Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 1.
CONSUMER CREDIT REGULATION
Subchapter K. PROHIBITIONS ON AUTHORIZED LENDERS
7 TAC §1.853
The Finance Commission of Texas (the commission) adopts an
amendment to 7 TAC §1.853, concerning misleading advertising. The purpose
of the amendment is to implement a technical correction to subsection (d).
The correction changes the word "work" to "word" in paragraph (5). The amendment
is adopted without changes to the proposal as published in the December 27,
2002, issue of the
Texas Register
(27 TexReg
12128).
The agency received no written comments on the proposal.
The amendment is adopted under Texas Finance Code §11.304,
which authorizes the finance commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code §342.551
authorizes the finance commission to adopt rules for the enforcement of the
consumer loan chapter.
The statutory provision (as currently in effect) affected by the adopted
amendment is Texas Finance Code §341.403.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301175
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 936-7640
7 TAC §1.1216
The Finance Commission of Texas (the commission) adopts amendments
to 7 TAC §1.1216, concerning model clauses for Subchapter E plain language
contracts. The amendment is adopted with changes to the proposal as published
in the December 27, 2002, issue of the
Texas Register
(27 TexReg 12128).
The purpose of the amendments is to implement technical corrections to
subsections (k), (l), and (x). The correction in subsection (l) changes the
words "buyer/buyers" to "borrower/borrowers" and deletes a duplicate signature
line. The changes to subsection (k) and (x) allows the wording of the model
clauses to match the wording in the promissory notes of 7 TAC §§1.1217(a)(7)
and 1.1217(a)(8).
The agency received no written comments on the proposal.
The amendments are adopted under Texas Finance Code §11.304,
which authorizes the Finance Commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code §342.551
authorizes the Finance Commission to adopt rules for the enforcement of the
consumer loan chapter.
The statutory provisions (as currently in effect) affected by the adopted
amendment are Chapter 342, Texas Finance Code, and the rest of the Title.
§1.1216.Model Clauses.
(a)
Generally. These model clauses are the plain language rendition
of contract clauses that have typically been stated in technical legal terms.
(1)
The model clauses refer to the Borrower as "I" or "me."
The Lender is referred to as "you" or "your."
(2)
Nothing in this regulation prohibits a contract from including
provisions that provide more favorable results for the borrower than those
that would result from the use of a model clause.
(b)
Itemization of the Amount Financed box. Two model clauses
for the itemization of amount financed are presented in this subsection. One
is for use when the licensee finances an administrative fee. The other is
for use when the administrative fee is paid in cash by the borrower. A licensee
may delete portions applicable to any insurance premiums that are not financed
and may also delete other inapplicable portions. The model clause itemizing
the amount financed reads:
(1)
For use when the administrative fee is financed:
Figure: 7 TAC §1.1216(b)(1) (No change.)
(2)
For use when the administrative fee is paid in cash:
Figure: 7 TAC §1.1216(b)(2) (No change.)
(c)
Promise to Pay. The model clause for the borrower's promise
to pay reads:
(1)
For contracts using the Scheduled Installment Earnings
Method: "I promise to pay the Total of Payments to the order of you, the Lender.
I will make the payments at your address above. I will make the payments on
the dates and in the amounts shown in the Payment Schedule."
(2)
For contracts using the True Daily Earnings Method: "I
promise to pay the cash advance plus the accrued interest to the order of
you, the Lender. I will make the payments at your address above. I will make
the payments on the dates and in the amounts shown in the Payment Schedule."
(d)
Late Charge. At the lender's option, the late charge provision
may be made applicable to loans with more than one installment. Alternatively,
a lender may omit the late charge provision for loans with a single repayment.
The late charge model clause reads: "If I don't pay all of a payment within
10 days after it is due, you can charge me a late charge. The late charge
will be 5% of the scheduled payment."
(e)
After Maturity Interest. The after maturity interest model
clause reads: "If I don't pay all I owe when the final payment becomes due,
I will pay interest on the amount that is still unpaid. That interest will
be the higher rate of 18% per year or the maximum rate allowed by law. That
interest will begin the day after the final payment becomes due."
(f)
Prepayment Clause. The model prepayment clause reads:
(1)
For contracts using the Scheduled Installment Earnings
Method: "I can make a whole payment early. Unless you agree otherwise in writing,
I may not skip payments. If I make a payment early, my next payment will still
be due as scheduled."
(2)
For contracts using the True Daily Earnings Method: "I
can make any payment early. Unless you agree otherwise in writing, I may not
skip payments. If I make a payment early, my next payment will still be due
as scheduled."
(g)
Finance Charge Earnings and Refund Method. The model finance
charge earnings and refund method reads:
(1)
For contracts using the Scheduled Installment Earnings
Method, Texas Finance Code §342.201(a):
Figure: 7 TAC §1.1216(g)(1) (No change.)
(2)
For contracts using the Scheduled Installment Earnings
Method, Texas Finance Code §342.201(d): "The annual rate of interest
is ___%. This interest rate may not be the same as the Annual Percentage Rate.
You figure the Finance Charge by applying the scheduled installment earnings
method as defined by the Texas Finance Code to the unpaid cash advance. The
unpaid cash advance does not include the administrative fee, late charges,
and returned check charges. If I prepay my loan in full before the final payment
is due, I may save a portion of the Finance Charge. I will not get a refund
if the refund would be less than $1.00. You base the Finance Charge and Total
of Payments as if I will make each payment on the day it is due. My final
payment may be larger or smaller than my regular payment."
(3)
For contracts using the Scheduled Installment Earnings
Method, Texas Finance Code §342.201(e):
Figure: 7 TAC §1.1216(g)(3) (No change.)
(4)
For contracts using the True Daily Earnings Method, Texas
Finance Code §342.201(d): "The annual rate of interest is _____%. This
interest rate may not be the same as the Annual Percentage Rate. You figure
the Finance Charge by applying the true daily earnings method as defined by
the Texas Finance Code to the unpaid portion of the cash advance. You base
the Finance Charge and Total of Payments as if I will make each payment on
the day it is due. You will apply payments on the date they are received.
This may result in a different Finance Charge or Total of Payments. My final
payment may be larger or smaller than my regular payment."
(5)
For contracts using the True Daily Earnings Method, Texas
Finance Code §342.201(e):
Figure: 7 TAC §1.1216(g)(5) (No change.)
(h)
Deferment Clause. The deferment model clause reads:
(1)
"If I ask for more time to make any payment and you agree,
I will pay more interest to extend the payment. The extra interest will be
figured under the Finance Commission rules."
(2)
Optional language for unilateral deferment(s): "You may
extend one or more of my payments without my permission. You have to wait
six months to do it again."
(i)
Fee for Dishonored Check Clause. The fee for dishonored
check model clause reads: "I agree to pay you a fee of up to $25 for a returned
check. You can add the fee to the amount I owe or collect it separately."
(j)
Default Clause. The model default clause reads: "I will
be in default if: I do not timely make a payment; I break any promise I made
in this agreement; I allow a judgment to be entered against me or the collateral;
I sell, lease, or dispose of the collateral; I use the collateral for an illegal
purpose; or you believe in good faith that I am not going to keep any of my
promises. If there is more than one Borrower, each Borrower agrees to keep
all of the promises in the loan documents."
(k)
Property Insurance Disclosure Box. The model provision
for the disclosure of property insurance reads:
(l)
Credit Insurance Disclosure Box. The model provision for
the disclosure of credit insurance reads:
(m)
Mailing of Notice to Borrower. The model agreement regarding
notice to the borrower reads: "You can mail any notice to me at my last address
in your records. Your duty to give me notice will be satisfied when you mail
it."
(n)
Statement of Truthful Information. The following clause
is sufficient as the borrower's agreement that the information provided to
the licensee is true: "I promise that all information I gave you is true."
(o)
Waiver of Notice of Intent to Accelerate and Waiver of
Notice of Acceleration Clause. The waiver of notice of intent to accelerate
and waiver of notice of acceleration clause reads: "If I am in default, you
may require me to repay the entire unpaid principal balance, and any accrued
interest at once. You don't have to give me notice that you are demanding
or intend to demand immediate payment of all that I owe."
(p)
No Waiver of Lender's Rights. The model agreement regarding
the lender's rights reads: "If you don't enforce your rights every time, you
can still enforce them later."
(q)
Collection Expense Clause. The model provision relating
to the collection of expenses if default occurs reads: "If this debt is referred
to an attorney for collection, I will pay any attorney fees set by the court
plus court costs."
(r)
Joint Liability Clause. The model joint liability clause
reads: "I understand that you may seek payment from only me without first
looking to any other Borrower."
(s)
Usury Savings Clause. The model usury savings clause reads:
"I don't have to pay interest or other amounts that are more than the law
allows."
(t)
Savings Clause. The model savings clause reads: "If any
part of this contract is declared invalid, the rest of the contract remains
valid."
(u)
Final Agreement and Modifications in Writing. The model
agreement requiring any change to be in writing reads: "This written loan
agreement is the final agreement between you and me and may not be changed
by prior, current, or future agreements or statements between you and me.
There are no oral agreements between us relating to this loan agreement. Any
change to this agreement has to be in writing. Both you and I have to sign
it."
(v)
Security Agreement Clause. The model clause for the security
agreement reads: "If I am giving collateral for this loan, I will see the
separate security agreement for more information and agreements."
(w)
Application of Law. The model agreement regarding the law
to be applied to the contract reads: "Federal law and Texas law apply to this
contract."
(x)
Complaints and Inquiries Notice. (This lender is licensed
and examined by the State of Texas - Office of Consumer Credit Commissioner.
Call the Consumer Credit Hotline or write for credit information or assistance
with credit problems: Office of Consumer Credit Commissioner, 2601 North Lamar
Boulevard, Austin, Texas 78705-4207, www.occc.state.tx.us, (512) 936-7600,
(800) 538-1579.
(y)
Clause Describing Collateral. In the TILA disclosure box,
the model clause describing the collateral reads: "You will have a security
interest in the following described collateral ________________."
(z)
Clause Relating to Prepayment. In the TILA disclosure box,
the model clause for prepayment reads:
(1)
For contracts using the Scheduled Installment Earnings
Method: "Prepayment: If I pay off early, I may be entitled to a refund of
part of the Finance Charge."
(2)
For contracts using the True Daily Earnings Method: "Prepayment:
If I pay off early, I will not be entitled to a refund of part of the Finance
Charge."
(aa)
Security Agreement. If the loan is secured, a separate
security agreement should be used.
(1)
The model clause stating the secured nature of the agreement
reads: "To secure this loan, I give you a security interest in the collateral.
The collateral includes the property listed below, improvements and attachments
to the property, insurance refunds, and proceeds."
(2)
Prohibition on Transfer and Collateral Free of Encumbrance.
The model agreement keeping the collateral free from encumbrance and against
transferring it reads: "I own the collateral. I won't sell or transfer it
without your written permission. I won't allow anyone else to have an interest
in the collateral except you."
(3)
Location and Restrictions on Movement or Transfer of Collateral.
The model agreement regarding the location of the collateral reads: "I will
keep the collateral at my address shown above. I will promptly tell you in
writing if I change my address. I won't permanently remove the collateral
from Texas unless you give me written permission."
(4)
Upkeep and Use of Collateral. The model agreement regarding
the upkeep and use of the collateral reads: "I will timely pay all taxes and
license fees on the collateral. I will keep it in good repair. I won't use
the collateral illegally."
(5)
Modifications in Writing. The model agreement regarding
changes made to the security agreement reads: "Any change to this security
agreement has to be in writing. Both you and I have to sign it."
(6)
Any Default is a Default of the Security Agreement. The
model agreement in the security agreement regarding defaults reads: "Any default
under my agreements with you will be a default of this security agreement."
(7)
Default Clause. The model clause setting out the security
agreement in case of default reads: "If there is a default, you can take the
collateral. You will only do this lawfully and without a breach of the peace.
If you take my collateral, you will tell me how much I have to pay to get
it back. If I don't pay you to get the collateral back, you can sell it or
take other action allowed by law. You will send me notice at least 10 days
before you sell it. My right to get the collateral back ends when you sell
it. You can use the money you get from selling it to pay amounts the law allows
and to reduce the amount I owe. If any money is left, you will pay it to me.
If the money from the sale is not enough to pay all I owe, I must pay the
rest of what I owe you plus interest."
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301176
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 936-7640
7 TAC §1.1217
The Finance Commission of Texas (the commission) adopts an
amendment to 7 TAC §1.1217, concerning permissible changes that can be
made to a plain language contract and still comply with the model provision
for Subchapter E contracts. The amendment is adopted with changes to the proposal
as published in the November 1, 2002, issue of the
Texas Register
(27 TexReg 10267).
The purpose of the amendment is to implement a technical correction to
subsections (a)(7)-(8). There is no change to the rule but the appearance
to the figure for subsection (a)(7) should have been presented in a table
format instead of a list. Additionally, a required statement was inadvertently
omitted in the Federal Disclosure box for prepayment.
The agency received no written comments on the proposal.
The amendment is adopted under the Texas Finance Code §11.304,
which authorizes the Finance Commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code §342.551
authorizes the Finance Commission to adopt rules for the enforcement of the
consumer loan chapter.
These statutory provisions (as currently in effect) affected by the adopted
amendment are Chapter 342, Texas Finance Code and the rest of the Title.
§1.1217.Permissible Changes
(a)
A licensed lender may consider making the following types
of changes to the model clauses:
(1)
The addition of information related to information set
forth in the model clauses that is not otherwise prohibited by law.
(2)
Substituting another term for "Lender", "Borrower" that
has the same meaning, or use of pronouns such as "you," "we," and "us."
(3)
The model clauses may be presented in any order, and may
be combined or further segregated at the licensee's option.
(4)
Inserting descriptive headings or number provisions.
(5)
Changing the case of a word if otherwise permitted by the
Texas Finance Code.
(6)
Other changes which do not affect the substance of the
disclosures.
(7)
A sample model contract using the scheduled installment
earnings method is presented in the following example.
Figure: 7 TAC §1.1217(a)(7) (.pdf format)
(8)
A sample model contract using the true daily earnings method
is presented in the following example.
Figure: 7 TAC §1.1217(a)(8) (.pdf format)
(9)
A sample model security agreement is presented in the following
example.
Figure: 7 TAC §1.1217(a)(9) (No change.)
(b)
An authorized licensee has considerable flexibility to
arrange the format of the model form if the revised format does not significantly
adversely affect the substance, clarity, or meaningful sequence of the disclosures.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301177
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: March 6, 2003
Proposal publication date: November 1, 2002
For further information, please call: (512) 936-7640
7 TAC §§1.1231, 1.1232, 1.1234 - 1.1237
The Finance Commission of Texas adopts new 7 TAC §§1.1231,
1.1232, and 1.1234-1.1237, concerning a plain language model contract for
Subchapter G second lien purchase money contracts. New 7 TAC §§1.1231,
1.1232, and 1.1234-1.1237 includes proposed clauses, disclosures, layout and
font type for Subchapter G second lien purchase money contracts. The new rules
are adopted with changes to the proposal as published in the December 27,
2002, issue of the
Texas Register
(27 TexReg
12129).
In §1.1235 a descriptive title was modified to more accurately characterize
the text of a contractual provision. In §1.1236 several amendments of
a grammatical nature or for consistency of drafting style were made. Additionally
a few changes were made to improve the readability or plain language reading
of a model clause. A model provision for extension of credit charges was added.
The purpose of the rules is stated in the purpose clause, §1.1231,
and is to implement the provisions of Texas Finance Code §341.502, which
requires contracts for consumer loans under Chapter 342, whether in English
or in Spanish, to be written in plain language. Use of the model contract
is optional; however, should a lender choose not to use the model contract,
contracts must be submitted to the agency in accordance with the provisions
of 7 TAC §1.841.
The agency received no written comments on the rule proposal.
Section 1.1232 explains the relationship of federal law to the state requirements.
The section describes how conflicts or inconsistencies shall be resolved.
Section 1.1233 is reserved for definitions.
Section 1.1234 details the required format, typeface, and font for model
plain language Subchapter G second lien purchase money loan contracts. The
requirements are necessary to ensure that the contract will be easy for consumers
to read and understand.
Section 1.1235 identifies the types of provisions that may be included
in a Subchapter G second lien purchase money loan contract.
Section 1.1236 contains the model clauses. These clauses are the agency's
interpretation of a plain language version of typical contract provisions.
Section 1.1237 outlines permissible changes that licensees can make to
a contract and still comply with the model provisions. This section provides
licensees with flexibility in using a model contract. Licensees may use additional
documents, including affidavits, in connection with the model documents contained
in this rule. The additional documents may provide the parties with additional
certainty on certain issues. Licensees may change the model documents so that
they are in compliance with Mortgage Electronic Registration Systems, Inc.
("MERS").
The new section is adopted under Texas Finance Code §11.304,
which authorizes the Finance Commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code §342.551
authorizes the Finance Commission to adopt rules for the enforcement of the
consumer loan chapter and Texas Finance Code §341.502 grants the Finance
Commission the authority to adopt rules to govern the form of Subchapter G
second lien purchase money loan contracts and to adopt model plain language
contracts.
These rules affect Texas Finance Code Chapter 342, Subchapter G. The effective
date of the new rules is May 1, 2003. By that date, a lender needs to make
a decision to adopt the model contract or submit a non-standard contract (any
contract other than the model form) for a readability review. The agency will
permit lenders until August 1, 2003, to deplete supplies of existing forms
during a transition period after the effective date of the rules.
§1.1231.Purpose.
(a)
The purpose of these rules is to provide a model plain
language contract in English for Texas Finance Code, Chapter 342, Subchapter
G purchase money loan transactions. The establishment of model provisions
for these transactions will encourage use of simplified wording that will
ultimately benefit consumers by making these contracts easier to understand.
Use of the "plain language" model contract by a licensee is not mandatory.
The licensee, however, may not use a contract other than a model contract
unless the licensee has submitted the contract to the commissioner in compliance
with §1.841 of this title. The commissioner shall issue an order disapproving
the contract if the commissioner determines the contract does not comply with
this section or rules adopted under this section. A licensee may not claim
the commissioner's failure to disapprove a contract constitutes an approval.
(b)
These provisions are intended to constitute a complete
plain language Subchapter G purchase money loan contract however, a licensee
is not limited to the contract provisions addressed by these rules.
§1.1232.Relationship with Federal Law.
In the event of an inconsistency or conflict between the disclosure
or notice requirements in these provisions and any current or future federal
law, regulation, or interpretation, the requirements of the federal law, regulation,
or interpretation will control to the extent of the inconsistency. The remainder
of the contract will remain in full force and effect. Use of the Federal Reserve
Board's promulgated model forms complies with the Truth-in-Lending requirements
of this chapter.
§1.1234.Format, Typeface, and Font.
(a)
Plain language contracts must be printed in an easily readable
font and type size pursuant to Texas Finance Code §341.502(a). If other
state or federal law requires a different type size for a specific disclosure
or contractual provision, the type size specified by the other law should
be used.
(b)
The text of the document must be set in a readable typeface.
Typefaces considered to be readable include: Times, Scala, Caslon, Century
Schoolbook, Helvetica, Arial, and Garamond.
(c)
Titles, headings, subheadings, captions, and illustrative
or explanatory tables or sidebars may be used to distinguish between different
levels of information or provide emphasis.
(d)
Typeface size is referred to in points (pt). Because different
typefaces in the same point size are not of equal size, typeface is not strictly
defined but is expressed as a minimum size in the Times typeface for visual
comparative purposes. Use of a larger typeface is encouraged. The typeface
for the federal disclosure box or other disclosures required under federal
law must be legible, but no minimum typeface is required. Generally, the typeface
for the remainder of the contract must be at least as large as 8pt in the
Times typeface.
§1.1235.Contract Provisions.
(a)
A Chapter 342, Subchapter G purchase money loan transaction
may include, but is not limited to, the following contract provisions to the
extent not prohibited by law or regulation. If the licensee desires to exercise
its rights under one of the following provisions, it must include that provision
in the contract. A licensee who does not desire to apply a provision is not
required to include it in the contract. For example, a licensee who does not
assess a fee for dishonored checks may omit the dishonored check fee clause.
A licensee may also exclude non-relevant portions of a model clause. For example,
a licensee who does not routinely finance certain insurance coverages may
omit those non-applicable portions of the model clause. A Chapter 342, Subchapter
G second lien purchase money loan transaction may contain the following provisions:
(1)
Identification of the parties, including the name and address
of each party and specifying the pronouns that designate the borrower and
the lender, and the property address.
(2)
A Truth-in-Lending Act (TILA) disclosure box.
(3)
An Itemization of Amount Financed box.
(4)
A promise to pay.
(5)
A late charge provision.
(6)
A provision for after maturity interest.
(7)
A prepayment clause.
(8)
A provision specifying the finance charge earnings and
refund method.
(9)
A provision contracting for a fee for a dishonored check.
(10)
A provision specifying the conditions causing default.
(11)
A provision regarding property insurance.
(12)
A credit insurance disclosure box.
(13)
A provision regarding the mailing of notices to the borrower.
(14)
A provision regarding the due on sale clause, notice of
intent to accelerate, and notice of acceleration.
(15)
A provision expressing no waiver of licensee's rights.
(16)
A collection expense clause.
(17)
A provision providing for joint liability.
(18)
A usury savings clause.
(19)
A savings clause stating that if any part of the Loan
Agreement is declared invalid, the rest remains valid.
(20)
An integration clause stating that the contract supersedes
all prior agreements and that the contract may not be changed by oral agreement.
(21)
A provision stating that the property described in the
loan agreement is subject to the lien of the security document.
(22)
A provision specifying that federal law and Texas law
apply to the contract.
(23)
Complaints and inquiries notice.
(24)
A provision describing the collateral.
(25)
Signature blocks.
(b)
The security document for a Chapter 342, Subchapter G second
lien purchase money loan contract may contain the following provisions:
(1)
A definition section.
(2)
A provision regarding the secured nature of the agreement.
(3)
A provision regarding the transfer of rights in the property.
(4)
Borrower and Lender's promise.
(5)
A provision regarding late charges and prepayment of principal
and interest.
(6)
A provision regarding the funds for escrow items.
(7)
A provision regarding charges and liens.
(8)
A provision regarding property insurance.
(9)
A provision regarding preservation, maintenance, protection,
and inspection of the property.
(10)
A provision regarding protection of the lender's interest
in the property and rights under the security document.
(11)
A provision regarding the assignment of miscellaneous
proceeds and forfeiture.
(12)
A provision specifying that the borrower is not released
from liability if lender modifies the payment schedule.
(13)
A provision regarding joint and several liability and
specifying that the person who signs the contract grants their ownership in
the homestead and binds their successors and assigns.
(14)
A provision regarding the extension of credit charges.
(15)
A provision regarding the delivery of notices.
(16)
A provision regarding the law governing the contract,
stating that if any part of the contract is declared invalid, the rest of
the contract remains valid.
(17)
A provision regarding rules of clause construction.
(18)
A provision specifying that the lender will give borrower
a copy of all signed documents at the time the loan agreement is made.
(19)
A provision regarding a transfer of interest in the property.
(20)
A provision regarding borrower's right to reinstate after
acceleration.
(21)
A provision regarding the sale of the loan, change of
loan servicer, notice of grievance, and lender's right to comply.
(22)
A provision regarding hazardous substances.
(23)
A provision regarding acceleration and remedies.
(24)
A provision regarding the assignment of rents, appointment
of receiver, and lender in possession.
(25)
A provision regarding power of sale.
(26)
A provision regarding the release of the lien securing
the loan agreement.
(27)
A provision regarding Lender's rights and Borrower's responsibilities.
(28)
A provision regarding trustees and trustee liability.
(29)
A default provision.
(30)
A provision regarding subrogation.
(31)
A provision regarding what happens if the sum secured
and other charges violate Applicable Law.
(32)
A request for notice of default and foreclosure under
superior mortgages or security documents provision.
(33)
Signature blocks.
(34)
An acknowledgment.
§1.1236.Model Clauses.
(a)
Generally. These model clauses are the plain language rendition
of contract clauses that have typically been stated in technical legal terms.
Nothing in this regulation prohibits a contract from including provisions
that provide more favorable results for the borrower than those that would
result from the use of a model clause.
(b)
For a Chapter 342, Subchapter G second lien purchase money
loan contract:
(1)
The model identification clause lists the account or contract
number, the name and address of the creditor or lender, the date of the note,
the name and address of the borrower, and the property address. The model
clause identifying the pronouns used for the borrower and lender reads: "A
word like "I" or "me" means each person who signs as a Borrower. A word like
"you" or "your" means the Lender or "Note Holder." "The Lender is _________.
The Lender may sell or transfer this Note. The Lender or anyone who is entitled
to receive payments under this Note is called the "Note Holder." You will
tell me in writing who is to receive my payments."
(2)
A Truth-in-Lending Act (TILA) disclosure box reads:
(3)
An Itemization of Amount Financed box. The itemization
of amount financed box is not required if the licensee provides the borrower
with a good faith estimate or a settlement statement as permitted by the Truth-in-Lending
Act.
(A)
For use when the administrative fee is financed reads:
Figure: 7 TAC §1.1236(b)(3)(A)
(B)
For use when the administrative fee is paid in cash reads:
Figure: 7 TAC §1.1236(b)(3)(B)
(4)
Promise to Pay. One permissible change to the model language
for the scheduled installment earnings method would be to allow partial prepayments
of the principal during the term of the loan. This variation on the scheduled
installment earnings method would allow periodic reductions of the principal
balance by partial prepayments. This variation would allow reductions of the
principal balance that were not originally scheduled. The model clause for
the borrower's promise to pay reads:
(A)
For contracts using the Scheduled Installment Earnings
Method: "I promise to pay the Total of Payments to the order of you. I will
make payments to you at the address above or as you direct. I will make the
payments on the dates and in the amounts shown in the Payment Schedule."
(B)
For contracts using the True Daily Earnings Method: "I
promise to pay the cash advance plus the accrued interest to the order of
you. I will make payments to you at the address above or as you direct. I
will make the payments on the dates and in the amounts shown in the Payment
Schedule."
(5)
Late Charge. Licensees using contracts using the True Daily
Earnings Method are not permitted to assess a late charge. The model late
charge provision for contracts using the Scheduled Installment Earnings Method
reads: "If I don't pay all of a payment within 10 days after it is due, you
can charge me a late charge. The late charge will be 5% of the scheduled payment."
(6)
After Maturity Interest. The model clause specifies the
maximum interest rate allowed by law for after maturity interest. A creditor
may always choose a lower rate. The model provision for after maturity interest
reads: "If I don't pay all I owe when the final payment becomes due, I will
pay interest on the amount that is still unpaid. That interest will be the
higher of the rate of 18% per year or the maximum rate allowed by law. That
interest will begin the day after the final payment becomes due."
(7)
Prepayment Clause. The model prepayment clause reads:
(A)
For contracts using the Scheduled Installment Earnings
Method: "I can make a whole payment early. Unless you agree otherwise in writing,
I may not skip payments. If I make a payment early, my next payment will still
be due as scheduled."
(B)
For contracts using the True Daily Earnings Method: "I
can make any payment early. Unless you agree otherwise in writing, I may not
skip payments. If I make a payment early, my next payment will still be due
as scheduled."
(8)
Finance Charge and Refund Method. The model provision specifying
the finance charge earnings and refund method reads:
(A)
For contracts using Scheduled Installment Earnings Method
- Section 342.301 rate loans, the model language reads:
Figure: 7 TAC §1.1236(b)(8)(A)
(B)
For contracts using Scheduled Installment Earnings Method
with prepayments option - Section 342.301 rate loans, the model language reads:
Figure: 7 TAC §1.1236(b)(8)(B)
(C)
For contracts using True Daily Earnings Method - Section
342.301 rate loans, the model language reads:
Figure: 7 TAC §1.1236(b)(8)(C)
(9)
Dishonored Check Fee. The model dishonored check fee provision
reads: "I agree to pay you a fee of up to $25 for a returned check. You may
add the fee to the amount I owe or collect it separately."
(10)
Default Clause. The model provision specifying the conditions
causing default reads:
(11)
Property Insurance. The model provision regarding property
insurance reads:
(12)
Credit Insurance. If single premium credit insurance is
offered, a permissible change to the disclosure can be to offer a single charge
for the entire term of the loan. The term for the single premium charge should
be shown for the original term of the loan, unless otherwise specified. The
licensee has the option of including language that reads: "The insurance will
cancel on the date when the total past due premiums equal or exceed four times
the first month premium." The industry standard regarding the relationship
between total past due premiums and the first month premium in this equation
appears to be four times therefore, that standard is applied here. However,
if a different time frame is more appropriate, that time frame may be used.
The model credit insurance disclosure box reads:
(13)
Mailing of Notices to Borrower. The duty to give notice
is satisfied when it is mailed by first class mail. The model provision regarding
the mailing of notices to the borrower reads: "You or I may mail or deliver
any notice to the address above. You or I may change the notice address by
giving written notice. Your duty to give me notice will be satisfied when
you mail it."
(14)
Due on Sale Clause, Notice of Intent to Accelerate, and
Notice of Acceleration. The model provision regarding the due on sale clause,
notice of intent to accelerate, and notice of acceleration reads: "If all
or any interest in the Property is sold or transferred without your prior
written consent, you may require immediate payment in full of all that I owe
under this Loan Agreement. You will not exercise this option if prohibited
by law. If you exercise this option, you will give me notice that you are
demanding immediate payment of all that I owe. This notice will give me a
period of not less than 21 days from the date of the notice within which I
must pay all that I owe under this Loan Agreement. If I fail to pay all that
I owe before the end of this period, you may use any remedy allowed by the
Loan Agreement."
(15)
No Waiver of Lender's Rights. The model provision expressing
no waiver of lender's rights reads: "If you don't enforce your rights every
time, you can still enforce them later."
(16)
Collection Expense Clause. The model collection expense
clause reads: "If you require me to pay all that I owe at once, you will have
the right to be paid back by me for all of your costs and expenses in enforcing
this Loan Agreement to the extent not prohibited by Applicable Law. These
expenses include, for example, reasonable attorneys' fees."
(17)
Joint Liability. The model provision providing for joint
liability reads: "I understand that you may seek payment from only me without
first looking to any other Borrower."
(18)
Usury Savings Clause. The model usury savings clause reads:
"I do not have to pay interest or other amounts that are more than Applicable
Law allows."
(19)
Savings Clause. The model clause stating that if any part
of the contract is invalid, the rest remains valid reads: "If any part of
this Loan Agreement is declared invalid, the rest of the Loan Agreement remains
valid. If any part of this Loan Agreement conflicts with law, that law will
control. The part of the Loan Agreement that conflicts with the law will be
modified to comply with the law. The rest of the Loan Agreement remains valid."
(20)
Contract Supersedes Prior Agreements. The model integration
clause providing that the contract supersedes prior agreements and statements
reads: "This written Loan Agreement is the final agreement between you and
me and may not be changed by prior, current, or future oral agreements between
you and me. There are no oral agreements between you and me relating to this
Loan Agreement. Any change to this agreement must be in writing. Both you
and I have to sign written agreements."
(21)
Security Document. The model provision stating that the
property described in the Loan Agreement is subject to the lien of the Security
Document reads: "In addition to the protections given to the Note Holder under
this Note, a Security Document, dated ______________ protects the Note Holder
from possible losses that might result if I do not keep the promises that
I make in this Note. The Security Document describes how and under what conditions
I may be required to make immediate payment in full of any amounts that I
owe under this Note."
(22)
Application of Law. The model clause specifying that federal
law and Texas law apply to the contract reads: "Federal law and Texas law
apply to this Loan Agreement."
(23)
Complaints and Inquiries. The model complaints and inquiries
notice reads: "The (name of Lender or Note Holder) is licensed and examined
under the laws of the State of Texas and by state law is subject to regulatory
oversight by the Office of Consumer Credit Commissioner. Any consumer wishing
to file a complaint against the (name of Lender or Note Holder) should contact
the Office of Consumer Credit Commissioner through one of the means indicated
below: In Person or U.S. Mail: 2601 North Lamar Boulevard, Austin, Texas 78705-4207.
Telephone No.: (800) 538-1579. Fax No.: (512) 936-7610. E-mail: consumer.complaints@occc.state.tx.us.
Website: www.occc.state.tx.us."
(24)
Clause Describing Collateral. The model provision describing
the collateral reads: "The collateral described above by the property address
is subject to the lien of the Security Document."
(25)
Signature Blocks. The licensee may also provide additional
signature lines for witness signatures.
(c)
For the security document for a Chapter 342, Subchapter
G second lien purchase money loan contract:
(1)
The model definition section reads:
(A)
"Loan Agreement" means the Note, Security Document, deed
of trust, any other related document, or any combination of those documents,
under which you have made a loan to me.
(B)
"Security Document" means this document, which is dated
________, together with all Riders to this document.
(C)
"I" or "me" means _________________________________________,
the grantor under this Security Document and the person who signed the Note
("Borrower").
(D)
"You" means __________________________________________,
the Lender and any holder entitled to receive payments under the Note. Your
address is _________________________________________. You are the beneficiary
under this Security Document.
(E)
"Trustee" is _______________________________. Trustee's
address is _____________________________________________.
(F)
"Note" means the Purchase Money Note signed by me and dated
______________. The Note states that the amount I owe you is _________________
Dollars (U.S. $____) plus interest. I have promised to pay this debt in regular
Periodic Payments and to pay the debt in full not later than ______________________________.
(G)
The "Property" means the real estate that is described
below under the heading "Transfer of Rights in the Property."
(H)
"Riders" means all Riders to this Security Document that
I execute.
Figure: 7 TAC §1.1236(c)(1)(H)
(I)
"Applicable Law" means all controlling applicable federal,
Texas and state constitutions, statutes, regulations, administrative rules,
local ordinances, judicial and administrative orders (that have the effect
of law) as well as all applicable final, non-appealable judicial opinions.
(J)
"Community Association Dues, Fees, and Assessments" means
all dues, fees, assessments and other charges that are imposed on me or the
Property by a condominium association, homeowners association or similar organization.
(K)
"Electronic Funds Transfer" means any transfer of funds,
other than a transaction originated by check, draft, or similar paper instrument,
which is initiated through an electronic terminal, telephonic instrument,
computer, or magnetic tape so as to order, instruct, or authorize a financial
institution to debit or credit an account. The term includes point-of-sale
transfers, automated teller machine transactions, transfers initiated by telephone,
wire transfers, and automated clearinghouse transfers.
(L)
"Escrow Items" means those items that are described in
Section ___ of this Security Document.
(M)
"Miscellaneous Proceeds" means any compensation, settlement,
award of damages, or proceeds paid by any third party (other than proceeds
paid under my insurance) for: damage or destruction of the Property; condemnation
or other taking of all or any part of the Property; conveyance instead of
condemnation; or misrepresentations or omissions related to the value or condition
of the Property.
(N)
"Periodic Payment" means the regularly scheduled amount
due for principal and interest under the Note plus any amounts under this
Security Document.
(O)
"RESPA" means the Real Estate Settlement Procedures Act
(12 U.S.C. §2601
et seq
) and Regulation
X (24 C.F.R. Part 3500), as they might be amended from time to time, or any
additional or successor legislation or regulation that governs the same subject
matter. As used in this Security Document, "RESPA" refers to all requirements
and restrictions that are imposed in regard to a "federally related mortgage
loan" even if the Loan Agreement does not qualify as a "federally related
mortgage loan" under RESPA.
(P)
"Successor in Interest of me" means any party that has
taken title to the Property, whether or not that party has assumed my obligations
under the Loan Agreement.
(Q)
"Ground Rents" means amounts I owe if I rented the real
property under the buildings covered by this Security Document. One of these
arrangements usually takes the form of a long-term "ground lease."
(2)
Secured Agreement. The model provision regarding the secured
nature of the agreement reads: "To secure this Loan Agreement, I give you
a security interest in the Property including existing and future improvements,
easements, fixtures, attachments, replacements and additions to the Property,
insurance refunds, and proceeds."
(3)
Transfer of Rights in the Property. The model provision
regarding a transfer of rights in the property reads:
(4)
Borrower and Lender's Promise. The model provision regarding
borrower and lender's promise to comply with the terms of the security document
reads: "You and I promise:"
(5)
Late Charges and Prepayment. The model provision regarding
late charges and prepayment of principal and interest reads:
(6)
Funds for Escrow Items. The model provision regarding the
funds for escrow items reads:
(7)
Charges and Liens. The model provision regarding charges
and liens reads:
(8)
Property Insurance. The model provision regarding: property
insurance reads:
(9)
Preservation, Maintenance, Protection, and Inspection of
the Property. The model provision regarding preservation, maintenance, protection,
and inspection of the property reads: "I will not destroy, damage or impair
the Property, allow it to deteriorate, or commit waste. Whether or not I live
in the Property, I will maintain it in order to prevent it from deteriorating
or decreasing in value due to its condition. I will promptly repair the damage
to the Property to avoid further deterioration or damage unless you and I
agree in writing that it is economically unreasonable. I will be responsible
for repairing or restoring the Property only if you release the insurance
or condemnation proceeds for the damage to or the taking of the Property.
You may release proceeds for the repairs and restoration in a single payment
or in a series of payments as the work is completed. I still am obligated
to complete repairs or restoration of the Property even if there are not enough
proceeds to complete the work. If this Security Document secures a unit in
a condominium or planned unit development, I will perform all of my obligations
under the declaration or covenants creating or governing the condominium or
planned unit development, and any other relevant document. You or your agent
may inspect the Property. You may inspect the interior of the Property with
reasonable cause. You will give me notice stating reasonable cause when or
before the interior inspection occurs."
(10)
Protection of Lender's Interest in the Property and Rights
Under the Security Document. The model provision regarding protection of the
lender's interest in the property and rights under the security document reads:
(11)
Assignment of Miscellaneous Proceeds and Forfeiture. The
model provision regarding the assignment of miscellaneous proceeds and forfeiture
reads:
(12)
Forbearance Not a Waiver. The model provision specifying
that the borrower is not released from liability if lender modifies the payment
schedule reads: "My successors and I will not be released from liability if
you extend the time for payment or modify the payment schedule. If I pay late,
you will not have to sue me or my successor to require timely future payments.
You may refuse to extend time for payment or modify this Loan Agreement even
if I request it. If you do not enforce your rights every time, you may enforce
them later."
(13)
Joint and Several Liability, Security Document Execution,
Successors Obligated. The model provision regarding joint and several liability
and specifying that the person who signs the contract grants their ownership
in the property and binds their successors and assigns reads:
(14)
Extension of Credit Charges. The model provision for the
extension of credit charges reads:
(15)
Delivery of Notices. The model provision regarding the
delivery of notices reads: "Under the Loan Agreement, you and I will give
notices to each other in writing. Any notice under the Loan Agreement will
be considered given to me when it is mailed by first class mail or when actually
delivered to me at my address if given by another means. You will give notice
to the Property address unless I provide you a different address. I will notify
you promptly of any change of address. I will comply with any reasonable procedure
for giving a change of address that you provide. There will only be one address
for notice under the Loan Agreement. Notice to me will be considered notice
to all persons who are obligated under the Loan Agreement unless Applicable
Law requires a separate notice. I may give you notice by delivering or mailing
it by first class mail to the address provided by you, unless you require
a different procedure. You, however, will not receive notice under the Loan
Agreement until you actually receive it. Legal requirements governing notices
subject to the Loan Agreement will prevail over conditions in the Loan Agreement."
(16)
Governing Law and Severability. The model provision regarding
the law governing the contract, stating that if any part of the contract is
declared invalid, the rest of the contract remains valid reads: "The Loan
Agreement will be governed by Texas and federal law. If any provision in the
Loan Agreement conflicts with any legal requirement, all non-conflicting provisions
will remain effective."
(17)
Rules of Construction. The model provision regarding rules
of clause construction reads:
(18)
Loan Agreement Copies. The model provision specifying
that the lender will give borrower a copy of all signed documents at the time
the loan agreement is made reads: "At the time the Loan Agreement is made,
you will give me copies of all documents I sign."
(19)
Transfer of Interest in Property. The model provision
regarding a transfer of interest in the property reads: ""Interest in the
Property" means any legal or beneficial interest. This term includes those
beneficial interests transferred in a bond for deed, contract for deed, installment
sales contract or escrow agreement (the intent of which is the transfer of
title by me at a future date to a purchaser). If any part of the Property
is sold or transferred without your prior written permission, you may require
immediate payment of all I owe. You will not exercise this option if disallowed
by Applicable Law. If you accelerate, you will give me notice. The notice
of acceleration will allow me at least 21 days from the date the notice is
given to pay all I owe. If I fail to timely pay all I owe, you may pursue
any remedy allowed by the Loan Agreement without further notice or demand."
(20)
Borrower's Rights to Reinstate After Acceleration. The
model provision regarding borrower's right to reinstate after acceleration
reads:
(21)
Sale of Note, Change of Loan Servicer, Notice of Grievance,
Lender's Right to Comply. The model provision regarding the sale of the loan,
change of loan servicer, notice of grievance, and lender's right to comply
reads: "A full or partial interest in the Loan Agreement can be sold one or
more times without prior notice to me. The sale may result in a change of
the company servicing or handling the Loan Agreement. The company servicing
or handling the Loan Agreement will collect my monthly payment and will comply
with other servicing conditions required by the Loan Agreement or Applicable
Law. In some cases, the company servicing or handling the Loan Agreement may
change even if the Loan Agreement is not sold. If the company servicing or
handling the Loan Agreement is changed, I will be given written notice of
the change. The notice will state the name and address of the new company,
the address to which my payments should be made, and any other information
required by RESPA. Any notice of acceleration and opportunity to cure under
the Loan Agreement will satisfy the notice and opportunity to address the
alleged violation provisions of this Section. No agreement between you and
me or any third party will limit your ability to comply with your duties under
the Loan Agreement and the Applicable Law. You and I are limiting all agreements
so that all current or future interest or fees in connection with this Loan
Agreement will not be greater than the highest amount allowed by Applicable
Law. You and I intend to conform the Loan Agreement to the provisions of Applicable
Law. If any part of the Loan Agreement is in conflict with the Applicable
Law, then that part will be corrected or removed. This correction will be
automatic and will not require any amendment or new document. Your right to
correct any violation will survive my paying off the Loan Agreement. My right
to correct will override any conflicting provision of the Loan Agreement.
Your right-to-comply as provided in this Section will survive the payoff of
the Loan Agreement. The provisions of this Section will supersede any inconsistent
provision of the Loan Agreement."
(22)
Hazardous Substances. The model provision regarding hazardous
substances reads:
(23)
Acceleration and Remedies. The model provision regarding
acceleration and remedies reads:
(24)
Assignment of Rents, Appointment of Receiver, Lender in
Possession. The model provision regarding assignment of rents, appointment
of receiver, and lender in possession reads: "As additional security, I assign
to you the rents of the Property, provided that have the right, prior to acceleration
or abandonment of the Property, to collect and retain the rents as they become
due. Upon acceleration or abandonment, you, by agent or by court-appointed
receiver, will be entitled to enter, take possession, manage the Property,
and collect due and past due rents. All rents you or the court-appointed receiver
collect will be applied first to payment of the costs of management of the
Property and collection of rents, including receiver's fees, premiums on receiver's
bonds, and reasonable attorneys' fees, and then to the sums secured by this
Security Document. You and the receiver will be liable to account only for
rents received."
(25)
Power of Sale. Lender has the option to choose wording
to indicate that a Trustee's deed will convey good title to the Property that
cannot be defeated. The model provision regarding power of sale reads:
(26)
Release. If the Lender cannot return the Note to Borrower,
Lender may provide Borrower with a discharge and release of all obligations
under the loan. The discharge must meet the requirements of §342.454
of the Texas Finance Code. The model provision regarding the release of the
lien securing the loan agreement reads: "Upon payment of all that I owe under
this Loan Agreement, you will cancel and return the Note to me and give me,
in recordable form, a release of lien securing the Loan Agreement or a copy
of any endorsement of the Note and assignment of the lien to a lender that
is refinancing the Loan Agreement. If you cannot, you will provide me with
a discharge and release of all obligations under the loan. I will pay only
the cost of recording the release of lien."
(27)
Lender's Rights and Borrower's Responsibilities. The model
provision specifying that each person who signs the document is responsible
for each promise and duty in the Security Document reads:
(28)
Trustees and Trustee Liability. The model provision regarding
trustees and trustee liability reads:
(29)
Default. The model default provision reads: "Any default
of my agreements with you will be a default of this Security Document."
(30)
Subrogation. The model provision regarding subrogation
reads: "If I ask, you will use proceeds from the Loan Agreement to pay off
all valid outstanding liens against the Property. You will then own all rights,
superior titles, liens, and interests owned or claimed by any owner or holder
of an outstanding lien or debt. You own these things whether the lien or debt
is transferred to you or whether it is released by the holder upon payment."
(31)
Partial Invalidity. The model provision regarding what
happens if the sum secured and other charges violate Applicable Law reads:
"If any portion of the sums secured by this Security Document cannot be lawfully
secured, payments minus those sums will be applied first to the portions not
secured. If any charge provided for in this Loan Agreement, separately or
together with other charges that are considered part of this Loan Agreement,
violates Applicable Law, the charge is reduced to the extent necessary to
eliminate the violation. At your option, you will refund the amount of interest
or other charges paid to you in excess of the amount permitted by Applicable
Law to reduce the principal of the debt or apply it to reduce the principal
of the debt."
(32)
Request for Notice of Default and Foreclosure under Superior
Mortgages or Security Documents. The model provision reads:
(33)
Signature Blocks. The model provision regarding signature
blocks reads:
(34)
Acknowledgment. The model provision regarding the acknowledgment
reads:
§1.1237.Permissible Changes.
(a)
A licensee may consider making the following types of changes
to the model clauses:
(1)
The addition of information related to information set
forth in the model clauses that is not otherwise prohibited by law.
(2)
Substituting another term for "Lender" or "Borrower" that
has the same meaning, or use of pronouns such as "you," "we," and "us."
(3)
The model clauses may be presented in any order, and may
be combined or further segregated at the licensee's option.
(4)
Inserting descriptive headings or number provisions.
(5)
Changing the case of a word if otherwise permitted by the
Texas Finance Code.
(6)
Other changes which do not affect the substance of the
disclosures.
(7)
A sample model note is presented in the following example.
Figure: 7 TAC §1.1237(a)(7) (.pdf format)
(8)
A sample model security document is presented in the following
example.
Figure: 7 TAC §1.1237(a)(8) (.pdf format)
(b)
A licensee has considerable flexibility to arrange the
format of the model form if the revised format does not significantly adversely
affect the substance, clarity, or meaningful sequence of the disclosures.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301178
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: May 1, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 936-7640
Chapter 25.
PREPAID FUNERAL CONTRACTS
Subchapter B. REGULATION OF LICENSES
7 TAC §25.23
The Finance Commission of Texas (commission) adopts amended §25.23,
concerning application fees, without changes to the proposed text as published
in the December 27, 2002, issue of the
Texas Register
(27 TexReg 12138). The text will not be republished.
The amendment to §25.23 implements Finance Code, §154.051, which
authorizes the commission to adopt reasonable rules concerning fees to defray
the cost of administering Finance Code, Chapter 154.
The amendment to §25.23 increases the maximum renewal application
fee from $1,500 to $2,000 for permit holders with no more than 20,000 outstanding
contracts. Under amended §25.23, a permit holder with more than 20,000
outstanding contracts will pay a fee of $3,000. The amendment to §25.23
also provides a mechanism for permit holders experiencing financial difficulties
to request a one-year reduction in their renewal fees.
Under amended §25.23, if the application for conversion of a trust-funded
prepaid funeral benefits operation to an insurance-funded prepaid funeral
benefits operation is incomplete, the fee for any additional processing time,
caused by the incomplete application, is increased from $500 per day to $600
per day. This $100 increase is necessary to more fully recover the increasing
costs to perform this additional processing. Assuming that conversion applicants
comply with the application requirements of the department, there should be
no increase in fees paid by permit holders.
The commission received no comments regarding the proposal.
The fee increases are established by the commission and not mandated by
the Legislature. The proposed fee increases are necessary because the existing
fees do not fully fund the costs of administering Finance Code, Chapter 154.
Inflation and rising program costs are factors that have led to the necessity
of the increased fees.
The amendment is proposed under the authority of Finance Code, §154.051,
which authorizes the commission to adopt reasonable rules concerning fees
to defray the cost of administering Finance Code, Chapter 154.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301170
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 475-1300
7 TAC §25.24
The Finance Commission of Texas (commission) adopts the repeal
of §25.24, concerning examination costs and assessment fees, without
changes to the proposed text as published in the December 27, 2002, issue
of the
Texas Register
(27 TexReg 12140).
Section 25.24 implements Finance Code, §154.051, which authorizes
the commission to adopt reasonable rules concerning fees to defray the cost
of administering Finance Code, Chapter 154, and Finance Code, §154.054,
which authorizes the commission to set examination fees in amounts sufficient
to cover the cost of examinations, the equitable and proportionate cost of
maintaining and operating the Texas Department of Banking (department), and
the cost of enforcing Finance Code, Chapter 154. Concurrently with this repeal,
the commission is adopting new 25.24. The proposed repeal and adoption will
convert the rule to a plain language format, change the existing fee calculation
method from biennial to annual, and increase the fee for additional examinations
for sellers who fail to comply. The increased examination fee for additional
examinations is necessary under Finance Code, §154.054 because existing §25.24
does not generate fees in amounts sufficient for the department to cover the
costs of additional examinations.
The commission received no comments regarding the proposal.
The repeal is adopted under Finance Code, §154.051, which
authorizes the commission to adopt reasonable rules concerning fees to defray
the cost of administering Finance Code, Chapter 154 and Finance Code, §154.054,
which authorizes the commission to set examination fees in amounts sufficient
to cover the cost of examinations, the equitable and proportionate cost of
maintaining and operating the department, and the cost of enforcing Finance
Code, Chapter 154.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301171
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 475-1300
7 TAC §25.24
The Finance Commission of Texas (commission) adopts new §25.24,
concerning fees, without changes to the proposed text as published in the
December 27, 2002, issue of the
Texas Register
(27
TexReg 12140). The text will not be republished. The repeal of existing §25.24
is published in this issue of the
Texas Register
.
New §25.24 implements Finance Code, §154.051, which authorizes
the commission to adopt reasonable rules concerning fees to defray the cost
of administering Finance Code, Chapter 154, and Finance Code, §154.054,
which authorizes the commission to set examination fees in amounts sufficient
to cover the cost of examinations, the equitable and proportionate cost of
maintaining and operating the Texas Department of Banking (department) , and
the cost of enforcing Finance Code, Chapter 154.
New §25.24 converts existing §25.24 to a plain language format
and changes the method of calculating prepaid funeral contract examination
fees from a fiscal biennium to a fiscal year.
Under new §25.24, a permit holder will pay an annual examination fee
calculated at a rate of up to $3.00 for each contract outstanding as of the
permit holder's last examination. The minimum annual examination fee will
be $100 and the maximum annual examination fee will be $7,350.
Under new §25.24, examination fees are increased from $500 per examiner
per day plus associated travel costs to $600 per examiner per day plus associated
travel costs for any additional examination that is required in the same fiscal
year because of a permit holder's failure to comply with Finance Code, Chapter
154, commission rules, or department requests. This $100 increase is necessary
to more fully recover the cost of examiner salaries to perform these additional
examinations.
The increase is established by the commission and not mandated by the Legislature.
It is adopted to comply with Finance Code, 154.054. The increased fee for
additional examinations is necessary because the existing fee for additional
examinations does not generate enough revenue to cover the costs of the additional
examinations. The department has determined that the increased fees for additional
examinations will generate fees in amounts sufficient to cover the costs of
the additional examinations.
Inflation and rising program costs are factors necessitating the increased
fees. The fees charged by the department for additional examination have not
increased since May 6, 1996.
No comments were received regarding adoption of the new rule.
New §25.24 is adopted under Finance Code, §154.051,
which authorizes the commission to adopt reasonable rules to implement Finance
Code, Chapter 154, and Finance Code, §154.054, which authorizes the commission
to set fees in amounts that are sufficient to cover the cost of examinations,
the equitable and proportionate cost of maintaining and operating the department,
and the cost of enforcing Finance Code, Chapter 154.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301172
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 475-1300
7 TAC §26.1
The Finance Commission of Texas (commission) adopts the repeal
of §26.1, concerning fees and assessments, without changes to the proposed
text as published in the December 27, 2002, issue of the
Texas Register
(27 TexReg 12141).
Section 26.1 implements Health and Safety Code, §712.0031, which requires
an applicant to submit a $500 filing fee with its letter of intent to operate
a perpetual care cemetery, and 712.042, which requires the commission to set
perpetual care cemetery fees in amounts sufficient to defray the cost of administering
Health and Safety Code, Chapter 712. Concurrently with this repeal, the commission
is adopting new 26.1. New section 26.1 is in a plain language format. Under
existing 26.1, in addition to the $500 filing fee required under Health and
Safety Code §712.0031, each corporation payed an annual fee of $500.
Under new §26.1, the fee is $50 for a corporation with a fund balance
of less than $13,000, $500 for a corporation with a fund balance over $13,000
but not over $250,000, $750 for a corporation with a fund balance over $250,000
but not over $1 million, and $1,000 for a corporation with a fund balance
over $1 million.
Under new §26.1, examination fees are increased from $500 per examiner
per day plus associated travel costs to $600 per examiner per day plus associated
travel costs for any additional examination that is required in the same fiscal
year because of a corporation's failure to comply with Health and Safety Code,
Chapter 712, commission rules, or Texas Department of Banking (department)
requests. The increased examination fee for additional examinations is necessary
under Health and Safety Code, §712.042 because existing §26.1 does
not generate fees in amounts sufficient for the department to cover the costs
of additional examinations.
The commission received no comments regarding the proposal.
The repeal is adopted under Health and Safety Code, §712.042,
which requires the commission to set perpetual care cemetery fees in amounts
sufficient to defray the cost of administering Health and Safety Code, Chapter
712.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 14, 2003.
TRD-200301173
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: March 6, 2003
Proposal publication date: December 27, 2002
For further information, please call: (512) 475-1300
Subchapter Q. CHAPTER 342, PLAIN LANGUAGE CONTRACT PROVISIONS
Part 2.
TEXAS DEPARTMENT OF BANKING
Chapter 26.
PERPETUAL CARE CEMETERIES