SRC-JBJ, MWN H.B. 2139 77(R)BILL ANALYSIS


Senate Research CenterH.B. 2139
By: Marchant (Carona)
Business & Commerce
5/10/2001
Committee Report (Amended)


DIGEST AND PURPOSE 

Under current Texas law, a retail buyer and retail seller may agree in a
motor vehicle retail installment contract to include a separate charge for
a debt cancellation agreement which is insurance coverage that reimburses
the retail buyer with the amount of the difference between the proceeds of
the buyer's basic collision insurance policy on the motor vehicle and the
remaining amount owed on the vehicle, if the vehicle has been rendered a
total loss.  H.B. 2139 provides that a debt cancellation agreement or
waiver included in a retail installment contract is not insurance or an
insurance product or service and that a separate charge for the debt
cancellation agreement or waiver may be included in a retail installment
contract.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 348.208, Finance Code, by redesignating
Subsection (c) as added by Chapter 1559, Acts of the 76th Legislature,
Regular Session, 1999, as Subsection (d) and by adding Subsection (e), as
follows: 
 
(e)  Authorizes a retail installment contract to include as a separate
charge an amount for a debt cancellation agreement or waiver by which, if
the motor vehicle is rendered a total loss, the holder agrees to cancel
indebtedness on the contract in an amount computed by subtracting the
proceeds of the retail buyer's basic collision insurance policy on the
motor vehicle from the amount remaining unpaid under the contract.
Authorizes a holder, in addition to other liability incurred under the debt
cancellation agreement or waiver, to agree to waive the deductible amount,
if any, the retail buyer is required to pay under the policy.  Provides
that a debt cancellation agreement or waiver included in a retail
installment contract as provided by this subsection is not insurance or an
insurance product or service and is not subject to regulation by the
commissioner of insurance or the Texas Department of Insurance. 

(f)  Provides that any debt canceled pursuant to an agreement authorized by
Finance Code Section 348.208(e) by a retail seller that is a dealer
licensed under Chapter 503, Transportation Code, or any affiliate of such
seller, who extends credit under a retail installment contract to a
purchaser of a used motor vehicle sold by the motor vehicle dealer, or an
affiliate of such dealer with a direct to indirect interest in the retail
installment contract, is entitled to credit or reimbursement for the motor
vehicle sales tax paid on the portion of the debt that has been determined
to be worthless and actually charged off for federal income tax purposes;
or the remaining unpaid balance of the sales price of the motor vehicle
after the motor vehicle is repossessed under a retail installment contract
or debt cancellation agreement. 

(g)  Provides that for purposes of Subsection (f), affiliate means any
entity or entities that would be classified as a member of a group under 26
U.S.C. Section 1504 or 1563. 
 
SECTION 2. Effective date: upon passage or September 1, 2001.


SUMMARY OF COMMITTEE CHANGES

Amends as Filed H.B. 2139 by adding newly proposed Subsections (f) and (g).