF BORROWER'S RIGHT PROHIBITED. A
532	532	borrower may not waive any right accruing to the borrower under this
533	533	chapter.
534	534	Sec. 354.457. MOTOR VEHICLE LOANS NONRECOURSE. A loan
535	535	secured by a motor vehicle made under this chapter is a nonrecourse
536	536	loan, unless the borrower is proven in court to have committed
537	537	fraud, forgery, or theft in connection with the loan.
538	538	Sec. 354.458. COMPLIANCE WITH UNIFORM COMMERCIAL CODE. An
539	539	authorized lender must comply with Chapter 9, Business & Commerce
540	540	Code, in the repossession and redemption of a motor vehicle. If the
541	541	borrower fails to redeem a motor vehicle legally repossessed by an
542	542	authorized lender, the authorized lender may accept the motor
543	543	vehicle in full satisfaction of the debt or the authorized lender
544	544	may dispose of the motor vehicle in compliance with Chapter 9.
545	545	Sec. 354.459. PROHIBITION AGAINST PREPAYMENT PENALTY. A
546	546	borrower may not be required to pay a prepayment penalty in
547	547	connection with a loan subject to this chapter.
548	548	Sec. 354.460. RESTRICTIONS ON OFF-SITE ADVERTISING. (a) A
549	549	license holder may not advertise a loan subject to this chapter on
550	550	the premises of a nursing facility, assisted living facility, group
551	551	home, intermediate care facility for persons with intellectual or
552	552	developmental disabilities, or other similar facility subject to
553	553	regulation by the Department of Aging and Disability Services.
554	554	(b) The finance commission may adopt rules to implement this
555	555	section.
556	556	Sec. 354.461. ANCILLARY PRODUCTS. A borrower may not
557	557	purchase any ancillary product or service in conjunction with a
558	558	loan not specifically authorized by this chapter. An authorized
559	559	lender may not finance the purchase of any ancillary product or
560	560	service in conjunction with a loan.
561	561	Sec. 354.462. PROHIBITION AGAINST CRIMINAL PROSECUTION. A
562	562	person may not threaten or pursue criminal charges against a person
563	563	who seeks a benefit from an authorized lender for a loan subject to
564	564	this chapter in the absence of forgery, fraud, theft, or other
565	565	criminal conduct.
566	566	Sec. 354.463. FAIR DEBT COLLECTION. An authorized lender
567	567	must comply with Chapter 392 and the Fair Debt Collection Practices
568	568	Act (15 U.S.C. Section 1692 et seq.).
569	569	Sec. 354.464. POSTING OF INTEREST AND FEES. An authorized
570	570	lender shall post, in a conspicuous location accessible to
571	571	consumers, in an area of each office where loans are made and on any
572	572	Internet website, including a social media site, maintained by the
573	573	authorized lender:
574	574	(1) a schedule of all interest rates and fees to be
575	575	charged in connection with a loan made under this chapter; and
576	576	(2) a notice of the name and address of the Office of
577	577	Consumer Credit Commissioner and the telephone number of the
578	578	office's consumer helpline.
579	579	Sec. 354.465. DISCLOSURE OF FINANCIAL TERMS IN LOAN. (a)
580	580	An authorized lender shall provide a separate written disclosure to
581	581	the borrower or borrowers for each loan plainly and conspicuously
582	582	stating the following:
583	583	(1) the amount of the loan;
584	584	(2) the interest rate;
585	585	(3) a description of any fee charged;
586	586	(4) the amount of the payment;
587	587	(5) the number of payments; and
588	588	(6) the total of all of the payments.
589	589	(b) An authorized lender may require the borrower to sign an
590	590	acknowledgement for the receipt of the financial information.
591	591	(c) The finance commission by rule shall adopt and the
592	592	commissioner shall provide a standard disclosure form that may be
593	593	used by authorized lenders.
594	594	Sec. 354.466. ARBITRATION. (a) An authorized lender may
595	595	not include in a loan agreement a mandatory arbitration clause that
596	596	is oppressive, unfair, unconscionable, or substantially in
597	597	derogation of the rights of consumers. Any agreement to arbitrate
598	598	disputes must be conspicuous, in type that is boldfaced,
599	599	capitalized, underlined, or otherwise distinguished from
600	600	surrounding written material, if any, provided to the borrower.
601	601	The time and location of any potential hearing must be reasonable
602	602	for the borrower to attend. The method of selecting the arbitrator
603	603	or arbitrators and the rules to be used by the arbitrators must be
604	604	identified in the agreement.
605	605	(b) The cost of filing, selecting the arbitrator, and the
606	606	first full day of the arbitration must be paid by the authorized
607	607	lender. Additional arbitration expenses after the first day must
608	608	be split between the parties, except that the borrower's total
609	609	liability for the arbitrator's expense may not exceed $200.
610	610	Sec. 354.467. CREDIT COUNSELORS. An authorized lender
611	611	shall provide each potential borrower a list of credit counselors
612	612	before the potential borrower submits a credit application. The
613	613	list must include counselors who are members of, accredited by, or
614	614	certified by the National Foundation for Consumer Credit, the
615	615	Council on Accreditation, or the United States Department of
616	616	Housing and Urban Development or another organization that the
617	617	authorized lender believes will provide quality service. This
618	618	information must be conspicuous and must be provided separately
619	619	from any other information.
620	620	SUBCHAPTER J. ADMINISTRATION OF CHAPTER
621	621	Sec. 354.501. ADOPTION OF RULES. (a) The finance
622	622	commission may adopt rules to enforce this chapter.
623	623	(b) The commissioner shall recommend proposed rules to the
624	624	finance commission.
625	625	Sec. 354.502. EXAMINATION; ACCESS TO RECORDS. (a) The
626	626	commissioner or the commissioner's representative shall, at the
627	627	times the commissioner considers necessary:
628	628	(1) examine each place of business of each license
629	629	holder; and
630	630	(2) investigate the license holder's transactions,
631	631	including loans, and records, including books, accounts, papers,
632	632	and correspondence, to the extent the transactions and records
633	633	pertain to the business regulated under this chapter.
634	634	(b) The license holder shall:
635	635	(1) give the commissioner or the commissioner's
636	636	representative free access to the license holder's office, place of
637	637	business, files, safes, and vaults; and
638	638	(2) allow the commissioner or the commissioner's
639	639	representative to make a copy of an item that may be investigated
640	640	under Subsection (a)(2).
641	641	(c) During an examination the commissioner or the
642	642	commissioner's representative may administer oaths and examine any
643	643	person under oath on any subject pertinent to a matter that the
644	644	commissioner is authorized or required to consider, investigate, or
645	645	secure information about under this chapter.
646	646	(d) Information obtained under this section is
647	647	confidential.
648	648	(e) A license holder's violation of Subsection (b) is a
649	649	ground for the suspension or revocation of the license holder's
650	650	license.
651	651	Sec. 354.503. GENERAL INVESTIGATION. (a) To discover a
652	652	violation of this chapter or to obtain information required under
653	653	this chapter, the commissioner or the commissioner's
654	654	representative may investigate the records, including books,
655	655	accounts, papers, and correspondence, of a person, including an
656	656	authorized lender, who the commissioner has reasonable cause to
657	657	believe is violating this chapter, regardless of whether the person
658	658	claims to not be subject to this chapter. The commissioner or the
659	659	commissioner's representative may administer oaths and take sworn
660	660	statements on any subject pertinent to a matter that the
661	661	commissioner is authorized or required to consider, investigate, or
662	662	secure information about under this chapter.
663	663	(b) For the purposes of this section, a person who
664	664	advertises, solicits, or otherwise represents that the person is
665	665	willing to make a loan secured by a motor vehicle with multiple
666	666	installments and a monitoring fee is presumed to be engaged in
667	667	licensed activity under this chapter.
668	668	(c) For the purposes of this section, a person who
669	669	advertises, solicits, or otherwise represents that the person is
670	670	willing to make an unsecured loan with multiple installments and
671	671	interest contracted for and calculated in a manner substantially
672	672	similar to Subchapter F is presumed to be engaged in licensed
673	673	activity under this chapter.
674	674	Sec. 354.504. CERTIFICATE; CERTIFIED DOCUMENT. On
675	675	application by any person and on payment of any associated cost, the
676	676	commissioner shall furnish under the commissioner's seal and signed
677	677	by the commissioner or an assistant of the commissioner:
678	678	(1) a certificate of good standing; or
679	679	(2) a certified copy of a license, rule, or order.
680	680	Sec. 354.505. TRANSCRIPT OF HEARING: PUBLIC. The
681	681	transcript of a hearing held by the commissioner under this chapter
682	682	is a public record.
683	683	Sec. 354.506. APPOINTMENT OF AGENT. (a) A license holder
684	684	shall maintain on file with the commissioner a written appointment
685	685	of a resident of this state as the license holder's agent for
686	686	service of all judicial or other process or legal notice, unless the
687	687	license holder has appointed an agent under another statute of this
688	688	state.
689	689	(b) If a license holder does not comply with this section,
690	690	service of all judicial or other process or legal notice may be made
691	691	on the commissioner.
692	692	Sec. 354.507. PAYMENT OF EXAMINATION COSTS AND
693	693	ADMINISTRATION EXPENSES. A license holder shall pay to the
694	694	commissioner an amount assessed by the commissioner to cover the
695	695	direct and indirect cost of an examination of the license holder
696	696	under Section 354.502 and a proportionate share of general
697	697	administrative expenses.
698	698	Sec. 354.508. RECORD RETENTION. (a) A license holder shall
699	699	maintain a record of each loan made under this chapter as is
700	700	necessary to enable the commissioner to determine whether the
701	701	license holder is complying with this chapter.
702	702	(b) A license holder shall maintain and make available in
703	703	this state, or, if the license holder makes, transacts, or
704	704	negotiates loans principally by mail, maintain and make available
705	705	at the license holder's principal place of business, a record of
706	706	each loan made under this chapter until the later of:
707	707	(1) the fourth anniversary of the date of the loan; or
708	708	(2) the second anniversary of the date on which the
709	709	final entry is made in the record.
710	710	(c) A record described by Subsection (a) must be prepared in
711	711	accordance with accepted accounting practices.
712	712	(d) The commissioner shall accept a license holder's system
713	713	of records if the system discloses the information reasonably
714	714	required under Subsection (a).
715	715	(e) A license holder shall keep each obligation signed by a
716	716	borrower at an office in this state designated by the license holder
717	717	unless the obligation is transferred under an agreement that gives
718	718	the commissioner access to the obligation.
719	719	Sec. 354.509. ANNUAL REPORT. (a) Each year, not later than
720	720	May 1 or a later date set by the commissioner, a license holder
721	721	shall file with the commissioner a report that contains relevant
722	722	information required by the commissioner concerning the license
723	723	holder's business and operations during the preceding calendar year
724	724	for each office of the license holder in this state where business
725	725	is conducted under this chapter.
726	726	(b) A report under this section must be:
727	727	(1) under oath; and
728	728	(2) in the form prescribed by the commissioner.
729	729	(c) A report and information provided in a report under this
730	730	section are confidential.
731	731	(d) Annually the commissioner shall prepare and publish a
732	732	consolidated analysis and recapitulation of reports filed under
733	733	this section.
734	734	(e) The following information must be included in a report
735	735	under this section and stated separately for each quarter:
736	736	(1) the number of borrowers with whom the license
737	737	holder entered into a loan subject to this chapter;
738	738	(2) the number of loans made by the license holder;
739	739	(3) the number of loan refinancing transactions made
740	740	by the license holder;
741	741	(4) the number of borrowers refinancing loans made by
742	742	the license holder;
743	743	(5) the number of borrowers refinancing more than one
744	744	loan made by the license holder;
745	745	(6) the average amount of loans made by the license
746	746	holder;
747	747	(7) the total amount of fees charged by the license
748	748	holder;
749	749	(8) the number of vehicles surrendered or repossessed
750	750	under the terms of a loan made by the license holder;
751	751	(9) the mean, median, and mode of the number of loans
752	752	obtained by each borrower as a result of entering into a loan made
753	753	by the license holder; and
754	754	(10) any related information the commissioner
755	755	determines necessary.
756	756	(f) The commissioner will verify information provided in
757	757	the annual report during routine examinations and investigations.
758	758	Sec. 354.510. CONDUCTING ASSOCIATED BUSINESS. A license
759	759	holder may conduct business under this chapter in an office, office
760	760	suite, room, or place of business in which any other business is
761	761	conducted or in combination with any other business unless the
762	762	commissioner:
763	763	(1) finds after a hearing that the license holder's
764	764	conducting of the other business in that office, office suite,
765	765	room, or place of business has concealed or perpetrated an evasion
766	766	of this chapter; and
767	767	(2) orders the license holder in writing to desist
768	768	from that conduct in that office, office suite, room, or place of
769	769	business.
770	770	SECTION 2. This Act takes effect September 1, 2015.