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A BILL TO BE ENTITLED
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AN ACT
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relating to certain extensions of consumer credit facilitated by |
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credit access businesses; providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter C, Chapter 393, Section 201, Finance |
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Code, is amended by adding Subsections (d) and (e) to read as |
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follows: |
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(d) A deferred presentment transaction, as defined by |
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Section 393.601, for the performance of services described by |
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Section 393.602(a)(1) must comply with the following terms. |
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(1) The proceeds given to a consumer in connection |
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with a deferred presentment transaction extended to the consumer |
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may not exceed: |
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(A) 35 percent of the consumer's gross monthly |
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income for a single payment transaction; and |
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(B) 25 percent of the consumer’s gross monthly |
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income for a scheduled payment on a multiple payment transaction. |
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The term of a single payment transaction may not exceed 30 days. In |
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determining a consumer’s gross monthly income, a credit access |
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business may utilize payroll documents, checks, bank statements and |
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reports from nationally or regionally recognized credit and data |
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reporting companies, and may rely on the representations of a |
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consumer to form a reasonable belief about the consumer’s gross |
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monthly income. |
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(2) A consumer who is unable to fully repay the fourth |
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refinance of an initial single payment deferred presentment |
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transaction may elect to repay the loan by means of an extended |
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payment plan provided the consumer is not otherwise in default of |
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such loan. For the purposes of this subsection, a “refinance” means |
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any transaction a credit access business assists a consumer in |
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obtaining that extends the repayment period of a then-outstanding |
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deferred presentment transaction beyond its original term. A |
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refinance shall include both a traditional refinance that is |
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evidenced by new written loan documents with new disclosures that |
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satisfy and replace the prior loan documents, as well as a renewal |
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of a single-payment transaction in which the term of the |
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transaction is extended for an additional identical period. A |
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refinance shall not include a workout agreement. "Refinance" |
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includes the terms "renewal" and "rollover." |
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(A) At every licensed location, a credit access |
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business must notify a consumer of the consumer’s right to an |
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extended payment plan by posting the following notice in a |
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conspicuous location visible to the general public: "If you are |
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unable to repay your transaction when due, you may be eligible for |
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an extended payment plan. You are eligible for an extended payment |
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plan if you have refinanced your initial transaction four times. |
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You are eligible for an extended payment plan at least once in any |
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12 month period. If you meet the requirements for an extended |
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payment plan, we will offer you a plan before the due date of your |
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existing transaction. To accept our offer of an extended payment |
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plan, you must sign a written agreement that describes the terms of |
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the plan before the due date of your exiting transaction." The |
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notice shall also be included, in at least 12-point bold type, on |
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the first page of a contract with a credit access business. |
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(B) An extended payment shall comply with the |
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following: |
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(i) A credit access business must offer to |
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assist an eligible consumer, as described in (d)(2) of this |
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subsection, in obtaining an extended payment plan at least once |
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every 12 months. The 12 month period is measured from the date of |
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such extended payment plan. |
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(ii) A credit access business must offer a |
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consumer an extended payment plan before the due date of the fourth |
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refinance of the outstanding transaction. |
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(iii) A credit access business may not |
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charge the consumer additional fees during an extended payment |
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plan. |
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(iv) A consumer must sign a written |
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agreement that describes the terms of the extended payment plan. |
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(v) An extended payment plan must allow a |
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consumer to repay all outstanding amounts owing at the time such |
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extended payment plan is offered in at least four substantially |
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equal payments. |
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(vi) A consumer may prepay an extended |
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payment plan in full at any time without penalty. |
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(C) If a consumer continues to make timely |
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payments pursuant to an extended payment plan, a credit access |
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business is prohibited from: |
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(i) engaging in collection activities with |
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respect to such deferred presentment transaction; and |
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(ii) obtaining, or assisting the consumer |
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in obtaining, additional deferred presentment transactions. |
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(3) A multiple payment deferred presentment |
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transaction shall be payable on a fully-amortizing, declining |
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principal balance basis with substantially equal payments as agreed |
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upon by the parties. Fees may be pre-computed or charged on a daily |
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accrual method. If fees are pre-computed, a credit access business |
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shall refund unearned fees calculated on an actuarial basis upon |
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the prepayment in full of a deferred presentment transaction. A |
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multiple payment deferred presentment transaction may not exceed |
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180 days. |
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(e) A motor vehicle title loan, as defined by Section |
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393.601, for the performance of services described by Section |
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393.602(a)(2), must comply with the following terms. |
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(1) The proceeds given to a consumer in connection |
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with a a motor vehicle title loan given to the consumer may not |
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exceed the lesser of: |
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(A) 7 percent of the consumer’s gross monthly |
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income for a single payment loan; |
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(B) 30 percent of the consumer’s gross monthly |
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income for a scheduled payment on a multiple payment loan; or |
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(C) 70 percent of the retail value of the motor |
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vehicle as determined pursuant to this subsection. |
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The term of a single payment loan may not exceed 30 days and the term |
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of a multiple-payment loan shall not exceed 365 days. The retail |
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value of a motor vehicle shall be based upon nationally or |
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regionally recognized motor-vehicle appraisal guides if the |
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vehicle is listed in such guides. If a value for the motor vehicle |
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is not listed in such guides, then the credit access business and |
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the consumer shall agree in good faith on an appropriate retail |
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value for the vehicle using generally available information |
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relating to such motor vehicle. In determining a consumer's gross |
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monthly income, a credit access business may utilize payroll |
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documents, checks, bank statements and reports from nationally or |
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regionally recognized credit and data reporting companies, and may |
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rely on the representations of a consumer to form a reasonable |
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belief about the consumer’s gross monthly income. |
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(2) A consumer who is unable to fully repay the eighth |
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refinance of an initial single payment motor vehicle title loan may |
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elect to repay the loan by means of an extended payment plan |
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|
provided the consumer is not otherwise in default of such loan. For |
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the purposes of this subsection, a "refinance" means any |
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|
transaction a credit access business assists a consumer in |
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|
obtaining that extends the repayment period of a then-outstanding |
|
|
motor vehicle title loan beyond its original term. A refinance |
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|
shall include both a traditional refinance that is evidenced by new |
|
|
written loan documents with new disclosures that satisfy and |
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|
replace the prior loan documents, as well as a renewal of a |
|
|
single-payment loan in which the term of the loan is extended for an |
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|
additional identical period. A refinance shall not include a |
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|
workout agreement. "Refinance" includes the terms "renewal" and |
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|
"rollover." |
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(A) At every licensed location, a credit access |
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|
business must notify a consumer of the consumer’s right to an |
|
|
extended payment plan by posting the following notice in a |
|
|
conspicuous location visible to the general public: "If you are |
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|
unable to repay your loan when due, you may be eligible for an |
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|
extended payment plan. You are eligible for an extended payment |
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plan if you have refinanced your initial loan eight times. You are |
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eligible for an extended payment plan at least once in any 12 month |
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period. If you meet the requirements for an extended payment plan, |
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we will offer you a plan before the due date of your existing loan. |
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To accept our offer of an extended payment plan, you must sign a |
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|
written agreement that describes the terms of the plan before the |
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|
due date of your exiting loan." The notice shall also be included, |
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|
in at least 12-point bold type, on the first page of a contract with |
|
|
a credit access business. |
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|
(B) An extended payment shall comply with the |
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following: |
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(i) A credit access business must offer to |
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assist an eligible consumer, as described in (e)(2) of this |
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subsection, in obtaining an extended payment plan at least once |
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every 12 months. The 12 month period is measured from the date of |
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such extended payment plan. |
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(ii) A credit access business must offer a |
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consumer an extended payment plan before the due date of the eighth |
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refinance of the outstanding loan. |
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(iii) A credit access business may not |
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charge the consumer additional fees during an extended payment |
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plan. |
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(iv) A consumer must sign a written |
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|
agreement that describes the terms of the extended payment plan. |
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(v) An extended payment plan must allow a |
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|
consumer to repay all outstanding amounts owing in at least four |
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|
substantially equal payments. |
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(vi) A consumer may prepay an extended |
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|
payment plan in full at any time without penalty. |
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|
(C) If a consumer continues to make timely |
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|
payments pursuant to an extended payment plan, a credit access |
|
|
business is prohibited from: |
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|
(i) engaging in collection activities with |
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|
respect to such motor vehicle title loan; and |
|
|
(ii) obtaining, or assisting the consumer |
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|
in obtaining, additional motor vehicle title loans. |
|
|
(3) A multiple payment motor vehicle title loan shall |
|
|
be payable on a fully-amortizing, declining principal balance basis |
|
|
with substantially equal payments as agreed upon by the parties. |
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|
Fees may be pre-computed or charged on a daily accrual method. If |
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fees are pre-computed, a credit access business shall refund |
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unearned fees calculated on an actuarial basis upon the prepayment |
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in full of a motor vehicle title loan. |
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(4) Notwithstanding other law to the contrary, a motor |
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vehicle title loan must provide that, except for fraud or other |
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misconduct, including without limitation creating or not |
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disclosing additional liens, or intentionally concealing or |
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damaging the motor vehicle, the consumer shall have no personal |
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liability with respect to the amount owed pursuant to either the |
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motor vehicle title loan agreement or credit access agreement or |
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any deficiency resulting from foreclosure against the motor vehicle |
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pledged by the consumer. |