Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 1.
CONSUMER CREDIT REGULATION
Subchapter J. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
7 TAC §§1.828, 1.836, 1.839, 1.841, 1.845
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter J, §§1.828, 1.836, 1.839, 1.841, and 1.845,
concerning authorized lender's duties and authority, in conjunction with the
commission's review of Subchapters J, K, P, and R. Additional amendments to
revise §§1.830 - 1.831, and 1.833 are anticipated in the near future.
In general, the purpose of the amendments to Subchapter J is to conform
the rules to the commission's current practice, to eliminate obsolete provisions,
to add clarification, and to correct typographical errors. In §1.828(b),
the definition of "collected funds" has been added for clarification. New
subsection (e) in §1.836 clarifies the procedure to correct errors made
using the true daily earnings method. Section 1.839 has been extensively revised
to conform with current agency practice in collecting follow-up examination
fees. A clarification concerning the acceptable electronic formats for submitting
non-standard contract filings has been added to subsection (c) of §1.841.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter J rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
For each year of the first five years the Subchapter J rules are in effect,
Commissioner Pettijohn has also determined that the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will conform to current practice, will be more easily understood by licensees
required to comply with the rules, and will be more easily enforced. There
is no anticipated cost to persons who are required to comply with the amendments
as proposed. There will be no adverse economic effect on small or micro businesses.
There will be no effect on individuals required to comply with the sections
as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §342.551 authorizes the
commission to adopt rules for the enforcement of the consumer loan chapter.
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 342, Subchapter J.
§1.828.Return of Instruments to Borrower.
(a)
Upon discharge of an indebtedness by payment,
renewal, or refinancing, a lender shall return an original or true and correct
copy of the instrument creating the indebtedness marked "PAID" or, in lieu
of a marked original or copy, provide a discharge and release of all obligations
under the loan to satisfy the requirements of §342.454, Texas Finance
Code. In addition, if a loan has been paid off, a lender shall give the borrower,
in a recordable form, a release of the lien, including a lien on
a
[
(b)
"Collected Funds" means cash or any other
form of payment that is, or has become, final. For example, an electronic
funds transfer that is actually received by the authorized lender from the
borrower's financial institution would be deemed to be collected funds.
§1.836.Correction of Errors or Violations.
(a)
Any amount found to be due a borrower may be credited to
the next payment or payments on the account of the borrower[
(b)
(No change.)
(c)
If the error correction or adjustment to an account is
related to an improper charge or proceeds improperly held by the licensee
on which interest has been precomputed, the licensee may alternatively credit
the final maturing installment or installments of the contract
,
provided
that credit is also given the borrower for the proportionate interest originally
charged on the amount being credited.
(d)
(No change.)
(e)
If the error correction or adjustment
is made to an account where the interest charge is earned using the true daily
earnings method, the licensee must refund the amount found to be due a borrower
plus the amount of accrued interest on this correction or adjustment amount.
§1.839. Follow-Up Examination Fees.
[(a)
Assessment. The commissioner will assess
and collect a nonrefundable examination fee designed to recover the expenditures
associated with the examination function, according to the formula in this
section.]
[(1)
General administrative fee per exam ($150.00). The administrative
and necessary costs necessary for the expenditures related to an examination;]
[(2)
Administrative fee for each additional day ($100.00).
The administrative and indirect costs necessary for the expenditures related
to each additional examination day required, and;]
[(3)
Hourly examination rate ($60.00). The direct and indirect
examiner cost for time required to conduct the examination.]
[(b)
Calculation of a day. A day is measured
as eight business hours spent on site conducting an examination.]
[(c)
Due date. An examination fee is due
upon delivery of the examination bill following the conclusion of an examination.]
[
§1.841.Non-Standard Contract Filing Procedures.
(a) - (b)
(No change.)
(c)
Filing requirements. Contract filings must be identified
as to the transaction type. Contract filings must be submitted on paper that
is suitable for permanent record storage and imaging. Handwritten forms or
handwritten corrections will not be accepted.
In addition to the paper
submission, the licensee must also submit the contract filings in an electronic
version. The electronic version must be submitted in a Corel WordPerfect (.wpd),
MS Word (.doc), or a text (.txt) format.
(d)
Contact
person
[
[(e)
Filing deadlines. Submission of non-standard
contracts is not required until the model contract provisions have been adopted
by rule.]
[(1)
For subchapter F loans under 342, non-standard contracts
are not required to be filed before May 1, 2002.]
[(2)
For subchapter E loans under 342, non-standard contracts
are not required to be filed until September 1, 2002.]
[(3)
For home equity loans, non-standard contracts are not
required to be filed before February 1, 2003.]
[(4)
For subchapter G purchase money loans, non-standard contracts
are not required to be filed before May 1, 2003.]
[(5)
For subchapter G home improvement loans, non-standard
contracts are not required to be filed before September 1, 2003.]
[(6)
For retail installment transactions under Chapter 348,
non-standard contracts are not required to be filed before March 1, 2004.]
§1.845.Complaints and Inquiries Notice.
(a)
(No change.)
(b)
Required
notice
[
(1) - (4)
(No change.)
(5)
In addition to the notice required to be included
on each privacy notice, a
[
(A) - (B)
(No change.)
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502515
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §§1.856 - 1.858, 1.861
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter K, §§1.856 - 1.858 and 1.861, concerning
prohibitions on authorized lenders, in conjunction with the commission's review
of Subchapters J, K, P, and R.
The purpose of the amendments to Subchapter K is to add clarification and
to correct typographical errors. A clarification has been added to §1.856
to note that a substantially similar statement to the quote contained in this
section may be utilized when using the state agency's name. In §1.861,
corrections have been made as to whom may be contacted for collection purposes,
and in particular, removing the borrower's spouse as a contact in subsections
(b) and (e). The remaining changes are technical and non-substantive in nature.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter K rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
For each year of the first five years the Subchapter K rules are in effect,
Commissioner Pettijohn has also determined that the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will be more easily understood by licensees required to comply with the rules,
and will be more easily enforced. There is no anticipated cost to persons
who are required to comply with the amendments as proposed. There will be
no adverse economic effect on small or micro businesses. There will be no
effect on individuals required to comply with the sections as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §342.551 authorizes the
commission to adopt rules for the enforcement of the consumer loan chapter.
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 342, Subchapter K.
§1.856.Use of State Agency Name.
It shall be permissible for a licensee of the Office of Consumer Credit
Commissioner to publicly display or advertise the following
or a substantially
similar
statement: "This office is licensed and examined by the Office
of Consumer Credit Commissioner of the State of Texas."
§1.857.Full Disclosure Requirements--Other Than Open - End or Revolving Loan Plans.
(a)
(No change.)
(b)
The information required by this
section
[
(c)
(No change.)
(d)
For purposes of this section, compliance by an authorized
lender with the
federal
[
§1.858.Full Disclosure Requirements--Open - End or Revolving Loan Plans.
(a)
Any advertisement of an open-end or revolving loan plan
which states any of the specific terms of that plan, shall also clearly and
conspicuously set forth the following items:
(1) - (3)
(No change.)
(4)
the method by which any charge for insurance, if any, is
to be calculated
, and
;
(5)
when periodic rates may be used to compute the finance
charge
,
the periodic rates expressed as annual percentage rates.
(b)
For purposes of this section, compliance by an authorized
lender with the
federal
[
§1.861.Collection Contacts.
(a)
A licensee or the licensee's agent shall have the right
to contact any person in order to secure information concerning a borrower,
unless any person other than the borrower, the borrower's spouse, a member
of the borrower's household, a
co-borrower
[
(b)
A licensee or the licensee's agent shall not solicit the
payment of all or any part of any debt subject to this title from any person
other than the borrower, [
(c)
(No change.)
(d)
[
(e)
Without the prior written consent of the borrower given
directly to the licensee or the express permission of a court of competent
jurisdiction, a licensee may not communicate any information pertaining to
a debt or obligation unless the person receiving the information is the borrower,
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502517
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §1.901, §1.902
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter P, §1.901 and §1.902, concerning registration
of retail creditors, in conjunction with the commission's review of Subchapters
J, K, P, and R.
The amendments to Subchapter P remove obsolete provisions and correct typographical
errors. Subsection (c) has been removed from §1.901, as subsection (c)
was only intended to address issues arising within one year after the initial
adoption of this rule. In §1.902, the references to Chapter 348 have
been deleted, as lenders under Chapter 348 are now required to be licensed
(not just registered) with the agency, and are no longer required to pay annual
registration fees.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter P rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
For each year of the first five years the Subchapter P rules are in effect,
Commissioner Pettijohn has also determined that the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will be more easily understood by licensees required to comply with the rules,
and will be more easily enforced. There is no anticipated cost to persons
who are required to comply with the amendments as proposed. There will be
no adverse economic effect on small or micro businesses. There will be no
effect on individuals required to comply with the sections as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §342.551 authorizes the
commission to adopt rules for the enforcement of the consumer loan chapter.
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 347, Subchapters J
and K.
§1.901.Consumer Notifications.
(a) - (b)
(No change.)
[(c)
A retail seller as that term is defined
in Chapter 345 or in Chapter 348 or a creditor as that term is defined in
Chapter 347 may continue to use the notice as previously required by this
section without modification for a period of one year following the effective
date of this rule.]
§1.902.Annual Registration Fees.
(a)
(No change.)
(b)
An annual fee is required under the provisions of Texas
Finance Code, §345.351
or
[
(1)
A
[
(2)
A
retail seller, holder, creditor, or assignee
who begins business under Texas Finance Code, Chapter 345
or
[
(3) - (4)
(No change.)
(5)
No annual fee is required for a location operated by a
retail seller, creditor, holder, or assignee operating under the provisions
of Texas Finance Code, Chapter 345
or
[
(c)
Evidence of registration. The Office of Consumer Credit
Commissioner will issue a decal evidencing registration under the provisions
of Texas Finance Code, Chapter 345
or
[
(1) - (2)
(No change.)
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502516
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §§1.1301, 1.1303, 1.1307, 1.1308
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter R, §§1.1301, 1.1303, 1.1307 and 1.1308,
concerning motor vehicle installment sales contract provisions, in conjunction
with the commission's review of Subchapters J, K, P, and R.
The purpose of the amendments to Subchapter R is to make technical corrections,
to add clarification, and to update the revised section numbers referencing
other law. In §1.1303, the definition of "contract rate" has been added.
In §1.1308, clarification has been made concerning the meaning of "peacefully."
The remaining changes are technical and non-substantive in nature. Technical
corrections to several figures have been made as well.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter R rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
For each year of the first five years the Subchapter R rules are in effect,
Commissioner Pettijohn has also determined that the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will be more easily understood by licensees required to comply with the rules,
and will be more easily enforced. There is no anticipated cost to persons
who are required to comply with the amendments as proposed. There will be
no adverse economic effect on small or micro businesses. There will be no
effect on individuals required to comply with the sections as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §348.513 authorizes the
commission to adopt rules for the enforcement of the motor vehicle installment
sales chapter.
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 348.
§1.1301.Purpose.
(a)
The purpose of this subchapter is to provide [
(b)
These provisions are intended to constitute a complete
plain language motor vehicle installment sales contract
;
[
§1.1303.Definitions.
The following words and terms, when used in this subchapter, have the
following meanings, unless the context clearly indicates otherwise:
(1)
(No change.)
(2)
Add-on method--A method for calculating a precomputed time
price differential charge in which the retail buyer agrees to pay the total
of payments. The total of payments includes both
the
principal
balance of the contract and the time price differential charge. The add-on
time price differential charge is calculated at the inception of the contract
on the principal balance for the full term, as if the principal balance of
the contract did not decline over the term of the contract.
(3)
Contract rate--The annual time
price differential rate stated in the retail installment contract that accrues
or is assessed against the principal balance that is subject to a finance
charge for the term of the contract. The contract rate cannot exceed the daily
rate converted to an annualized rate.
(4)
[
(5)
[
(6)
[
(A)
That is payable in installments that are not consecutive,
monthly, and substantially equal in amount; or
(B)
The first scheduled installment of which is due later than
1 month and 15 days after the date of the contract.
(7)
[
(8)
[
(9)
[
(10)
[
(A)
Under this method, the finance charge refund is calculated
as follows:
(i)
Subtract an acquisition fee not greater than $150 for a
heavy commercial vehicle, or $25 for other vehicles, from the total finance
charge.
(ii)
Multiply the amount computed in clause (i) of this subparagraph
by the refund percentage computed below. The result is the finance charge
refund.
(iii)
Compute the refund percentage by:
(I)
Computing the sum of the unpaid monthly balances under
the contract's schedule of payments beginning:
(-a-)
On the first day, after the date of the prepayment or
demand for payment in full
;
[
(-b-)
If the prepayment or demand for payment in full is made
before the first installment date under the contract, one month after the
date of the second scheduled payment of the contract occurring after the prepayment
or demand;
(II)
Dividing the result in subclause (I) of this clause by
the sum of all of the monthly balances under the contract's schedule of payments.
(B)
As an alternative for heavy commercial vehicles, as defined
in the Texas Finance Code, the sum of the periodic balances method may be
computed as follows:
(i)
Multiply the total finance charge by a refund percentage
determined as follows:
(I)
Compute the sum of the unpaid monthly balances under the
contract's schedule of payments beginning:
(-a-)
On the first day, after the date of the prepayment or
demand for payment in full
;
[
(-b-)
If the prepayment or demand for payment in full is made
before the first installment date under the contract, one month after the
date of the second scheduled payment of the contract occurring after the prepayment
or demand;
(II)
Divide the result in subclause (I) of this clause by the
sum of all of the monthly balances under the contract's schedule of payments.
(ii)
From the result derived in clause (i) of this subparagraph,
deduct an acquisition fee not to exceed $150.
(C)
The creditor is not required to give a finance charge refund
if it would be less than $1.00.
(D)
These methods may not be used with an irregular payment
contract.
(11)
[
(12)
[
§1.1307Contract Provisions.
A Chapter 348 motor vehicle installment sales contract may include,
the following contract provisions to the extent not prohibited by law or regulation.
If the seller desires to assess certain charges or exercise certain rights
under one of the following provisions, except provisions relating to default,
repossessions, acceleration, and assignment of the contract, the seller must
include the provision in the contract. A seller may delete inapplicable provisions.
A seller who does not desire to apply a provision is not required to include
it in the contract. For example, the seller may omit the balloon payment provisions
if there is no balloon payment. A seller may also exclude non-relevant portions
of a model clause. For example, a seller who does not routinely finance certain
insurance coverages may omit those non-applicable portions of the model clause.
A Chapter 348 motor vehicle installment sales contract [
(1) - (7)
(No change.)
(8)
An
itemization
[
(9) - (24)
(No change.)
(25)
An agreement to keep
the
motor vehicle insured.
(26) - (29)
(No change.)
(30)
A transfer of rights
provision
[
(31) - (32)
(No change.)
(33)
Agreements regarding the care of the motor vehicle,
which may include:
[
(34) - (45)
(No change.)
§1.1308.Model Clauses.
The following model
clauses provide
[
(1)
Identification of parties. This information identifies
the parties to the contract.
(A)
The model identification clause lists the name and address
of the creditor, the date of the contract, and the name and address of the
buyer. At the creditor's option, a creditor may include an account number
or contract number. The model clause reads:
(B)
(No change.)
(2)
Assignment of
contract
[
(3)
Buyer's
affirmation
[
(4)
Inspection
acknowledgement
[
(5)
Identification of the
motor vehicle
[
(6)
Trade-in
vehicle description
[
Figure: 7 TAC §1.1308(6) (No change.)
(7)
Truth-in-Lending Act
disclosure
[
Figure: 7 TAC §1.1308(7) (No change.)
(8)
Itemization of
amount financed
[
(A)
The model clause regarding
itemization
[
Figure: 7 TAC §1.1308(8)(A) (No change.)
(B)
The model clause regarding
itemization
[
Figure: 7 TAC §1.1308(8)(B) (No change.)
(9)
Documentary
fee
[
(A)
The following notice satisfies the requirements of Texas
Finance Code §348.006 if printed in a size equal to at least ten-point
type that is boldfaced, capitalized, underlined, or otherwise set out from
surrounding written material so as to be conspicuous and within reasonable
proximity to the place at which the fee is disclosed. The
parenthetical
phrase
[
(B)
The following notice is a sufficient Spanish translation
of the documentary fee disclosure required by Texas Finance Code §348.006.
The
parenthetical phrase
[
(10)
Deferred
downpayments
[
Figure: 7 TAC §1.1308(10) (No change.)
(11)
Required
physical damage insurance
[
(12) Optional
insurance coverages
[
(13)
Optional
credit life
[
(14) Liability
insurance
[
(A) - (C)
(No change.)
(15)
Prohibition
against oral modifications
[
Figure: 7 TAC §1.1308(15) (No change.)
(16)
Finance
charge earnings methods
[
(A)
Regular
transaction
[
(i)
Sales
tax advance
[
(I) - (II)
(No change.)
(ii)
Deferred
sales tax
[
(B)
True
daily earnings method
[
(i)
Sales
tax advance
[
(I) - (II)
(No change.)
(ii)
Deferred
sales tax
[
(C)
Scheduled
installment earnings method
[
(i)
Sales
tax advance
[
(I) - (II)
(No change.)
(ii)
Deferred
sales tax
[
(17)
Consumer
warning
[
(A)
(No change.)
(B)
For contracts using the true daily earnings method. [
(18)
Buyer's
acknowledgment
[
(A)
The following acknowledgments conform to the requirements
of Texas Finance Code §348.112 if they appear directly above the place
for the buyer's signature in at least ten-point type that is boldfaced, capitalized,
underlined, or otherwise set out from surrounding written material so as to
be conspicuous. A creditor may
choose
[
(i) - (iv)
(No change.)
(B)
Acceptance of
contract receipt
[
Figure: 7 TAC §1.1308(18)(B) (No change.)
(19)
Consumer
credit commissioner notice
[
(20)
Finance
charge refund method
[
(A) - (C)
(No change.)
(21)
Application of
payments
[
Figure: 7 TAC §1.1308(21) (No change.)
(22)
Effect of
early
[
(23)
Interest on
matured amount
[
(24)
Balloon
payments
[
(A) - (B)
(No change.)
(25)
Agreement to
keep
[
(26)
Your
right
[
(27)
Physical
damage insurance proceeds
[
(28)
Returned
insurance premiums
[
(A) - (B)
(No change.)
(29)
Application of
credits
[
(30)
Transfer of
rights
[
(31)
Grant of a
security interest
[
Figure: 7 TAC §1.1308(31) (No change.)
(32)
Agreements
regarding
[
(33)
Care of the
motor vehicle
[
(34)
Default
rights
[
(A)
Acceleration and
default
[
Figure: 7 TAC §1.1308(34)(A) (No change.)
(B)
Late
charge
[
(C)
Repossession. At the creditor's option a creditor may choose
one of the following model
provisions
[
(i)
"If I default, you may repossess the motor vehicle from
me if you do so peacefully. If any personal items are in the motor vehicle,
you can store them for me and give me written notice at my last address shown
on your records within 15 days of discovering that you have my personal items.
If I do not ask for these items back within 31 days from the day you mail
or deliver the notice to me, you may dispose of them as applicable law allows.
Any accessory, equipment, or replacement part stays with the motor vehicle."
In this provision, the term "peacefully" is intended to have the same meaning
as "
without breaching the
[
(ii)
(No change.)
(D) - (G)
(No change.)
(35)
Acceleration,
waiver
[
(36)
Refund
upon acceleration
[
(37)
Integration and
severability
[
(38)
No
waiver
[
(A) - (C)
(No change.)
(39)
Applicable
law
[
(40)
Warranty
disclaimer
[
(41)
Preservation of
consumer's claims
[
(42)
Used
car buyer's guide
[
(A) - (B)
(No change.)
(43)
Negotiability and
assignment
[
(A)
"
The Annual Percentage Rate may be negotiated
with the Seller. The Seller may assign this contract and retain its right
to receive a part of the Finance Charge
"
;
(B)
"
The rates of this contract are negotiable.
The seller may assign or otherwise sell this contract and receive a discount
or other payment for the difference between the rate, charges, or balance
"
; or
(C)
"
A customer may obtain their own financing.
The finance charge may be negotiable. The dealership may assign the retail
installment contract. There is no duty to disclose the terms for the sale
of this contract (e.g., price paid to retail seller to purchase retail installment
contract).
"
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502518
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
Chapter 85.
RULES OF OPERATION FOR PAWNSHOPS
Subchapter B. PAWNSHOP LICENSE
7 TAC §§85.202, 85.203, 85.205, 85.206, 85.210, 85.211
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter B, §§85.202, 85.203, 85.205, 85.206, 85.210,
and 85.211, concerning pawnshop license, in conjunction with the commission's
review of Chapter 85.
In general, the purpose of the amendments is to conform the rules to the
commission's current practice, to add clarification, to correct section numbers
referencing other law, and to correct typographical errors. Sections 85.202,
85.205, and 85.210 have been revised, mainly to update form numbers and to
align the rules with current agency licensing application procedures. In §85.203,
three types of revisions have occurred: (1) the substantive language of §85.409
(which is being proposed for repeal separately in this issue of the
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the amendments as proposed are in effect, there
will be no fiscal implications for state or local government as a result of
administering the amended sections.
Commissioner Pettijohn also has determined that for each year of the first
five years the amendments as proposed are in effect, the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will conform to current practice, will be more easily understood by licensees
required to comply with the rules, and will be more easily enforced. There
is no anticipated cost to persons who are required to comply with the amendments
as proposed. There will be no adverse economic effect on small or micro businesses.
There will be no effect on individuals required to comply with the amendments
as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by e-mail to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 371.
§85.202.Filing of New Application.
(a)
An application for issuance of a new pawnshop license must
be submitted on forms prescribed by the commissioner at the date of filing.
The application shall include the following:
(1)
Required forms. All questions must be answered.
(A)
Application
for License (ADM 10a)
[
(i)
A physical street address must be listed for the proposed
location for which the applicant can show proof of ownership or an executed
lease agreement. A post office box or a mail box location at a private mail-receiving
service may not be used except for a physical location that does not receive
general mail delivery. An application will not be accepted if the address
or the full legal property description has not yet been determined or the
application is for an inactive license.
(ii)
Each person who is responsible for the
day-to-day operation of one or more of the applicant's proposed locations
must be named. This person must be:
(I)
a principal party as defined below;
(II)
a licensed pawnshop employee identified by license number;
or
(III)
an applicant for a pawnshop employee license with the
date of application.
(iii)
On an application for a sole proprietorship
or a partnership, the proprietor and each general partner must sign. On an
application for a corporate applicant, two officers must sign unless only
one officer of the corporation has been appointed. On an application for a
limited liability company, two authorized members must sign unless the company
only has one member. On an application for a trust or an estate, each trustee
or executor must sign.
(B)
Application Questionnaire (ADM 10b). All
questions must be answered.
(C)
Disclosure of Owners and Principal Parties
(ADM 11).
(i)
[
(ii)
[
(I)
Sole proprietorship. The individual owning and operating
the business must be named.
(II)
General partnership. Each partner must be listed and the
percentage of ownership stated.
(III)
Corporation. Each shareholder holding voting stock must
be named if the corporation is privately held. If a parent corporation is
the sole or part owner of the proposed business, a narrative or diagram must
be attached that describes each level of ownership and management. This narrative
or diagram requires the listing of the names of all officers, directors, and
stockholders owning 5% or more stock at each level.
(IV)
Limited partnership. Each partner, general and limited,
must be listed and the percentage of ownership stated. If a partner is a business
entity and not an individual, a narrative or diagram must be attached that
describes each level of ownership. This narrative or diagram requires the
listing of the names of all officers, directors, and stockholders owning 5%
or more stock at each level.
(V)
Limited liability company. Each manager, officer, agent,
and member, as those terms are used by the Texas Limited Liability Company
Act, Texas Civil Statutes Art. 1528n, must be named. If a member is a business
entity and not an individual, a narrative or diagram must be attached that
describes each level of ownership. This narrative or diagram requires the
listing of the names of all officers, directors, and stockholders owning 5%
or more stock at each level.
(VI)
Trusts or estates. Each beneficiary, trustee, and executor
must be named.
[(iv)
Manager. Each person who is responsible
for the day-to-day operation of one or more of applicant's proposed locations
must be named. The manager must be:]
[(I)
a principal party as defined above;]
[(II)
a licensed pawnshop employee identified by license number;
or]
[(III)
an applicant for a pawnshop employee license with the
date of application.]
[(v)
Supervisor. Each person who will be responsible
for the supervision of a licensed location must be named. The supervisor must
be:]
[(I)
a principal party as defined above;]
[(II)
a licensed pawnshop employee identified by license number;
or]
[(III)
an applicant for a pawnshop employee license with the
date of application.]
[(vi)
Signature. On an application for a sole
proprietorship or a partnership, each proprietor and general partner must
sign. On an application for a corporate applicant, two officers must sign
unless only one officer of the corporation has been appointed. On an application
for a limited liability company, two authorized members must sign unless the
company only has one member. On an application for a trust or an estate, each
trustee or executor must sign.]
(D)
[
(E)
[
(F)
Personal Employment History (ADM 15b).
A continuous 10-year history must be provided.
(G)
Personal Questionnaire (ADM 16). All questions
must be answered.
(H)
[
(I)
[
(i)
General information. A financial statement must be dated
no earlier than sixty (60) days prior to the date of application. An applicant
may also submit an audited financial statement dated within one year prior
to the application date
in lieu of completing the Supporting Financial
Information (ADM 18/19)
[
(I)
As
[
(II)
The amount required by the Texas Pawnshop Act §371.072(b)
as the license existed or should have existed under the law and rules in effect
on August 31, 1999. A change in net asset requirement occurs with respect
to any change of ownership or other event causing a change in the net asset
requirement that may have occurred prior to September 1, 1999. The change
in the net asset requirement is effective as of the date of change of ownership
or other event causing the change of the net asset requirement.
(ii)
Sole proprietorship. A sole proprietor must complete all
sections of
the Personal Financial Statement (ADM 17)
[
(iii)
Partnership. A balance sheet for the partnership itself
must be submitted. In addition, each general partner must submit a balance
sheet. Each balance sheet for the partnership and the partners must be dated
the same day. The information requested in
Supporting Financial Information
(ADM 18/19)
[
(iv)
Corporation or limited liability company. A corporation
or a limited liability company must file a balance sheet. The information
requested in
Supporting Financial Information (ADM 18/19)
[
(v)
Trusts or estates. A trust or an estate must file a balance
sheet. The information requested in
Supporting Financial Information
(ADM 18/19)
[
(J)
[
(i)
Corporation, limited partnership, or limited liability
company. An applicant using or planning to use an assumed name must file an
assumed name certificate (ADM-21 or its equivalent) in compliance with Tex.
Bus. & Comm. Code, §36.0011, as amended. Evidence of the filing bearing
the appropriate filing stamp must be submitted or, alternatively, a certified
copy.
(ii)
All other applicants. An applicant using or planning to
use an assumed name must file an assumed name certificate (ADM-20 or its equivalent)
with the county clerk of the county where the proposed business is located
in compliance with Tex. Bus. & Comm. Code, §36.0010, as amended.
An applicant must provide a copy of the assumed name certificate that shows
the filing stamp of the county clerk or, alternatively, a certified copy.
(2)
Other required filings.
(A)
(No change.)
(B)
Entity documents.
(i)
(No change.)
(ii)
Corporation.
(I)
A corporate applicant, domestic or foreign, must provide
the following documents:
(-a-) - (-b-)
(No change.)
(-c-)
Minutes of corporate meetings that record the election
of each current officer and director as listed on the
Disclosure of Owners
and Principal Parties (ADM 11)
[
(-d-)
(No change.)
(II) - (III)
(No change.)
(iii) - (iv)
(No change.)
(C) - (E)
(No change.)
(F)
Proof of general liability and fire insurance. Each applicant
shall file
proof of insurance as required in §85.403 of this title
[
(b)
Subsequent applications. If the applicant is currently
licensed and filing an application for a new location, the applicant must
provide the forms and other information that are unique to the new location
including the
Application for License (ADM 10a)
[
(c)
(No change.)
§85.203.Relocation.
(a)
Definition.
(1)
As used in [
(A) - (B)
(No change.)
(2)
As used in §371.059 of the Texas Pawnshop Act and
in this section, [
(b)
(No change.)
(c)
Filing requirements. An application for relocation must
be submitted on forms prescribed by the commissioner. The application for
relocation shall include the following:
(1)
Application for Relocation (ADM 36)
[
(2)
Personal
Financial
Statement
[
(3)
Other required filings.
(A) - (C)
(No change.)
(D)
Proof of general liability and fire insurance. If the license
requested for relocation includes the activation of a license that is inactive
at the date of the request for relocation,
proof of insurance as required
in §85.403 of this title
[
(d)
(No change.)
(e)
Notice to customer. A written notice of relocation must
be given to each
pledgor
[
(f)
(No change.)
(g)
Pawn transactions. If the pawnbroker is
only transferring pawn transactions from one licensed location to another
licensed location, the pawnbroker must comply with subsection (e) of this
section and provide, if requested, a list of pawn transactions transferred.
This list of transferred pawn transactions shall include the pawn ticket number
and the full name of the pledgor.
§85.205.Transfer of License.
(a) - (b)
(No change.)
(c)
Filing requirements. An application for transfer of a pawnshop
license must be submitted on forms prescribed by the commissioner. The application
for transfer must include the following:
(1)
Application for License (ADM 10a)
[
(2)
Application Questionnaire (ADM 10b). The
instructions in §85.202 of this title are applicable to this filing.
(3)
Disclosure of Owners and Principal Parties
(ADM 11). The instructions in §85.202 of this title are applicable to
this filing.
(4)
[
(5)
[
(6)
Personal Employment History (ADM 15b).
A continuous 10-year history must be provided.
(7)
Personal Questionnaire (ADM 16). All questions
must be answered.
(8)
[
(9)
[
(A)
a copy of the asset purchase agreement when the license
or other assets have been purchased, including a statement relating to the
sale of the license;
(B)
a copy of the stock purchase agreement or other evidence
of a stock transfer; or
(C)
a copy of any document that transferred ownership in a
license
[
(10)
[
(11)
[
(d)
Transferee operating under
transferor's
[
(e)
(No change.)
§85.206.Processing of Application.
(a) - (f)
(No change.)
(g)
Hearing. When an application is denied, the applicant has
30 days from the date of the denial to request a hearing in writing to contest
the denial. Also, upon a proper and timely protest pursuant to subsection
(e)
of this section
, a hearing shall be set. This hearing shall
be conducted within 60 days of the date of the appeal or protest unless the
parties agree to an extension of time or the administrative law judge grants
an extension of time pursuant to the Administrative Procedure Act, Texas Government
Code, Chapter 2001 and
§9.1
[
(h)
(No change.)
§85.210.Designation of Active or Inactive Status.
(a)
Inactivation of an active license. A licensee may cease
operating a pawnshop and render the license inactive by giving notice of the
cessation of operations to the commissioner not less than 30 days prior to
the anticipated cessation date. Notification must be filed on the license
amendment form
(ADM 37)
[
(b)
(No change.)
§85.211.Fees.
(a)
New licenses. A $500 investigation fee is assessed each
time an application for a new license is filed and is non-refundable. In addition,
the applicant is initially required to pay
the fees required by subsection
(e)(6) of this section
[
(b)
Subsequent licenses. A $250 investigation fee is assessed
each time an application for a new license of an existing licensee is filed
or if the application involves substantially identical principals and owners
of a licensed pawnshop and is non-refundable. In addition, the applicant is
initially required to pay
the fees required by subsection (e)(6) of this
section
[
(c) - (d)
(No change.)
(e)
Annual
renewal
[
(1) - (5)
(No change.)
(6)
Upon approval of a new pawnshop license pursuant to [
(f) - (j)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502519
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §§85.301, 85.303, 85.304
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter C, §§85.301, 85.303, and 85.304, concerning
pawnshop employee license, in conjunction with the commission's review of
Chapter 85. In addition, the commission proposes the adoption of new §85.308,
published elsewhere in this issue of the
Texas Register
.
In general, the purpose of the amendments is to conform the rules to the
commission's current practice, to correct a section number referencing other
law, to add clarification, and to correct typographical and grammatical errors.
A form number has been updated in §85.301 in order to align the rule
with current agency licensing application procedures. A phrase has been moved
for clarity to correct a grammatical error in §85.303. In §85.304,
a citation concerning the rules governing administrative hearings has been
corrected.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter C rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
Commissioner Pettijohn also has determined that for each year of the first
five years the Subchapter C rules are in effect, the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will conform to current practice, will be more easily understood by licensees
required to comply with the rules, and will be more easily enforced. There
is no anticipated cost to persons who are required to comply with the amendments
as proposed. There will be no adverse economic effect on small or micro businesses.
There will be no effect on individuals required to comply with the sections
as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 371.
§85.301.Filing of New Application.
An application for issuance of a new employee license must be submitted
on forms prescribed by the commissioner. The application shall include the
following required forms. All questions must be answered.
(1)
Application
Form
[
(A) - (E)
(No change.)
(2)
Fingerprint
Cards
[
§85.303.Notification of Hiring.
It is the responsibility of a pawnshop to notify the commissioner
within a reasonable period of time
when a licensed employee begins working
at a pawnshop [
§85.304.Processing of Application.
(a) - (d)
(No change.)
(e)
Hearing. When an application is denied, the applicant has
30 days from the date of the denial to request a hearing in writing to contest
the denial. This hearing shall be conducted pursuant to the Administrative
Procedure Act, Texas Government Code, Chapter 2001 and [
(f)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502521
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §85.308
The Finance Commission of Texas (the commission) proposes
new §85.308, concerning the availability of pawnshop employee license
information, in conjunction with the commission's review of Chapter 85. The
purpose of the new rule is to require that pawnbrokers maintain readily available
copies of pawnshop employee licenses and documents relating to pending pawnshop
employee applications. This rule formalizes an existing examination practice
and the recordkeeping commonly in place by pawnshops relative to pawnshop
employee licenses.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the new rule is in effect, there will be no
fiscal implications for state or local government as a result of administering
the rule as proposed.
Commissioner Pettijohn also has determined that for each year of the first
five years the new rule as proposed will be in effect, the public benefit
anticipated as a result of the new rule will be to help ensure that pawnshop
employees are properly licensed to conduct pawn transactions and that pawnshop
records will appropriately reflect an employee's status (i.e., licensed or
pending). There is no anticipated cost to persons who are required to comply
with the new rule as proposed. There will be no adverse economic effect on
small or micro businesses. There will be no effect on individuals required
to comply with the section as proposed, as it is the agency's experience that
many pawnshop employees already display their licenses within the pawnshops.
Comments on the proposed new rule may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
This new rule is proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
new section are contained in Texas Finance Code, Chapter 371.
§85.308.Availability of Pawnshop Employee License Information.
A pawnbroker must maintain adequate written documents demonstrating
that all pawnshop employees are either properly licensed pursuant to Texas
Finance Code, §371.101 or have applied for a pawnshop employee license.
During an examination by the commissioner or the commissioner's representative,
or an inspection by a peace officer, copies of the pawnshop employee licenses
or copies of records relating to any pending applications for pawnshop employee
licenses must be readily available.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502520
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §§85.401, 85.404, 85.407, 85.410, 85.413, 85.416, 85.418, 85.420
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter D, §§85.401, 85.404, 85.407, 85.410, 85.413,
85.416, 85.418, and 85.420, concerning operation of pawnshops, in conjunction
with the commission's review of Chapter 85. The commission is proposing the
repeal of §85.409, which is published elsewhere in this issue of the
In general, the purpose of the amendments is to add clarification, to correct
section numbers referencing other law, and to correct typographical errors.
The word "national" has been replaced by "federal" to clarify which holidays
fall under §85.401. Citation references have been corrected in §85.404
and §85.420. Clarifying language has been added to §85.407 and §85.413.
In §§85.410, 85.413, and 85.418, typographical errors have been
corrected. New subsection (c) has been added to §85.416 in reference
to the translation of foreign text in advertisements. Also, technical corrections
have been made to figures contained within §85.407 and §85.418.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the amendments as proposed are in effect, there
will be no fiscal implications for state or local government as a result of
administering the amended sections.
Commissioner Pettijohn also has determined that for each year of the first
five years the amendments as proposed are in effect, the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will be more easily understood by licensees required to comply with the rules,
and will be more easily enforced.
The addition of subsection (c) to §85.416 provides parallel language
to that which is contained in 7 TAC §1.834, which is applicable to regulated
lenders, concerning the translation of foreign text in advertisements. There
might be a minimal cost associated in complying with new subsection (c), but
only for those licensees who have not already translated their advertisements
into English. There will be little to no effect on individuals required to
comply with the amendments as proposed, aside from the small cost noted above
in connection with foreign advertisement translations. To reduce or eliminate
such costs, licensees may utilize public domain translation resources that
are available at no cost. Other than the negligible potential cost under §85.416(c),
there are no other anticipated costs to persons who are required to comply
with the amendments as proposed. There will be no adverse economic effect
on small or micro businesses.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by e-mail to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 371.
§85.401.Hours and Days of Operation.
(a)
(No change.)
(b)
Approved closing.
(1)
Holiday closing.
(A)
A pawnshop may be closed on any
federal
[
(B)
(No change.)
(2) - (3)
(No change.)
(c)
Effect of closing.
(1)
Non-holiday closing. The amount of pawn service charge
scheduled to accrue on each pawn transaction from the date of non-holiday
closing pursuant to
subsection
(b)(2)
of this section
until
actual redemption must be waived for any person who states an attempt was
made to redeem goods during the closing.
(2)
(No change.)
§85.404.Security of Pledged Goods.
(a) - (b)
(No change.)
(c)
Exterior storage of pledged goods. If pledged goods are
accepted and cannot reasonably be stored inside the pawnshop (e.g., motor
vehicles, boats, trailers, construction equipment), the goods must be stored
adjoining the pawnshop and must be securely enclosed by protective fencing
unless those goods are stored in compliance with subsection (d) of this section.
Any damage or deterioration of the pledged goods resulting from outdoor storage
will be handled in accordance with
§85.413
[
(d) - (e)
(No change.)
§85.407.Memorandum of Extension.
(a)
Prescribed form and content. If an extension of a pawn
transaction is made, a written memorandum must be used to document the extension
of the maturity date. The prescribed memorandum form is shown in Figure: 7
TAC
§
85.407(a). The printed portions of the memorandum must
be legible and all the information must be reproduced on all parts.
(b) (No change.)
(c)
Distribution of copies. The original memorandum must be
given to the person paying for the extension or, if paid by mail, sent to
the pledgor. The location of all memorandum copies relating to a particular
pawn ticket must be documented:
(1)
in the electronic system
(if the memorandum of extension
form can be reproduced in its actual original printed format)
; or
(2)
(No change.)
(d) - (f)
(No change.)
§85.410.Lost or Destroyed Pawn Ticket.
(a) - (c)
(No change.)
(d)
Suggested guidelines. These suggested guidelines are intended
to give pawnshops considerable flexibility to fit individual needs while providing
some guidance. Modifications to the guidelines may be made without the loss
of protection from any liability defense. When oral notification that a pawn
ticket has been lost or stolen is received, the pledgor is instructed to give
the notice in writing within
the
next two (2) business days. If
a person other than the pledgor presents the pawn ticket in an attempt to
redeem the item prior to timely receiving written notice, it is suggested
that:
(1) - (4)
(No change.)
§85.413.Lost or Damaged Goods.
(a) - (d)
(No change.)
(e)
Communications with pledgors.
(1) - (5)
(No change.)
(6)
When an attempt or offer to redeem, renew, or extend a
pawn transaction is made and it is known or learned that pledged goods have
been lost or damaged, the pledgor must accurately be informed of the facts
of the situation, the status of the pledged goods, the pawnbroker's responsibility
under the Texas Finance Code, Chapter 371, and the pledgor's rights under
paragraph (5) of this subsection. A model disclosure is provided in Figure:
7 TAC
§
85.413(e)(6).
Figure: 7 TAC §85.413(e)(6) (No change.)
(f)
(No change.)
(g)
Partial redemption. If one or more items pledged on a pawn
transaction are not lost or damaged and are available for redemption, the
pledgor may redeem the available items by negotiating a partial, proportionate
payment not to exceed the pawn service charge limitations in the Texas Finance
Code,
Chapter 371,
Subchapter D.
(h)
Replacement complaints. Upon request by the person attempting
to redeem pledged goods, a complaint form issued by the commissioner must
be provided. The complaint form is provided in Figure: 7 TAC
§
85.413(h).
The agency will begin review of a complaint for lost or damaged items upon
receipt of the written complaint.
Figure: 7 TAC §85.413(h) (No change.)
(1) - (4)
(No change.)
§85.416.Advertisements.
(a) - (b)
(No change.)
(c)
Translation of foreign text of advertisement.
If any language other than English is used in any advertising material, a
true and correct translation must be maintained along with the advertising
material.
(d)
[
§85.418.Acceptance of Goods.
(a)
Monitoring of transactions and customers.
(1)
(No change.)
(2)
Written policy. A written policy must be established for
the acceptance of pledged goods. The policy must expressly identify situations
which may involve the attempted pawn of stolen goods and must list procedures
to be followed in order to avoid the acceptance of stolen goods. A copy of
the policy must be provided to each employee. Each employee must sign a document
acknowledging receipt and understanding of the policy. A copy of each signed
receipt must be placed in the compliance file. Alternatively, a pawnshop may
employ another systematic method of filing receipts that allows for the appropriate
retrieval of records for inspection. A model policy may be found in Figure:
7 TAC
§
85.418(a)(2).
(3) - (5) (No change.)
(b)
(No change.)
§85.420.Purchase Transactions.
(a)
Relevant pawn provisions. Accepting goods in a purchase
transaction must be done in compliance with all relevant administrative rules,
in the context of the purchase transaction in the same manner as if the transaction
were a pawn transaction. These rules include:
(1) - (2)
(No change.)
(3)
§85.405(c)
[
(4)
§85.405(e)
[
(5)
§85.405(f)
[
(6) - (8)
(No change.)
(b)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502522
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §85.409
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the Office of
Consumer Credit Commissioner or in the Texas Register office, Room 245, James
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Finance Commission of Texas (the commission)
proposes the repeal of §85.409, concerning the sale of pawn transactions.
As part of an agency rule review, the commission has determined that the substance
of §85.409 would more logically be included as part of §85.203.
Proposed amendments elsewhere in this issue of the
Texas Register
seek to incorporate the old §85.409 within §85.203,
concerning relocation.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the repeal as proposed will be in effect, there
will be no fiscal implications for state or local government as a result of
administering or enforcing the repeal.
Commissioner Pettijohn also has determined that for each year of the first
five years the repeal as proposed will be in effect, the public benefit anticipated
as a result of the repeal will be a more logical location of this information
for our licensees. There is no anticipated cost to persons who are required
to comply with the repeal as proposed. There will be no adverse economic effect
on small or micro businesses. There will be no effect on individuals required
to comply with the repeal as proposed.
Comments on the proposed repeal may be submitted in writing to Sealy Hutchings,
General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar
Boulevard, Austin, Texas 78705-4207, or by e-mail to sealy.hutchings@occc.state.tx.us.
The repeal is proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
repeal are contained in Texas Finance Code, Chapter 371.
§85.409.Sale of Pawn Transactions.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502525
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §85.503
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter E, §85.503, concerning inspections and examination,
in conjunction with the commission's review of Chapter 85.
In general, the purpose of the amendments is to conform the rule to the
commission's current practice, to eliminate obsolete provisions, and to correct
typographical errors. Section 85.503 has been extensively revised to align
with current agency practice in collecting follow-up examination fees.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the rule is in effect, there will be no fiscal
implications for state or local government as a result of administering the
rule.
Commissioner Pettijohn also has determined that for each year of the first
five years the rule is in effect, the public benefit anticipated as a result
of the proposed amendments will be that the commission's rule will conform
to current practice, will be more easily understood by licensees required
to comply with the rule, and will be more easily enforced. There is no anticipated
cost to persons who are required to comply with the amendments as proposed.
There will be no adverse economic effect on small or micro businesses. There
will be no effect on individuals required to comply with the section as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 371.
§85.503. Follow-Up Examination Fees.
[(a)
Assessment. The commissioner will assess
and collect a nonrefundable examination fee designed solely to recover agency
expenditures applicable to the examination function, according to the formula
set out below:]
[(1)
General administrative fee per exam ($150.00) - The administrative
and overhead costs necessary to cover agency expenditures related to an examination
(e.g., computer support, examination function administration);]
[(2)
Administrative fee for each additional day ($100.00)
- The administrative and overhead costs necessary to cover agency expenditures
for each additional day required to conduct the examination; and]
[(3)
Hourly examination rate ($60.00) - The direct and indirect
examiner cost including travel costs.]
[(b)
Calculation of a day. A day is measured
as eight (8) business hours spent on site conducting an examination.]
[
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502523
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
7 TAC §85.603, §85.607
The Finance Commission of Texas (the commission) proposes
amendments to Subchapter F, §85.603 and §85.607, concerning license
revocation, suspension, and surrender, in conjunction with the commission's
review of Chapter 85.
In general, the purpose of the amendments is to conform the rules to the
commission's current practice and to correct typographical errors. Section
85.603 has been updated to correlate with current agency practice concerning
annual licensing fees. Typographical errors have been corrected in §85.607.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the Subchapter F rules are in effect, there
will be no fiscal implications for state or local government as a result of
administering the rules.
Commissioner Pettijohn also has determined that for each year of the first
five years the Subchapter F rules are in effect, the public benefit anticipated
as a result of the proposed amendments will be that the commission's rules
will conform to current practice, will be more easily understood by licensees
required to comply with the rules, and will be more easily enforced. There
is no anticipated cost to persons who are required to comply with the amendments
as proposed. There will be no adverse economic effect on small or micro businesses.
There will be no effect on individuals required to comply with the sections
as proposed.
Comments on the proposed amendments may be submitted in writing to Sealy
Hutchings, General Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207, or by email to sealy.hutchings@occc.state.tx.us.
The amendments are proposed under Texas Finance Code §11.304,
which authorizes the commission to adopt rules to enforce Title 4 of the Texas
Finance Code. Additionally, Texas Finance Code §371.006 authorizes the
commission to adopt rules for enforcement of the Texas Pawnshop Act (Chapter
371).
The statutory provisions (as currently in effect) affected by the proposed
amendments are contained in Texas Finance Code, Chapter 371.
§85.603.Reinstatement of an Expired Pawnshop License.
If a pawnshop license expires on June 30 for failure to pay the annual
renewal fee, the commissioner shall by July 31 of that same year notify the
pawnshop license holder via certified mail that the license has expired and
that the licensee may not make or renew a pawn loan. The holder of the expired
license may elect to reinstate the license by submitting the
fees required
by §85.211(e) of this title
[
§85.607.Hearings.
Hearings held under this chapter will be held in accordance with Administrative
Hearing Process and Rules of
Procedure
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 17, 2005.
TRD-200502524
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 936-7640
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter A. GENERAL RULES
7 TAC §91.101
The Credit Union Commission proposes amendments to §91.101,
concerning definitions and interpretations. The amendments add a definition
for "catastrophic act" and clarify the definitions for "manufactured home"
and "underserved area."
The amendments to the rule are proposed as a result of the Department's
general rule review and the addition of the term catastrophic act to another
rule.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the amended rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed amendments.
Ms. Galvin has also determined that for each year of the first five years
the amended rule is in effect, the public benefits anticipated as a result
of enforcing the amendments will be to clarify terminology used in Department
Rules. There is no anticipated effect on small businesses as a result of adopting
amendments as proposed. There is no economic cost anticipated to credit unions
for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, September 16,
2005, at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The amendments are proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code.
The specific sections affected by the proposed amendments are Texas Finance
Code, §§122.004, 122.014, 122.101, 123.201.
§91.101.Definitions and Interpretations.
(a)
Words and terms used in this chapter that are defined in
Finance Code §121.002, have the same meanings as defined in the Finance
Code. The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1) - (5)
(No change.)
(6)
Catastrophic act--any natural disaster
such as a flood, tornado, earthquake, etc. or major fire or other disaster
resulting in some physical destruction or damage.
(7)
[
(A)
Occupational--based on an employment relationship that
may be established by:
(i)
employment (or a long term contractual relationship equivalent
to employment) by a single employer, affiliated employers or employers under
common ownership with at least a 10% ownership interest;
(ii)
employment or attendance at a school; or
(iii)
employment in the same trade, industry or profession
(TIP) with a close nexus and narrow commonality of interest, which is geographically
limited.
(B)
Associational--based on groups consisting primarily of
natural persons whose members participate in activities developing common
loyalties, mutual benefits, or mutual interests. In determining whether a
group has an associational community of interest, the commissioner shall consider
the totality of the circumstances, which include:
(i)
whether the members pay dues,
(ii)
whether the members participate in furtherance of the
goals of the association,
(iii)
whether the members have voting rights,
(iv)
whether there is a membership list,
(v)
whether the association sponsors activities,
(vi)
what the association's membership eligibility requirements
are, and
(vii)
the frequency of meetings. Associations formed primarily
to qualify for credit union membership and associations based on client or
customer relationships, do not have a sufficient associational community of
interest.
(C)
Geographic--based on a clearly defined and specific geographic
area where persons have common interests and/or interact. More than one credit
union may share the same geographic community of interest. There are currently
four types of affinity on which a geographic community of interest can be
based: persons, who
(i)
live in,
(ii)
worship in,
(iii)
attend school in, or
(iv)
work in that community. The geographic community of interest
requirements are met if the area to be served is in a recognized single political
jurisdiction, e.g., a city or a county, or a portion thereof.
(D)
Other--The commissioner may authorize other types of community
of interest, if the commissioner determines that either a credit union or
foreign credit union has sufficiently demonstrated that a proposed factor
creates an identifiable affinity among the persons within the proposed group
. Such a factor shall be well-defined, have a geographic definition, and may
not circumvent any limitation or restriction imposed on one of the other enumerated
types.
(8)
[
(9)
[
(10)
[
(11)
[
(12)
[
(13)
[
(14)
[
(15)
[
(16)
[
(17)
[
(18)
[
(19)
[
(20)
[
(21)
[
(22)
[
(A)
the credit union has an ownership interest in the service
facility either directly or through a CUSO or similar organization; or
(B)
the service facility is local to the credit union and the
credit union is an authorized participant in the service center.
(23)
[
(24)
[
(25)
[
(26)
[
(27)
[
(28)
[
(29)
[
(30)
[
(31)
[
(32)
[
(33)
[
(34)
[
(A)
A majority of the residents earn less than 80 percent of
the average for all wage earners as established by the
U.S.
[
(B)
The annual household income for a majority of the residents
falls at or below 80 percent of the median household income for the
State of Texas, or the
nation
, whichever is higher
; or
(C)
The commission makes a determination that the lack of available
or adequate financial services has adversely effected economic development
within the specified area.
(35)
[
(36)
[
(b)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 20, 2005.
TRD-200502532
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 837-9236
7 TAC §91.115
The Credit Union Commission proposes amendments to §91.115,
concerning safety at unmanned teller machines. The amendments add specific
definitions from Texas Finance Code §59.301 for ease of use of the rule
and clarify that the rule applies unless the unmanned teller machine is exempt
under Texas Finance Code §59.302.
The amendments to the rule are proposed as a result of the Department's
general rule review.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the amended rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed amendments.
Ms. Galvin has also determined that for each year of the first five years
the amended rule is in effect, the public benefits anticipated as a result
of enforcing the amendments will be greater clarity and ease of use of the
rule. There is no anticipated effect on small businesses as a result of adopting
the amendments as proposed. There is no economic cost anticipated to credit
unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, September 16,
2005, at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The amendments are proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code and under Texas Finance Code §59.310, which authorizes
the Commission to adopt rules to implement Chapter 59, Subchapter D of the
Texas Finance Code.
The specific sections affected by the proposed amendments are Texas Finance
Code, §59.301 and §59.302.
§91.115.Safety at Unmanned Teller Machines.
(a)
Definitions and Standards.
The following words and
terms, when used in this section, shall have the following meanings, unless
the context clearly indicates otherwise.
(1)
Access area--a paved walkway or sidewalk
that is within 50 feet of an unmanned teller machine. The term does not include
a public right-of-way or any structure, sidewalk, facility, or appurtenance
incidental to the right-of-way.
(2)
Access device--has the meaning assigned
by Regulation E (12 CFR Section 205.2), as amended, adopted under the Electronic
Fund Transfer Act (15 USC Section 1693 et seq.), as amended.
(3)
Candle power--the light intensity of candles
on a horizontal plane at 36 inches above ground level and five feet in front
of the area to be measured. For the purposes of measuring compliance with
the Finance Code §59.307, candle foot power should be determined under
normal, dry weather conditions, without complicating factors such as fog,
rain, snow, sand, or dust storm, or other similar condition.
(4)
Control--the authority to determine how,
when, and by whom an access area or defined parking areas may be used, maintained,
lighted, and landscaped.
(5)
Member--an individual to whom an access
device is issued for personal, family, or household use.
(6)
Defined parking area--the portion of a
parking area open for unmanned teller machine member parking that is contiguous
to an access area, is regularly, principally, and lawfully used during the
period beginning 30 minutes after sunset and ending 30 minutes before sunrise
for parking by members using the machine, and is owned or leased by the owner
or operator of the machine or owned or controlled by a person leasing the
machine site to the owner or operator of the machine. The term does not include:
(A)
a parking area that is physically closed or on which one
or more conspicuous signs indicate that the area is closed; or
(B)
a level of a multiple-level parking area other than the
level considered by the operator of the unmanned teller machine to be the
most directly accessible to a member.
(7)
Operator--the person primarily responsible
for the operation of an unmanned teller machine.
(8)
Owner--a person having the right to determine
which financial institutions are permitted to use or participate in the use
of an unmanned teller machine.
(9)
Unmanned teller machine--a machine, other
than a telephone, capable of being operated solely by a member to communicate
to a credit union:
(A)
a request to withdraw money from the member's account directly
or under a line of credit previously authorized by the credit union for the
member;
(B)
an instruction to deposit money in the member's account
with the credit union;
(C)
an instruction to transfer money between one or more accounts
maintained by the member with the credit union;
(D)
an instruction to apply money against an indebtedness of
the member to the credit union; or
(E)
a request for information concerning the balance of the
account of the member with the credit union.
[(1)
Words and terms used in this chapter
that are defined in the Finance Code, §59.301, have the same meanings
as defined in the Finance Code.]
[(2)
For the purposes of measuring compliance
with the Finance Code, §59.307, candle foot power should be determined
under normal, dry weather conditions, without complicating factors such as
fog, rain, snow, sand or dust storm, or other similar condition.]
(b)
Safety evaluations.
(1)
The credit union owner or operator of an unmanned teller
machine shall evaluate the safety of each machine on a basis no less frequently
than annually
, unless the machine is exempted under the Finance Code §59.302
.
(2) - (3)
(No change.)
(c) - (d)
(No change.)
(e)
Video surveillance equipment. Video surveillance equipment
is not required to be installed at all unmanned teller machines. The credit
union owner or operator must determine whether video surveillance or unconnected
video
[
[(f)
Unmanned teller machines located in a
credit union vestibule. The provisions of the Finance Code, Chapter 59, Subchapter
D, and this section are applicable to an unmanned teller machine located in
a credit union vestibule if there is 24 hours access to the vestibule from
outside the building.]
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 20, 2005.
TRD-200502534
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 837-9236
7 TAC §91.125
The Credit Union Commission proposes new §91.125, concerning
accuracy of advertising. The proposed rule sets forth standards for accuracy
in advertising and allows the Commissioner to prohibit the use of advertising
that is false, deceptive or misleading.
The new rule is proposed as a result of comments and inquiries received
by the Department from Legislators and other interested parties regarding
credit union advertising.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the new rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the new rule is in effect, the public benefits anticipated as a result of
enforcing the rule will truthful, accurate advertisements to help consumers
make informed choices about providers of financial services. There is no anticipated
effect on small businesses as a result of adopting the rule as proposed. There
is no economic cost anticipated to credit unions for complying with the new
rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, September 16,
2005, at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The new section is proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code and under Texas Finance Code §15.4022, which authorizes
the Commission to prohibit false, misleading or deceptive practices.
The specific sections affected by the proposed section are Texas Finance
Code, §122.004 and §122.254.
§91.125.Accuracy of Advertising.
(a)
As used in this rule, an advertisement is any informational
communication, including oral, written, electronic, broadcast or any other
type of communication, made to members, prospective members, or to the public
at large in any manner designed to attract attention to the business of a
credit union.
(b)
No credit union shall disseminate or cause the dissemination
of any advertisement that is in any way intentionally or negligently false,
deceptive, or misleading. An advertisement shall be deemed by the Commissioner
to be intentionally or negligently false, deceptive, or misleading if it:
(1)
contains materially false claims or misrepresentations
of material facts;
(2)
contains materially implied false claims or implied misrepresentations
of material fact;
(3)
omits material facts;
(4)
makes a representation likely to create an unjustified
expectation about credit union products or services;
(5)
states that the credit union's services are superior to
or of a higher quality than that of another financial institution unless the
credit union can factually substantiate the statement;
(6)
states that a service is free when it is not, or contains
intentionally untruthful or deceptive claims regarding costs and fees; and
(7)
fails to disclose that a person must meet certain membership
eligibility requirements to participate in or enjoy the advantage of the product
or service.
(c)
Prior to placing an advertisement, a credit union must
possess credible information which, when produced, substantiates the truthfulness
of any assertion, representation or omission of material fact set forth in
the advertisement.
(d)
If the Commissioner notifies a credit union that an advertisement
is deemed to be false, deceptive or misleading, the credit union will have
ten days following the credit union's receipt of the notification to provide
the Commissioner with information substantiating the truthfulness of the advertisement.
If the credit union does not provide this information or the Commissioner,
after receipt of the information, still deems the advertisement to be false,
deceptive or misleading, the Commissioner may issue a cease and desist order
to the credit union to stop the use of the advertisement.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 20, 2005.
TRD-200502539
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 837-9236
7 TAC §91.202
The Credit Union Commission proposes amendments to §91.202,
concerning form of bylaws; amendments to articles of incorporation and bylaws.
The amendments insert proper rule references to correct incomplete cites.
The amendments to the rule are proposed as a result of the Department's
general rule review.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the amended rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed amendments.
Ms. Galvin has also determined that for each year of the first five years
the amended rule is in effect, the public benefits anticipated as a result
of enforcing the amendments will be to clarify the cites used in the rule
to avoid any confusion. There is no anticipated effect on small businesses
as a result of adopting the amendments as proposed. There is no economic cost
anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, September 16,
2005, at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The amendments are proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code.
The specific sections affected by the proposed amendments are Texas Finance
Code, §§122.001, 122.002, and 122.005.
§91.202.Form of Bylaws; Amendments to Articles of Incorporation and Bylaws.
(a) - (e)
(No change.)
(f)
The commissioner does not need to provide notice as prescribed
in
§91.103
[
(g)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 20, 2005.
TRD-200502535
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 837-9236
7 TAC §91.205
The Credit Union Commission proposes amendments to §91.205
concerning use of credit union name. The amendments clarify and list examples
of when a credit union must use its official name.
The amendments to the rule are proposed as a result of the Department’s
general rule review.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the amended rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be greater compliance by credit unions
and less confusion by the general public regarding which institution they
are dealing with. There is no anticipated effect on small businesses as a
result of adopting the amended rule. There is no economic cost anticipated
to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission’s Legislative Advisory Committee meeting on Friday, September
16, 2005 at 9:00 am at 914 East Anderson Lane, Austin, Texas 78752.
The amendments are proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code.
The specific section affected by the proposed amendment is Texas Finance
Code, §122.003.
§91.205.Use of Credit Union Name.
(a)
A credit union shall do business under the name in
which its certificate of incorporation was issued, unless a name change has
been
[
(b)
Subject to the requirements of this rule,
[
(c)
[
(d)
[
(e)
[
(f)
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on June 20, 2005.
TRD-200502537
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: July 31, 2005
For further information, please call: (512) 837-9236
an
] motor vehicle title or real estate, or shall provide documentation
for the release to the borrower, at the option of the lender whose loan has
been paid
,
a copy of an endorsement, with or without recourse,
representation or warranty, and assignment of the lien to a lender that is
refinancing the loan. A lender shall comply with the requirements of this
section within a reasonable time not to exceed 30 days after receipt of collected
funds by the lender. An authorized lender must discharge or release a lien
to a motor vehicle not later than the 10th day after the date of receipt of
the collected funds by the lender pursuant to Texas Transportation Code, §501.115.
,
]
if the borrower has an existing obligation to the licensee. The licensee must
notify the borrower in writing of the date and amount of the next payment
due after this credit has been given.
(d)
Return examinations.
] If a follow-up
examination visit is required within
nine (9) months
[
180
days
] after a written deficiency report
has been
given as
a result of a failure to comply with Chapter 342 of the Texas Finance Code,
this chapter, or the special instruction section of the examination report,
an examination fee at the hourly rate of $100 may be assessed.
[
the return examination will be assessed at the rates provided in subsection
(a)(3) of this section.
]
Person
]. One person
shall be designated as the contact person for each filing submitted. Each
submission should provide the name, address, phone number, and fax number,
if available, of the contact person for that filing. If the contracts are
submitted by anyone other than the company itself, the contracts must be accompanied
by a dated letter which contains a description of the anticipated users of
the contracts and designates the legal counsel or other designated contact
person for that filing.
Notice
].
A
] notice is also required on
each contract of a licensed lender pursuant to §14.104, Texas Finance
Code.
Subchapter K. PROHIBITIONS ON AUTHORIZED LENDERS
subsection
] shall be clearly shown in such a manner as not to be deceiving
or misleading.
Federal
]
Truth in Lending
[
Truth-In-Lending
] Act and regulations promulgated thereunder
relating to closed-end transactions shall constitute compliance with §342.505,
Texas Finance Code and these administrative rules.
Federal
]
Truth in Lending
[
Truth-In-Lending
] Act and regulations promulgated thereunder
relating to open-end credit transactions shall constitute compliance with
the Texas Credit Title and these administrative rules.
comaker
],
endorser, surety, or guarantor of the obligation, objects to any contact by
a licensee or the licensee's agent. Upon receipt of the objection, the licensee
or agent, shall cease and desist from any further contact with the person.
the borrower's spouse, a member of the borrower's
household,
] a
co-borrower
[
comaker
], endorser,
surety, or guarantor of the obligation.
Without the prior written consent of the borrower
given directly to the licensee or the express permission of a court of competent
jurisdiction,
]
A
[
a
] licensee may not communicate
with a borrower in connection with the collection of a loan at the borrower's
place of employment if the licensee
has received written notification
from the borrower or the borrower's employer to cease communications with
the borrower while at the place of employment
[
knows or has reason
to believe that the borrower's employer prohibits the borrower from receiving
the communication
].
This restriction may be overridden by court
order.
the borrower's spouse,
] the borrower's attorney, a consumer reporting
agency, another creditor, or the attorney of the creditor. Unless notified
pursuant to subsection (a), this prohibition does not apply to a licensee
seeking information about the location of the borrower.
Subchapter P. REGISTRATION OF RETAIL CREDITORS
,
] §347.451 [
or §348.401
] and shall be payable as follows:
a
] retail seller, creditor, holder,
or assignee shall pay a registration fee for every chapter under which business
is conducted.
,
] 347[
, or 348
] shall pay the annual fee within sixty days
after the first day of commencing regulated operations.
,
] 347[
, or 348
] provided the personnel at the location are not conducting
regulated business with the consumer (e.g. storage, web-hosting, or data processing
facility).
,
] 347[
, or 348
] and this rule. This decal shall be:
Subchapter R. MOTOR VEHICLE INSTALLMENT SALES CONTRACT PROVISIONS
a
]
model provisions and
a
model plain language contract in English
for Texas Finance Code
,
Chapter 348 motor vehicle installment sales
contract provisions. The establishment of model provisions for these transactions
will encourage
the
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 seller is not mandatory. The seller,
however, may not use a contract other than a model contract unless the seller
has submitted the contract to the commissioner in compliance with 7 TAC §1.841.
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 seller may not claim the commissioner's failure to disapprove
a contract constitutes approval.
,
] however, a seller is not limited to the contract provisions contained
in these rules.
(3)
] Creditor--The seller or any
subsequent holder or assignee of the retail installment contract.
(4)
] Daily
rate
[
Rate
]--The rate authorized under Texas Finance Code §
348.105,
[
§303.201 or 303.202
] or the simple rate equivalent
of the rate applicable to the contract under Texas Finance Code §348.104,
computed on a daily basis using a
365-day
[
365 day
]
calendar year.
(5)
] Irregular
payment contract
[
Payment Contract
]--A contract:
(6)
] Regular
payment contract
[
Payment Contract
]--Any contract that is not an irregular
payment contract.
(7)
] Scheduled installment earnings
method--The scheduled installment earnings method is a method to compute a
finance charge by applying a daily rate to the unpaid principal balance as
if each payment will be made on its scheduled installment date. A payment
received before or after the due date does not affect the amount of the scheduled
reduction in the unpaid principal balance. Under this method, a finance charge
refund is calculated by deducting the earned finance charges from the total
finance charges. If prepayment in full or demand for payment in full occurs
between payment due dates, a daily rate equal to 1/365th of the annual rate
is multiplied by the unpaid principal balance. The result is then multiplied
by the actual number of days from the date of the previous scheduled installment
through the date of prepayment or demand for payment in full to determine
earned finance charges for the abbreviated period. In addition to the earned
finance charges calculated in this
paragraph
[
subsection
],
the creditor may also earn a $150 acquisition fee for a heavy commercial vehicle,
or a $25 fee for other vehicles, so long as the total of the earned finance
charges and the acquisition fee do not exceed the finance charge disclosed
in the contract. The creditor is not required to refund unearned finance charges
if the refund is less than $1.00. The scheduled installment earnings method
may be used with either an
irregular payment contract
[
Irregular
Payment Contract
] or a
regular payment contract
[
Regular
Payment Contract
]. The computation of finance charges must comply with
the U.S. rule as defined in Appendix J of 12 C.F.R. Part 226 (Regulation Z).
(8)
] Seller--The seller of the
motor vehicle.
(9)
] Sum of
the
periodic
balances method (Rule of 78s)--
,
] that is
,
the
date of a month that corresponds to the date of the month that the first installment
is due under the contract, or;
,
] that is
,
the
date of a month that corresponds to the date of the month that the first installment
is due under the contract, or;
(10)
] True daily earnings method--The
true
[
truly
] daily earnings method is a method to compute
the finance charge by applying a daily rate to the unpaid principal balance.
The daily rate is 1/365th of the equivalent contract rate. The earned finance
charge is computed by multiplying the daily rate of the finance charge by
the number of days the actual unpaid principal balance is outstanding. Payments
are credited as of the time received; therefore, payments received prior to
the scheduled installment date result in a greater reduction of the unpaid
principal balance than the scheduled reduction, and payments received after
the scheduled installment date result in less than the scheduled reduction
of the unpaid principal balance. The computation of finance charges must comply
with the U.S. rule as defined in Appendix J of 12 C.F.R. Part 226 (Regulation
Z).
(11)
] Vehicle--A motor vehicle
as defined by §348.001(4).
provisions
]
may contain the following provisions:
Itemization
] of
amount financed
[
Amount Financed
] box.
provisions
].
including
] keeping the motor vehicle
in good working order and repair
;
[
,
] keeping the vehicle
free from liens and encumbrances
;
[
,
] not [
to
]
exposing the motor vehicle to seizure, confiscation, or other involuntary
transfer
;
[
,
] and repaying the creditor for any amounts
paid to satisfy liens or encumbrances.
clause provides
] the plain language equivalent of provisions found in contracts subject
to Chapter 348.
Contract
].
The model clause regarding
assignment
[
Assignment
] of
contract
[
Contract
] reads: "This contract may be transferred
by the Seller."
Affirmation
]
and
promise
[
Promise
] to
pay
[
Pay
].
The model clause regarding
buyer's affirmation
[
Buyer's Affirmation
] and
promise
[
Promise
] to
pay
[
Pay
] reads: "The credit price is shown below as the "Total Sales Price."
The "Cash Price" is also shown below. By signing this contract, I choose to
purchase the motor vehicle on credit according to the terms of this contract.
I agree to pay you the Amount Financed, Finance Charge, and any other charges
in this contract. I agree to make payments according to the Payment Schedule
in this contract. If more than one person signs as a buyer, I agree to keep
all the promises in this agreement even if the others do not."
Acknowledgement
]. The model clause regarding
inspection acknowledgement
[
Inspection Acknowledgement
] reads: "I have thoroughly inspected, accepted,
and approved the motor vehicle in all respects."
Motor
Vehicle
]. The motor vehicle identification information provision should
contain the following information about the motor vehicle: the seller's stock
number; the manufacturer's year model; the manufacturer's make; the manufacturer's
model type or number; the vehicle identification number; the license plate
number (if applicable); a new/used designation; and the primary purpose designation.
The seller's stock number and the license number are both optional; the omission
will not make a contract non-standard. The motor vehicle identification information
provision may include additional information about the vehicle including,
odometer reading, color, the designation as a heavy commercial vehicle, and
key code. If the creditor includes this additional information about the motor
vehicle, the change will not make the provision a non-standard provision.
The model clause regarding
identification
[
Identification
] of the
motor vehicle
[
Motor Vehicle
] reads:
Vehicle Description
]. The model clause regarding
trade-in vehicle description
[
Trade-in Vehicle Description
] reads:
Disclosure
]. The model clause regarding Truth-in-Lending Act
disclosure
[
Disclosure
] reads:
Amount
Financed
]. The creditor drafting the contract is given considerable
flexibility regarding the
itemization
[
Itemization
]
of
amount financed
[
Amount Financed
] disclosure so long
as the
itemization
[
Itemization
] of
amount financed
[
Amount Financed
] disclosure complies with the Truth in
Lending Act. As an example, a creditor may disclose the manufacturer's rebate
either as: a component of the downpayment; or a deduction from the cash price
of the motor vehicle. The model contract provision for the
itemization
[
Itemization
] of the
amount financed
[
Amount
Financed
] discloses the manufacturer's rebate as a component of the
downpayment. If the creditor elected to disclose the manufacturer's rebate
as a deduction from the cash price of the motor vehicle, the cash price component
of the
itemization
[
Itemization
] of
amount financed
[
Amount Financed
] would be amended to reflect the dollar
amount of the manufacturer's rebate being deducted from the cash price of
the motor vehicle.
Itemization
] of
amount financed-sales tax advance
[
Amount Financed-Sales Tax Advance
] reads:
Itemization
] of
amount financed-sales tax deferred
[
Amount Financed-Sales Tax Deferred
] reads:
Fee
].
bracketed insert
] may be inserted at the dealer's
option or the disclosure may be made without the
parenthetical phrase
[
bracketed portion
] if the dealer does not charge an amount
in excess of $50 for either ordinary motor vehicles or heavy commercial vehicles
or if the contract form is not used for heavy commercial vehicles. The model
clause is contained in the Itemization of Amount Financed. The documentary
fee clause reads: "A documentary fee is not an official fee. A documentary
fee is not required by law, but may be charged to buyers for handling documents
and performing services relating to the closing of a sale. A documentary fee
may not exceed $50 (for a motor vehicle contract or a reasonable amount agreed
to by the parties for a heavy commercial vehicle contract). This notice is
required by law."
bracketed insert
] may be inserted
at the dealer's option or the disclosure may be made without the
parenthetical
phrase
[
bracketed portion
] if the dealer does not charge
an amount in excess of $50 for either ordinary motor vehicles or heavy commercial
vehicles or if the contract form is not used for heavy commercial vehicles.
The Spanish translation may read: "Un honorario de documentación no
es un honorario official. Un honorario de documentación no es requerido
por la ley, pero puede ser cargada al comparador como gastos de manojo de
documentos y para realizar servicios relacionados con el cierre de una venta.
Un honorario de documentación no puede exceder $50 (un contrato de
vehículo automotor o una cantidad razonable acordada por las partes
para un contrato de vehiculo comercial pesado). Esta notificación es
requerida por la ley." Or "Un cargo documental no es un cargo oficial. La
ley no exige que se imponga un cargo documental. Pero éste podría
cobrarse a los compradores por el manejo de la documentación y la prestación
de servicios en relación con el cierre de una venta. Un cargo documental
no puede exceder de $50 para (un contrato de vehículo automotor o una
cantidad razonable acordada por las partes para un contrato de vehículo
comercial pesado). Esta notificación se exige por ley."
Downpayments
].
The creditor has considerable flexibility in disclosing the deferred downpayments.
The model provision discloses the deferred downpayments by placing the information,
the due date and dollar amount of the deferred downpayments, in several boxes.
If a creditor uses this model provision, the creditor would enter the due
date and dollar amount of each deferred downpayment in the appropriate boxes.
As an alternative to this model provision, a creditor may disclose the deferred
downpayments in the Payment Schedule of the Amount Financed in the federal
disclosure box. If a creditor elects this option, the due date and the dollar
amount of the deferred downpayment must be shown. If the total amount of the
deferred downpayment is not satisfied by the date of the second regularly
scheduled installment, the deferred downpayment must be included in the Payment
Schedule. As another alternative, the creditor may disclose the deferred downpayment
amount [
or
] in the Payment Schedule. The model clause regarding
deferred downpayments
[
Deferred Downpayments
] reads:
Physical
Damage Insurance
]. The creditor may chose to omit the statement of the
borrower's
[
borrowers
] right to obtain substitute coverage
from another source. The model clause regarding
required physical damage
insurance
[
Required Physical Damage Insurance
] reads:
Insurance
Coverages
]. The model clause regarding
optional insurance coverages
[
Optional Insurance Coverages
] reads:
Credit Life
]
and
accident
[
Accident
] and
health insurance
[
Health Insurance
]. The model clause regarding
optional credit life
[
Optional Credit Life
] and
accident
[
Accident
] and
health insurance
[Health Insurance
] reads:
Insurance
].
If liability insurance coverage is not included in the contract,
any
[
either
] of the following notices are sufficient to satisfy
the requirements of Texas Finance Code §348.205 if printed in a size
equal to at least ten-point type that is boldfaced, capitalized, underlined,
or otherwise set out from surrounding written material so as to be conspicuous:
Against Oral Modifications
]. The contract may include a provision barring
oral modifications of the contract. A unilateral change to a contract may
nevertheless occur as prescribed by the procedures in Subchapter C of Chapter
349. The model clause regarding
prohibition against oral modifications
[
Prohibition Against Oral Modifications
] reads:
Charge
Earnings Methods
].
Transaction
]
using sum of the periodic balances method.
Tax Advance
].
At the creditor's option a creditor may choose one of the following model
clauses regarding
sales tax advance
[
Sales Tax Advance
].
Sales Tax
].
The model clause regarding
deferred sales tax
[
Deferred Sales
Tax
] reads: "The Finance Charge will be calculated by using the add-on
method. Add-on Finance Charge is calculated on the full amount of the unpaid
principal balance subject to a finance charge and added as a lump sum to the
unpaid principal balance subject to a Finance Charge for the full term of
the contract. The add-on Finance Charge is calculated at a rate of $____ per
$100.00."
Daily Earnings
Method
].
Tax Advance
].
At the creditor's option a creditor may choose one of the following model
clauses regarding
sales tax advance
[
Sales Tax Advance
].
Sales Tax
]:
If a retail seller requires a retail buyer to purchase credit life or credit
accident and health insurance and the sales tax is deferred, the contract
rate disclosure should read: "The contract rate is _____%. This contract rate
may not be the same as the Annual Percentage Rate. You will figure the Finance
Charge by applying the true daily earnings method as defined by the Texas
Finance Code to the unpaid portion of the principal balance subject to a Finance
Charge. The daily rate is 1/365th of the contract rate. The unpaid principal
balance subject to a finance charge does not include the late charges, sales
tax, or returned check charges."
Installment Earnings Method
]:
Tax Advance
]:
At the creditor's option a creditor may choose one of the following model
clauses regarding
sales tax advance
[
Sales Tax Advance
].
Sales Tax
]:
If a retail seller requires a retail buyer to purchase credit life or credit
accident and health insurance and the sales tax is deferred, the contract
rate disclosure should read: "The contract rate is _____%. This contract rate
may not be the same as the Annual Percentage Rate. You figured the Finance
Charge by applying the scheduled installment earnings method as defined by
the Texas Finance Code to the unpaid portion of the principal balance subject
to a Finance Charge. You based the Finance Charge, Total of Payments, and
Total Sale Price as if all payments were made as scheduled. The unpaid principal
balance subject to a Finance Charge does not include the late charges, sales
tax, or returned check charges."
Warning
]. The
following notices satisfy the requirements of Texas Finance Code §348.102(d)
if printed in at least ten-point type that is boldfaced, capitalized, underlined,
or otherwise set out from surrounding written material so as to be conspicuous.
The bracketed portion of the notice may be included at the creditor's option.
] The notice may read: "NOTICE TO THE BUYER -- I WILL NOT SIGN THIS
CONTRACT BEFORE I READ IT OR IF IT CONTAINS ANY BLANK SPACES. I AM ENTITLED
TO A COPY OF THE CONTRACT I SIGN. UNDER THE LAW, I HAVE THE RIGHT TO PAY OFF
IN ADVANCE ALL THAT I OWE AND UNDER CERTAIN CONDITIONS MAY SAVE A PORTION
OF THE FINANCE CHARGE. I WILL KEEP THIS CONTRACT TO PROTECT MY LEGAL RIGHTS."
Acknowledgment
] of
contract receipt
[
Contract Receipt
].
close
] the most
appropriate option:
Contract
Receipt
]. The model
clause
[
clauses
] regarding
acceptance
[
Acceptance
] of
contract receipt
[
Contract Receipt
] reads:
Credit Commissioner Notice
]. The following notice satisfies the requirements
of Texas Finance Code §14.104 and §1.901 of this title relating
to Consumer Notifications. The telephone number of the retail seller, creditor,
or holder may be printed in conjunction with the name and address of the retail
seller, creditor, or holder elsewhere on the contract or agreement provided
the notice required by Texas Finance Code §14.104 is amended to direct
the reader's attention to the area of the contract where the telephone number
may be found. The consumer credit commissioner notice reads: "To contact (insert
authorized business name of retail seller, creditor or holder as appropriate)
about this account, call (insert telephone number of retail seller, creditor,
or holder as appropriate). This contract is subject in whole or in part to
Texas law which is enforced by the Consumer Credit Commissioner, 2601 N. Lamar
Blvd., Austin, Texas 78705-4207; (800) 538-1579; (512) 936-7600, and can be
contacted relative to any inquiries or complaints."
Charge Refund
Method
]. If a contract uses the finance charge refunding method of the
sum of the periodic balances or the scheduled installment earnings method,
the
finance charge refund
[
Finance Charge Refund
] provision
reads: "If I prepay in full, I may be entitled to a refund of part of the
Finance Charge." On contracts using the true daily earnings method, this Finance
Charge Refund provision should not be disclosed because it is not applicable.
Payments
].
In this provision, the term "finance charge" should not be construed to have
the same meaning as Finance Charge as defined by the
Truth in Lending
[
Truth-in-Lending
] Act. A default or late charge is considered
to be a finance charge under Texas law; therefore, a default or late charge
can be charged and collected as part of the earned finance charge. At the
creditor's option the creditor may modify the
application
[
Application
] of
payments
[
Payments
] language by
adding "and late charges" following the phrase "earned but unpaid finance
charge.
"
The model clause reads:
Early
] and
late payments
[
Late Payments
]. True daily earnings method:
The model clause reads: "You based the Finance Charge, Total of Payments,
and Total Sale Price as if all payments were made as scheduled. If I do not
timely make all my payments in at least the correct amount, I will have to
pay more Finance Charge and my last payment will be more than my final scheduled
payment. If I make scheduled payments early, my Finance Charge will be reduced
(less). If I make my scheduled payments late, my Finance Charge will increase."
Matured Amount
]. The model provision for interest on any matured amount at any rate
permitted by law reads: "If I don't pay all I owe when the final payment becomes
due, or I do not pay all I owe if you demand payment in full under this contract,
I will pay an interest charge on the amount that is still unpaid. That interest
charge will be the higher rate of 18% per year or the maximum rate allowed
by law, if that rate is higher. The interest charge for this amount will begin
the day after the final payment becomes due." In this provision, the maximum
rate allowed by law refers to the rate found in Chapter 303 of the Texas Finance
Code.
Payments
]. If
the contract has a balloon payment, the creditor must include a provision
in the contract that allows the buyer to refinance the balloon payment over
time. The provision must comply with Section 348.123 of the Texas Finance
Code. The model provision for defining the balloon payment reads: "A balloon
payment is a scheduled payment more than twice the amount of the average of
my scheduled payments, other than the downpayment, that are due before the
balloon payment."
Keep
] the
motor vehicle insured
[
Motor Vehicle Insured
]. The model
clause regarding
agreement
[
Agreement
] to
keep
[
Keep
] the
motor vehicle insured
[
Motor
Vehicle Insured
] reads: "I agree to have physical damage insurance covering
loss or damage to the motor vehicle for the term of this contract. The insurance
must cover your interest in the vehicle." The creditor may include the following
optional provision: "The insurance must include collision coverage and either
comprehensive or fire, theft, and combined additional coverage."
Right
] to
purchase
required insurance
[
Purchase Required Insurance
] if I
fail
[
Fail
] to
keep
[
Keep
] the
motor vehicle insured
[
Motor Vehicle Insured
]. The model
clause regarding
agreement
[
Agreement
] to
allow
creditor
[
Allow Creditor
] to
purchased required insurance
[
Purchase Required Insurance
] if
buyer fails
[
Buyer Fails
] to
keep
[
Keep
] the
motor vehicle
insured
[
Motor Vehicle Insured
] reads: "If I fail to give
you proof that I have insurance, you may buy physical damage insurance. You
may buy insurance that covers my interest and your interest in the motor vehicle,
or you may buy insurance that covers your interest only. I will pay the premium
for the insurance and a finance charge at the contract rate. If you obtain
collateral protection insurance, you will mail notice to my last known address
shown in your file."
Damage
Insurance Proceeds
]. The model clause regarding
physical damage
insurance proceeds
[
Physical Damage Insurance Proceeds
] reads:
"I must use physical damage insurance proceeds to repair the motor vehicle,
unless you agree otherwise in writing. However, if the motor vehicle is a
total loss, I must use the insurance proceeds to pay what I owe you. I agree
that you can use any proceeds from insurance to repair the motor vehicle,
or you may reduce what I owe under this contract. If you apply insurance proceeds
to the amount I owe, they will be applied to my payments in the reverse order
of when they are due. If my insurance on the motor vehicle or credit insurance
doesn't pay all I owe, I must pay what is still owed. Once all amounts owed
under this contract are paid, any remaining proceeds will be paid to me."
Insurance
Premiums
] and
service contract charges
[
Service Contract
Charges
]. The contract may authorize a creditor to apply charges returned
to the creditor for canceled insurance, service contract, and extended warranty
charges to the buyer's obligation under the agreement as permitted by law,
regardless of whether or not the buyer is in default under the contract.
Credits
].
The model clause regarding
application
[
Application
]
of
credits
[
Credits
] reads: "Any credit that reduces
my debt will apply to my payments in the reverse order of when they are due,
unless you decide to apply it to another part of my debt. The amount of the
credit and all finance charge or interest on the credit will be applied to
my payments in the reverse order of my payments."
Rights
]. The
seller does not have a duty to disclose the terms on which a contract or a
balance under a contract is acquired, including any discount or difference
between the rates, charges, or balance under the contract and the rates, charges,
or balance acquired as provided by Texas Finance Code, §348.301. The
model clause regarding
transfer
[
Transfer
] of
rights
[
Rights
] reads: "You may transfer this contract to
another person. That person will then have all your rights, privileges, and
remedies."
Security
Interest
] in
collateral
[
Collateral
]. The model
clause regarding a description of a security interest granted in a typical
motor vehicle installment sale reads
:
[
.
]
Regarding
]
the
use
[
Use
] and
transfer
[
Transfer
] of the
motor vehicle
[
Motor Vehicle
]. The contract
may contain a provision prohibiting a buyer from transferring any interest
in the motor vehicle without the creditor's written permission, requiring
the buyer to notify the seller of change of address, or prohibiting the removal
of the motor vehicle from Texas. The transfer fee limitation establishes the
maximum fee that a creditor could contract for, charge, or collect for transferring
the buyer's equity in the motor vehicle to another party. If desired, a creditor
could amend the model provision to reflect a lower transfer fee amount. The
model clause regarding agreements regarding the use and transfer of the motor
vehicle reads: "I will not sell or transfer the motor vehicle without your
written permission. If I do sell or transfer the motor vehicle, this will
not release me from my obligations under this contract, and you may charge
me a transfer of equity fee of $25.00 ($50 for a heavy commercial vehicle).
I will promptly tell you in writing if I change my address or the address
where I keep the motor vehicle. I will not remove the motor vehicle (Optional:
motor vehicle or other collateral) from Texas for more than 30 days unless
I first get your written permission."
Motor Vehicle
]. The contract may obligate the buyer to keep the motor vehicle free
of liens and encumbrances, require the buyer to keep the motor vehicle in
good working order and repair, or prohibit the buyer from allowing the motor
vehicle to be exposed to seizure, confiscation, or other involuntary transfer.
The model clause regarding care of the motor vehicle reads: "I agree to keep
the motor vehicle free from all liens, and claims except those that secure
this contract. I will timely pay all taxes, fines, or charges pertaining to
the motor vehicle. I will keep the motor vehicle in good repair. I will not
allow the motor vehicle to be seized or placed in jeopardy or use it illegally.
I must pay all I owe even if the motor vehicle is lost, damaged or destroyed.
If a third party takes a lien or claim against or possession of the motor
vehicle, you may pay the third party any cost required to free the motor vehicle
from all liens or claims. You may immediately demand that I pay you the amount
paid to the third party for the motor vehicle. If I do not pay this amount,
you may repossess the motor vehicle and add that amount to the amount I owe.
If you do not repossess the motor vehicle, you may still demand that I pay
you, but you cannot compute a finance charge on this amount."
Rights
] and
repossession provisions
[
Repossession Provisions
]. This subsection
details agreements allowing acceleration of the buyer's obligation upon the
buyer's default or upon the creditor's determination of insecurity as permitted
by Business and Commerce Code, §
1.309
[
1.208
].
The following provisions are samples of model clauses of some of the default
rights and remedies of a creditor in a typical motor vehicle installment sale
transaction:
Default
].
The model clause regarding
acceleration
[
Acceleration
]
and
default
[
Default
] reads:
Charge
]. The model clause
regarding
late charge
[
Late Charge
] reads: "I will pay
you a late charge as agreed to in this contract when it accrues."
provision
] pertaining
to
repossession
[
repossessions
]
. The model clauses
regarding repossession read
[
reads
]:
breach of
] peace," as determined
by the Texas courts
, and as found under clause (ii) of this subparagraph
.
Waiver
] of
notice
[
Notice
] of
intent
[
Intent
]
to
accelerate
[
Accelerate
], and
notice
[
Notice
] of
acceleration
[
Acceleration
]. A model
clause regarding the holder's right to accelerate maturity of the contract
and to waive the buyer's or co-buyer's common law right to notice of intent
to accelerate, notice of acceleration, or both reads: "If I default, or you
believe in good faith that I am not going to keep any of my promises, you
can demand that I immediately pay all that I owe. You don't have to give me
notice that you are demanding or intend to demand immediate payment of all
that I owe."
Upon Acceleration
]. Sum of the periodic balances method or scheduled installment earnings
method: The model clause regarding the buyer's right to a finance charge refund
upon acceleration of the contract reads: "If you demand that I pay you all
that I owe, you will give me a credit of part of the Finance Charge as if
I had prepaid in full."
Severability
]. The contract may include an integration clause indicating that the
parties to the contract intend it to be final written expression their agreement,
such as: "This contract contains the entire agreement between you and me relating
to the sale and financing of the motor vehicle." The contract may also include
a severability clause providing that the invalidity of any portion of the
contract does not render invalid other parts of the contract that would otherwise
be valid. The model clause regarding severability reads: "If any part of this
contract is not valid, all other parts stay valid."
Waiver
] and
limitations
[
Limitations
] on
creditor's rights
[
Creditor's
Rights
] and
usury savings
[
Usury Savings
].
Law
]. A model clause
to establish the law that will apply to the contract reads: "Federal and Texas
law apply to this contract."
Disclaimer
].
The disclaimer of express and implied warranties should be set out from the
surrounding text so that the disclosure is conspicuous. A disclaimer of express
and implied warranties, such as the following, is permitted by Article 2,
Subchapter C
[
Section 3
] of the Business and Commerce Code
, and
reads: "Unless the seller makes a written warranty, or enters
into a service contract within 90 days from the date of this contract, the
seller makes no warranties, express or implied, on the motor vehicle, and
there will be no implied warranties of merchantability or of fitness for a
particular purpose. This provision does not affect any warranties covering
the motor vehicle that the motor vehicle manufacturer may provide."
Consumer's
Claims
] and
defenses notice
[
Defenses Notice
].
This notice only applies if the motor vehicle financed in the contract was
purchased for personal, family, or household use. The preservation of consumer's
claims and defenses notice disclosure should be set out from the surrounding
text so that the disclosure is in all capitals,
boldfaced
[
bold faced
] and in at least
10-point
[
10 point
]
type. The preservation of consumer's claims and defenses notice disclosure,
as required by the Federal Trade Commission's
preservation
[
Preservation
] of consumer's claims and defenses notice, 16 C.F.R. §433.1
et seq., reads: "NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT
TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER
OF GOODS AND SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF.
RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR
HEREUNDER. This provision applies to this contract only if the motor vehicle
financed in the contract was purchased for personal, family, or household
use."
Car Buyers Guide
]. The
used car buyer's guide
[
Used Car Buyers Guide
] disclosure should be set out from the surrounding text so that the
disclosure is conspicuous. The disclosure should be prefaced by the words
"In this box only, the word "you" refers to the Buyer." The
used car
buyer's guide
[
Used Car Buyers Guide
] disclosure, as required
by the Federal Trade Commission's Used Car Regulation, 16 C.F.R. §455.1
et seq., reads:
Assignment
]. The disclosure of the negotiability of the contract should be placed
on the front side of the contract and may read:
Part 5.
OFFICE OF CONSUMER CREDIT COMMISSIONER
form
(Form ADM-10/11)
].
(ii)
] If the applicant is a corporation,
then the officers and directors' sections on the form (
ADM 11
[
ADM-011
]) must be completed.
(iii)
] The section inquiring about
owners requires an answer based upon the applicant's entity type. If an individual's
interest in an entity is community property, then a spouse with a community
property interest must also be listed. If the business interest is owned by
a married individual as separate property, documentation establishing or confirming
that status must be provided.
(B)
] Statutory
Agent Disclosure
[
agent disclosure
] (
ADM 13
[
Form ADM-13
]). This form must be completed by all applicants. The statutory agent
is the person or entity to whom any legal notice may be delivered. The agent
must be a Texas resident and list an address for legal service. If the statutory
agent is an individual, the address must be a residential address. On an application
for a corporation, the statutory agent listed on Form
ADM 13
[
ADM-13
] should be the registered agent listed in the articles of incorporation.
On an application for a limited liability company, the statutory agent listed
on Form
ADM 13
[
ADM-13
] must be the registered agent
listed in the articles of organization. If the statutory agent is not listed
in the relevant organizational document, then the applicant must submit certified
minutes appointing the new agent.
(C)
] Personal
Affidavit
[
affidavit
]
(ADM 15a)
[
(Form ADM-15/16)
]. Each
individual listed on the
Disclosure of Owners and Principal Parties (ADM
11)
[
license application (ADM-10/11)
] as a principal party[
, except for a pawnshop employee or an applicant for a pawnshop employee license,
] must complete this form. [
The percentage of ownership stated
on this form must correspond to the individual's percentage listed on the
license application Form ADM-10/11.
] The record of business association
must also include the individual's association with the entity applying for
the license.
(D)
] Fingerprint
Cards
[
cards
]. A complete set of legible fingerprints shall be provided for
each individual having a substantial relationship with the applicant. An individual
has a substantial relationship with an applicant if it is a "principal party"
as that term is defined in [
7 TAC
] §85.102
of this title
. An individual who has previously been licensed by the commissioner
or a principal party of an entity currently licensed by the commissioner is
not required to provide fingerprints. The commissioner may require fingerprints
of an employee or another person with some relationship to the applicant if
the commissioner believes that the individual's involvement in the pawnshop
operation is relevant to the applicant's eligibility for a license. All fingerprints
should be submitted on the format provided by the agency and approved by the
Department of Public Safety and the Federal Bureau of Investigation. A request
for fingerprint cards may be made by submitting a completed
Fingerprint
Order Form (ADM 68)
[
Form ADM-030
].
(E)
]
Personal
Financial
Statement
[
statement
] (
ADM 17
[
Form ADM-17/18/19
])
and Supporting Financial Information (ADM 18/19)
.
in order to expedite verification procedures
]. A financial statement must be certified as true, correct, and complete
by a principal party. A financial statement should be prepared in accordance
with generally accepted accounting principles (GAAP). A financial statement
must reflect the net assets as defined in the Texas Pawnshop Act §371.003
of at least the lesser of the following amounts:
The amount
] required in the Texas
Pawnshop Act §371.072(a)
, $150,000
; or
Form
ADM-17
] and the
Supporting Financial Information (ADM 18/19)
[
attached schedules, Form ADM-18/19
], or provide a personal financial
statement that contains all of the information requested by Forms
ADM
17/18/19
[
ADM-17/18/19
].
Schedules 1-6 (ADM-18/19)
] must be submitted
and attached to any balance sheet that is appended to the application.
Schedules 1-6 (ADM-18/19)
] must be submitted and attached to any balance
sheet that is appended to the application. A financial statement is generally
not required of related parties, but may be required by the commissioner if
the commissioner believes the information is relevant.
Schedules 1-6 (ADM-18/19)
] must be submitted
and attached to any balance sheet that is appended to the application. A financial
statement is generally not required of related parties, but may be required
by the commissioner if the commissioner believes the information is relevant.
(F)
] Assumed
Name Certificate
[
name certificate (Forms ADM-20 and ADM-21)
]. For an applicant
that does business under an assumed name as that term is defined in Tex. Bus. &
Comm. Code, §36.02(7), an assumed name certificate must be filed as provided
in this
subparagraph
[
subsection
].
license application (Form ADM-10/11)
]; and
a copy of a general liability and fire insurance policy in an
amount sufficient to protect pledged goods including jewelry
]. The policy
must explicitly cover loss of pledged goods.
application
form (ADM 10/11)
] and an updated financial statement as provided in
this section. Other information required by this section need not be filed
if the information on file with the agency is current and valid.
this
] §371.059 of the Texas
Pawnshop Act and in this section, the "relocation of a licensed pawnshop"
means either:
"
]the relocation of a licensed pawnshop[
"
] means the act of moving an existing pawnshop license from a location
at which or premises in which a pawnbroker holds a pawnshop license to a new
location.
Change
of address application form (Form ADM-22)
].
statement
]
(ADM 17) and Supporting Financial Information (ADM 18/19)
[
(ADM-17/18/19)
]. If the license requested for relocation
includes the activation of a license that is inactive at the date of the request
for relocation, an updated financial statement is required. The instructions
in [
7 TAC
] §85.202
of this title
are applicable
to this filing.
a copy of a general liability and
fire insurance policy in an amount sufficient to protect pledged goods including
jewelry
] must be filed. The policy shall explicitly cover loss of pledged
goods.
pledger
] whose pledged goods
will be moved. Five days prior to relocation the pawnbroker must mail written
notices to each
pledgor
[
pledger
] who has not been given
a written notice prior to that date. A notice must identify the pawnshop,
both the old and the new
locations
[
location
], the telephone
number of the new location, and the date the relocation is effective. The
commissioner may modify the notification requirement if the relocation adversely
affects
pledgors
[
pledgers
]. The modification may require
the pawnbroker to extend the maturity date of pawn transactions or waive the
collection of pawn service charges which may accrue after relocation. No relocation
may be made which will adversely affect
pledgors
[
pledgers
] to the extent that redemption is unreasonable or impossible due to
the distance between the locations. The commissioner may approve notification
by signs in lieu of notification by mail if no
pledgors
[
pledgers
] will be adversely affected.
When a relocation also involves
a transfer of ownership, the buyer may agree to assume responsibility for
compliance with this subsection.
Application
form (Form ADM-10/11)
]. The instructions in [
7 TAC
] §85.202
of this title
are applicable to this filing.
(2)
] Statutory
Agent Disclosure
[
agent disclosure
] (
ADM 13
[
Form ADM-13
]). The instructions in [
7 TAC
] §85.202
of this
title
are applicable to this filing.
(3)
] Personal
Affidavit
[
affidavit
] (
ADM 15a
[
Form ADM-15/16
]). Each individual
listed on the
Disclosure of Owners and Principal Parties (ADM 11) as
[
license application (ADM-10/11) who is
] a principal party,
[
except for a pawnshop employee or an applicant for a pawnshop employee
license,
] of the transferee must complete this form. The instructions
set forth in [
7 TAC
] §85.202
of this title
are
applicable to this filing.
(4)
]
Fingerprint Cards
[
Fingerprints
]. A complete set of legible fingerprints shall be provided
for each individual having a substantial relationship with the applicant.
An individual has a substantial relationship with an applicant if it is a
"principal party" as that term is defined in [
7 TAC
] §85.102
of this title
. An individual who has previously been licensed by the
commissioner or a principal party of an entity currently licensed by the commissioner
is not required to provide fingerprints. The commissioner may require fingerprints
of an employee or another person with some relationship to the applicant if
the commissioner believes that the individual's background history is relevant
to the applicant's eligibility for a license. All fingerprints should be submitted
on a format provided by the agency and approved by the Department of Public
Safety and the Federal Bureau of Investigation. A request for acceptable fingerprint
cards may be made by submitting a completed
Fingerprint Order Form (ADM
68)
[
Form ADM-030
].
(5)
] Evidence of the transfer of
ownership. Documentation evidencing the transfer of ownership must be filed
with the application. This must include one of the following:
licensee
] by gift, devise, or descent, such as a
probated will or a court order.
(6)
]
Personal
Financial
Statement (ADM 17) and Supporting Financial Information (ADM 18/19)
[
statement (ADM-17/18/19)
]. The instructions in [
7 TAC
] §85.202
of this title
are applicable to this filing.
(7)
] Other required filings. All
filings required of new license applicants pursuant to [
7 TAC
] §85.202
of this title
must be filed and completed by any applicant for transfer
of a license. If the applicant is currently licensed and acquiring another
location, the applicant must provide the information that is unique to the
new location. Other information required by this subsection need not be filed
if the information on file with the agency is current and valid.
transferors
] license. The commissioner may approve a written agreement
whereby a transferor grants a transferee the authority to operate under the
transferor's license pending approval of the transferee's license application.
Within three
(3)
business days after the date of sale the written
agreement between the transferor and transferee must be submitted with a request
to operate under the transferor's license. The agreement must provide that
the transferor accepts full responsibility to the commissioner and any customer
of the licensed business for any acts of the transferee in connection with
the operation of the business. The written agreement between the transferor
and the transferee must be submitted with a request to operate under the transferor's
license. The agreement may include a provision whereby the transferee may
operate using the transferee's name during the pendency of the application
if the transferee has an existing pawnshop license issued under this chapter.
The agreement shall be for a limited time as provided in the agreement and
in no case may such authority extend beyond 180 days. The commissioner may
deny a request for permission to operate during the pendency of the application.
7 TAC §9.01
]
et seq.
of this title
. The commissioner shall make a final decision
approving or denying the license.
(ADM-22)
]. The notice must
include a valid mailing address, the fee for amending the license, a certification
that no loans will be made or collected under this license until it is activated,
a notice to pledgors that pawn loans are being relocated, and a plan ensuring
pledged goods are made available for redemption. If an active license is not
being used for the active operation of a pawnshop, the commissioner may unilaterally
place the license in inactive status.
an annual license fee of $100 that is not
prorated but is refundable if the license application is denied
].
an annual license fee of $100 that is not prorated but
is refundable if the license application is denied
].
Renewal
] and
examination assessment
[
Examination Assessment
].
7 TAC
]
§
85.206
of this title
, the first year's
operational assessment fee shall be $430.
Subchapter C. PAWNSHOP EMPLOYEE LICENSE
form
] (ADM 30/31
[
Form ADM-30/31
]).
cards
]. A complete
set of legible fingerprints shall be provided for each applicant. An individual
who has previously been licensed by the commissioner is not required to provide
fingerprints. The commissioner may require fingerprints of an employee if
the commissioner believes that the individual has not been fingerprinted for
a significant amount of time and believes a new set of fingerprints might
provide additional information about the person's criminal background. All
fingerprints should be submitted on the format provided by the agency and
approved by the Department of Public Safety and the Federal Bureau of Investigation.
A request for acceptable fingerprint cards may be made by submitting a completed
ADM 68
[
Form ADM-025
].
within a reasonable period of time
] whose address
is different from that printed on the employee's license. A reasonable period
of time is within one week from the issuance of the initial wage payment or
in accordance with a standard preapproved reporting schedule.
7 TAC
]
§9.1
[
9.01
] et seq.
of this title.
When
a hearing is requested following an initial license application denial, the
hearing shall be held within 60 days after a request for a hearing is made
unless the parties agree to an extension of time. The commissioner shall make
a final decision approving or denying the license application after receipt
of the proposal for decision from the administrative law judge.
Subchapter D. OPERATION OF PAWNSHOPS
national
] holiday without notice.
§85.412
] of this title.
(c)
] Use of state agency name. Advertisements
with the name of the Office of Consumer Credit Commissioner may only be used
in connection with the following statement: "This office is licensed and examined
by the Office of Consumer Credit Commissioner of the State of Texas."
§85.405(b)
]
of this title--Identification of pledged goods;
§85.405(d)
]
of this title--Standards for describing goods;
§85.405(e)
]
of this title--Titled goods;
Subchapter E. INSPECTIONS AND EXAMINATION
(c)
Due date. Unless specifically stated
by the commissioner any examination fee is due at the time of billing.
]
(d)
]
If a
[
Return Examinations.
A
] follow-up examination visit
is
[
may be
] required
within
nine (9) months
[
ninety (90) days
] after a written
deficiency report
has been
given as a result of a failure to comply
with
Chapter 371 of the
Texas Finance Code, [
Chapter 371,
] this chapter, or the special instructions section of the examination
report
, an examination fee at the hourly rate of $100 may be assessed.
[
The follow-up examination may result in an assessment at two
(2) times the rates provided in subsection (a), paragraph (3) of this section.
]
Subchapter F. LICENSE REVOCATION, SUSPENSION, AND SURRENDER
$125 annual fee
] and a
$1,000 reinstatement fee postmarked on or before December 27 of that same
year. An expired pawnshop license holder may not conduct any licensed business
at the formerly licensed location during the time the license is expired.
Any unlicensed acts are subject to administrative action of the commissioner
should the holder of the expired license not cease operations upon expiration
of the license on July 1. An expired license is considered an operating pawnshop
location for the duration of the period of reinstatement right for the purpose
of statutory distance requirements.
Procedures
]
in the Finance Commission Agencies, §9.1 et seq. of this title, the Administrative
Procedure
[
Procedures
] Act, the Texas Rules of Civil Procedure,
and the Texas Rules of Evidence.
Part 6.
CREDIT UNION DEPARTMENT
(6)
] Community of interest--a unifying
factor among persons that by virtue of its existence, facilitates the successful
organization of a new credit union or promotes economic viability of an existing
credit union. The types of community of interest currently recognized are:
(7)
] Construction or development
loan--a financing arrangement for acquiring property or rights to property,
including land or structures, with the intent of converting the property into
income-producing property such as residential housing for rental or sale;
commercial use; industrial use; or similar use.
(8)
] Core capital--has the same
meaning as "tier one capital" as set forth in the capital regulations adopted
by the appropriate federal banking regulatory agency.
(9)
] Corporate credit union--a
credit union whose field of membership consists primarily of other credit
unions.
(10)
] Day--whenever periods of
time are specified in this title in days, calendar days are intended. When
the day, or the last day fixed by statute or under this title for taking any
action falls on Saturday, Sunday, or a state holiday, the action may be taken
on the next succeeding day which is not a Saturday, Sunday, or a state holiday.
(11)
] Department newsletter--the
monthly publication that serves as an official notice of all applications,
and by which procedures to protest applications are described.
(12)
] Field of membership (FOM)--refers
to the totality of persons a credit union may accept as members. The FOM may
consist of one group, several groups with a related community of interest,
or several unrelated groups with each having its own community of interest.
(13)
] Imminent danger of insolvency--a
circumstance or condition in which a credit union is unable or lacks the means
to meet its current obligations as they come due in the regular and ordinary
course of business, even if the value of its assets exceeds its liabilities;
or the credit union has a positive net worth ratio equal to two percent or
less of its assets.
(14)
] Improved residential property--real
property consisting of a residential dwelling having one to four dwelling
units, at least one of which is occupied by the owner of the property. This
term shall also include a one to four unit dwelling occupied in whole or in
part by the owner on a seasonal basis.
(15)
] Indirect financing--a program
in which a credit union makes the credit decision in a transaction where the
credit is extended by the vendor and assigned to the credit union or a loan
transaction that generally involves substantial participation in and origination
of the transaction by a vendor.
(16)
] Loan-to-value ratio--the
aggregate amount of all sums borrowed including outstanding balances plus
any unfunded commitment or line of credit from all sources on an item of collateral
divided by the market value of the collateral used to secure the loan.
(17)
] Loan and extension of credit--a
direct or indirect advance of funds to a member, or on that member's behalf,
that is conditioned upon the repayment of the funds by the member or the application
of collateral. The terminology also includes the purchase of a member's loan
or other obligation, a lease financing transaction, a credit sale, a line
of credit or loan commitment under which the credit union is contractually
obligated to advance funds to or on behalf of a member, an advance of funds
to honor a check or share draft drawn on the credit union by a member, or
any other indebtedness not classified as an investment security.
(18)
] Manufactured home--a HUD-code
manufactured home as defined by the Texas Manufactured Housing Standards Act.
The terminology may also include a mobile home, house trailer, or similar
recreational vehicle if the unit will be used as the member's residence and
the loan is secured by a first lien on the unit, and the unit meets the requirements
for the home mortgage interest deduction under the Internal Revenue Code (26
U.S.C. Section 163(a), (h)(2)(D)).
(19)
] Metropolitan Statistical
Area (MSA)--a geographic area as defined by the director of the U. S. Office
of Management and Budget.
(20)
] Mobile office--a branch office
that does not have a single, permanent site, including a vehicle that travels
to various public locations to enable members to conduct their credit union
business.
(21)
] Office--includes any service
facility or place of business established by a credit union at which deposits
are received, checks or share drafts paid, or money lent. This definition
includes a credit union owned branch, a mobile branch, an office operated
on a regularly scheduled weekly basis, a credit union owned ATM, or a credit
union owned electronic facility that meets, at a minimum, these requirements;
however, it does not include the credit union's Internet website. This definition
also includes a shared branch or a shared branch network if either:
(22)
] Overlap--the situation which
exists when a group of persons is eligible for membership in two or more state,
foreign, or federal credit unions doing business in this state. Notwithstanding
this provision, no overlap exists if eligibility for credit union membership
results solely from a family relationship.
(23)
] Person--an individual, partnership,
corporation, association, government, governmental subdivision or agency,
business trust, estate, trust, or any other public or private entity.
(24)
] Principal office--the home
office of a credit union.
(25)
] Protestant--a credit union
that opposes or objects to the relief requested by an applicant.
(26)
] Remote service facility--an
automated, unstaffed credit union facility owned or operated by, or operated
for, the credit union, such as an automated teller machine, cash dispensing
machine, point-of-sale terminal, or other remote electronic facility, at which
deposits are received, cash dispensed, or money lent.
(27)
] Reserves--allocations of
retained earnings including regular and special reserves, except for any allowances
for loan, lease or investment losses.
(28)
] Resident of this state--a
person physically located in, living in or employed in the state of Texas.
(29)
] Respondent--a credit union
or other person against whom a disciplinary proceeding is directed by the
department.
(30)
] Shared service center--a
facility which is connected electronically with two or more credit unions
so as to permit the facility, through personnel at the facility and the electronic
connection, to provide a credit union member at the facility the same credit
union services that the credit union member could lawfully obtain at the principal
office of the member's credit union.
(31)
] Secured credit--a loan made
or extension of credit given upon an assignment of an interest in collateral
pursuant to applicable state laws so as to make the enforcement or promise
more certain than the mere personal obligation of the debtor or promisor.
Any assignment may include an interest in personal property or real property
or a combination thereof.
(32)
] Title--Title 7, Part VI of
the Texas Administrative Code (TAC), Banking and Securities, which contains
all of the department's rules.
(33)
] Underserved area--a geographic
area, which could be described as one or more contiguous metropolitan statistical
areas (MSA) or one or more contiguous political subdivisions, including counties,
cities, and towns, that satisfy any one of the following criteria:
u.S.
] Bureau of
Labor Statistics
[
labor statistics
];
(34)
] Uninsured membership share--funds
paid into a credit union by a member that constitute uninsured capital under
conditions established by the credit union and agreed to by the member including
possible reduction under section 122.105 of the act, risk of loss through
operations, or other forfeiture. Such funds shall be considered an interest
in the capital of the credit union upon liquidation, merger, or conversion.
(35)
] Unsecured credit--a loan
or extension of credit based solely upon the general credit financial standing
of the borrower. The term shall include loans or other extensions of credit
supported by the signature of a co-maker, guarantor, or endorser.
vide
] surveillance equipment should be installed at
a particular unmanned teller machine site, based on the safety evaluation
required under the Finance Code, §59.308. If a credit union owner or
operator determines that video surveillance equipment should be installed,
the credit union must provide for selecting, testing, operating, and maintaining
appropriate equipment.
Subchapter B. ORGANIZATION PROCEDURES
§1.103
] (relating to Public Notice
of Department Activities) and
§91.104
[
§1.104
]
(relating to Notice of Applications) for applications that apply for standard
optional field of membership provisions (1), (2), (3), and (4) as contained
in the Standard Bylaws for State Chartered Credit Unions
"Appendix A"
.
Unless changed by a bylaw amendment
] approved by the
commissioner in accordance with the Act and these rules
.
[
, a credit union shall do business under the name in which its charter was
issued.
]
In addition to the official charter name,
] a credit union
may
adopt
[
do business under
] an assumed name.
The credit union’s
[
However, the
] official name
, however,
[
as it appears in the bylaws
] must be used in
all official or legal communications or documents
, which includes account
and membership agreements, loan contracts, title documents, account statements,
checks, drafts, and correspondence with the Department or the National Credit
Union Administration. The assumed name may also be used in those materials
so long as it is identified as such (e.g. Generic Credit Union dba GCU). Further,
a credit union using an assumed name shall clearly disclose the credit union’s
official name when the assumed name is used on any signs, advertising, mailings,
or similar materials
.
(b)
] A credit union shall not
use
[
do business under
] any name other than its official
name until it
has received a certificate of authority to use an assumed
business name from the commissioner and
has registered the designation
with the Secretary of State and the appropriate county clerk
.
[
, and has received from the commissioner a certificate of authority to use
an assumed business name.
]
(c)
] The commissioner shall not
issue a certificate of authority to use an assumed business name if the designation
might
confuse or
mislead the public
,
or
if it
is
not readily distinguishable from, or is deceptively similar to, a name of
another credit union lawfully doing business and that has established an office
in this state.
(d)
] It is the responsibility of
the credit union officials to [
make every reasonable attempt to
]
comply with state and federal law applicable to corporate names.
(e)
] A credit union that intends
to use an assumed name shall take reasonable steps to ensure that
use
of the name
[
members
] will not
result in confusion
[
become confused and believe
]
to the extent
that its different
facilities
may
[
will
] be mistaken
as different
[
for separate
] credit unions or that the shares and deposits
deposited at or through
[
in
] the different facilities are
separately insured
from those of the other facilities
.