Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 1.
CONSUMER CREDIT REGULATION
Subchapter J. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
7 TAC §§1.830 - 1.832, 1.834
The Finance Commission of Texas (the commission) proposes
amendments to §§1.830 - 1.832 and 1.834, concerning the duties and
authority of authorized lenders. (Please note that the proposed repeal of §1.833
is being published elsewhere in this issue of the
Texas Register
.)
The purpose of the amendments is to modernize the recordkeeping rules for
regulated lenders, so that the rules better accommodate the prevalence of
automated recordkeeping systems used by the vast majority (over 95%) of licensees
today. The rules have also been reorganized and streamlined, so that items
to be contained together in one file (e.g. the borrower's account record)
are listed in one place within the rules. To that end, the substantive language
of §1.833 (which is being proposed for repeal separately) has been added
to §§1.830 - 1.832.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the 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 rules 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. There is an anticipated, but negligible cost to some
persons who will be required to comply with the amendments as proposed. Such
negligible cost is estimated to be less than $5.00 per licensee who sells
gap insurance, in order to comply with maintaining a gap waiver agreement
register per §1.831. There will be little to no effect on individuals
required to comply with the sections as proposed, aside from the minimal cost
for those needing to maintain a log concerning gap waivers. Gap waiver registers
may be maintained in electronic recordkeeping systems or simple manual logs.
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 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.
§1.830.Files and Records Required (Subchapter E and F Lenders).
Each licensee must maintain records with respect to each loan made
under Chapter 342,
Subchapters
[
(1)
Loan register [
(A) - (D)
(No change.)
(2)
Alphabetical index of current borrowers. A current alphabetical
index or report of outstanding loans showing the full name of each borrower,
co-borrower
[
(3)
Borrower's account record
(including payment and collection
contact history)
.
[
(A)
[
(B)
[
(i)
[
(ii)
[
(iii)
[
(iv)
[
(v)
[
(C)
[
(D)
[
(E)
[
(F)
[
(G)
[
(H)
[
(i)
On Subchapter E loans, the
base finance charge, the administrative loan fee and additional days charge
for irregular installments, or;
(ii)
On Subchapter F loans, the acquisition
charge and the installment account handling charge shown separately;
(I)
[
(i)
[
(ii)
[
(iii)
[
(iv)
[
(v)
[
(vi)
[
(vii)
Gap waiver agreements, and;
(viii)
Automobile club services
memberships authorized by Texas Finance Code, §342.457.
(J)
[
(K)
[
(L)
[
(i)
[
(ii)
[
(iii)
[
[
(M)
[
(i)
Interest refunded;
(ii)
Credit life, accident and health, involuntary unemployment,
collateral protection
[
(iii)
Dual automobile physical damage insurance when borrower
requests cancellation of the policy
;
[
(iv)
Gap waiver agreements, and;
(v)
Automobile club services memberships.
(N)
Collection contact history.
A licensee must make a written or an electronic record of each and every contact
made by a licensee with the borrower or any other person. The written or electronic
record must also include every contact made by the borrower with the licensee.
The written record must include the date, method of contact, contacted party,
person initiating the contact, and a summary of the contact.
(O)
Corrective entries. A licensee
can make corrective entries to the borrower's account record if the corrective
entry is justified. A licensee must maintain the reason and supporting documentation
for each corrective entry made to the borrower's account record. The reason
for the corrective entry can be recorded in the collection contact history
of the borrower's account record. The supporting documentation justifying
the corrective entry can be maintained in the individual borrower's account
file or properly stored and indexed in a licensee's optically imaged recordkeeping
system. If a licensee manually maintains the borrower's account record, the
licensee must properly correct an improper entry by drawing a single line
through the improper entry and entering the correct information above or below
the improper entry. No erasures or other obliterations may be made on the
payments received or collection contact history section of the manual borrower's
account record.
[
(4)
[
[
(5)
[
(6)
[
(A)
The amount of official fees collected at the time the loan
is made and to be disbursed within the period prescribed in subparagraph (D)(i)
of this paragraph must be disclosed on the individual borrower's account record.
(B)
Information concerning fees for termination, continuation,
or amendment collected at the time a loan is made but not disbursed, as prescribed
by subparagraph (D)(i) of this paragraph, or collected subsequent to the making
of the loan, must be entered in a record. Entries to this record must be in
chronological order as to the date the fees are collected. The record must
show the date each fee is collected, the amount of each fee collected, the
date each fee is disbursed and the amount of each fee disbursed. In addition,
if a fee is collected in advance for the purpose of filing a UCC-3 to "continue"
a notice of security interest, the record must show the date the present filing
expires.
(C)
If more than one fee is included in a disbursement by check
to the recording office, the loan number of each account to which the disbursement
is related on the check copy, check stub, or voucher must be documented.
(D)
Disbursement procedures.
(i)
Fees collected at the time a loan is made for recording,
amending, or continuing a notice of security interest must be disbursed to
the recording agency within 30 days from the date of collection from the borrowers.
If fees are not properly disbursed within 30 days, the borrower must be given
credit for the fee and any filing may be made only at the licensee's expense.
If filing of continuation fees may not be made during the 30 days following
the date of the loan due to conflict with
§9.515
[
(ii)
Each licensee should disburse, to the recording agency,
termination fees collected from borrowers within 30 days from the date the
loan is paid in full. If the termination fees are not disbursed within this
period, the fees must be returned to the borrowers and the termination effected
at expense of the licensee.
(E)
Continuation of liens will be dependent upon conformity
with the following:
(i)
If a licensee desires to continue a notice of security
interest on which a maturity date was not initially established on the financing
statement, a continuation statement must be filed no later than 60 days after
the maturity date and no sooner than six months prior to the maturity date.
A licensee may exercise one of the following options when "continuing" a lien:
(I)
The cost of filing a continuation statement may be included
in the official fees collected in connection with a renewal loan that has
a maturity date extending past the end of the
five-year
[
(II)
The filing fee may be collected directly from the borrower
within the period for filing prescribed by
§9.515
[
(III)
The borrower and the licensee may agree to charge the
borrower's account for the cost of filing.
(IV)
The cost of filing may be borne by the licensee.
(ii)
Record of fees collected under this section must be maintained
as prescribed in subparagraphs (A) or (B) of this paragraph.
(7)
[
(8)
[
(A)
An index of each repossession as it occurs and each legal
action by or against the licensee as it is initiated must be recorded. The
index must show the borrower's name, account number, and date of action. If
accounts have been transferred, it must be noted in the index as well as on
the record of transferred accounts.
(B)
All loan records, account cards, correspondence, and any
other pertinent information must be maintained in the borrower's account folders
or files. The file must include the following applicable items:
(i)
Identification of the collateral sought or acquired by
the licensee;
(ii)
A copy of the original petition and the most current amended
petition, if any;
(iii)
Proof of judgment if a judgment is taken and amounts
awarded by the court;
(iv)
The date and terms of settlement if settlement is made
between the borrower and the licensee before judgment;
(v)
Record of all payments received after judgment, properly
identified and applied;
(vi)
When the licensee, acting as a secured party, takes possession
of the collateral and disposes of it at a public or private sale as provided
under the Uniform Commercial Code, and the sale is not a judicial sale, written
evidence substantiating the commercial reasonableness of all aspects of the
sale of the collateral, and of its preparation for sale, if any. These documents
should include copies of any invoices or receipts, condition reports indicating
the condition of the collateral, notice of intended disposition sent to the
borrower and any other obligor or the waiver of the notice signed after default
by the borrower and other obligors, and evidence of fair sale of the collateral.
One means of providing evidence of fair sale or the commercial reasonableness
of sale is the taking of not less than three bona fide bids. Bids must disclose
the names and addresses of the bidders.
(vii)
Name and address of purchaser of repossessed collateral.
(viii)
After the disposition of the collateral, a licensee
must maintain a copy of any explanation of calculation of surplus or deficiency
sent to the borrower.
[
[
[
[
[
[
(9)
Insurance
loss registers
[
(A)
Life
insurance claims
[
(B)
(No change.)
(C)
Personal property insurance
claims
[
(D) - (E)
(No change.)
(10)
Loan records and documents
file.
(A)
A licensee must maintain loan records and documents
files for each individual borrower. The loan records and documents file must
contain all necessary records and documents to evidence compliance with applicable
state and federal laws and regulations including the Equal Credit Opportunity
Act and the Truth in Lending Act. The loan records and documents file shall
include copies of the following records or documents:
(i)
promissory notes including disclosures required
by the Truth in Lending Act;
(ii)
security agreements that describe the collateral
in detail sufficient to identify each individual item taken (including any
separate valuation sheets reporting the replacement value of the personal
property items);
(iii)
loan applications and any other written or
recorded information used in evaluating the application;
(iv)
financing statements;
(v)
certificates of title for motor vehicles securing
the loan and applications for certificate of titles;
(vi)
records of insurance policies issued by or
through the licensee in connection with the loan, including certificate of
insurances;
(vii)
if a motor vehicle physical damage insurance
policy is required, a copy of the policy or insurance application and other
pertinent records relating to the rating of the policy as finally issued;
(viii)
supplemental insurance records;
(ix)
supplemental gap waiver agreement records;
(x)
any written or recorded records relating to
repossessions, legal actions, or foreclosure actions relating to the borrower
or the borrower's collateral securing the loan, and;
(xi)
any separate disclosures that are required
by federal or state law such as the notice to cosigner required by the Federal
Trade Commission's Credit Practices Trade regulation, 16 C.F.R. §444.3.
(B)
Supplemental insurance records. Each licensee
must maintain in the borrower's file supplemental records supporting the settlement
or denials of claims reported in the registers. If the reason for the denial
of a life insurance or an accident and health insurance claim is based upon
the medical records of the borrower, supplemental records supporting the denial
of the claim must be forwarded to the commissioner upon request.
(i)
Life insurance claims. The supplemental insurance
records for life insurance claims shall include the death certificate or other
written records relating to the death of the borrower; proof of loss or claim
form that discloses the amount of indebtedness at the time of death; check
copies or electronic payment receipts that reflect the gross amount of the
claim paid including the amount of insurance benefits paid beneficiaries other
than the licensee which is in excess of the net amount necessary to pay the
indebtedness; and the amount that is paid beneficiaries other than the licensee.
(ii)
Accident and health insurance claims. The supplemental
insurance records for accident and health insurance claims shall include any
written records relating to the disability including statements from the physician,
employer, and borrower; the proof of loss or claim form filed by the borrower;
and copies of the checks or electronic payment receipts reflecting disability
payments paid by the insurance carrier.
(iii)
Personal property insurance claims. The supplemental
insurance records for personal property insurance claims shall include the
law enforcement report, fire department report, or other written record reflecting
the loss or destruction of any covered item; the proof of loss or claim form
filed by the borrower; copies of the checks or electronic payment receipts
reflecting the payment of the claim by the insurance carrier; and any other
pertinent written record relating to the personal property insurance claim.
In the case of property insurance claims, these supplemental insurance records
must clearly indicate whether the amount of the settlement on each individual
item is based on replacement or based on repair.
(iv)
Involuntary unemployment insurance claims.
The supplemental insurance records for involuntary unemployment insurance
claims shall include any written document relating to the termination, layoff,
or dismissal of the borrower; the proof of loss or claim form filed by the
borrower; copies of the checks or electronic payment receipts reflecting the
payment of the claim by the insurance carrier; and any other pertinent written
record relating to the involuntary unemployment insurance claim.
(v)
Single interest insurance claims. The supplemental
insurance records for single interest insurance claims shall include the law
enforcement report, fire department report, or other written record reflecting
the loss or destruction of any covered motor vehicle; the proof of loss or
claim form filed by the borrower; copies of the checks or electronic payment
receipts reflecting the payment of the claim by the insurance carrier; and
any other pertinent written record relating to the single interest insurance
claim.
(C)
Supplemental gap waiver agreement records. Each
licensee must maintain in the borrower's individual file records supporting
the settlements or denials of gap waiver agreement claims reported in the
gap wavier agreement register. The records must include, if applicable:
(i)
the gap waiver agreement claim form;
(ii)
proof of loss and settlement check from the
borrower's basic comprehensive, collision, or uninsured/underinsured policy
or other parties' liability insurance policy for the settlement of the insured
total loss of the motor vehicle;
(iii)
documents that provide verification of the
borrower's primary insurance deductible;
(iv)
if the accident was investigated by a law enforcement
officer, a copy of the offense or police report filed in connection with the
total loss to the motor vehicle;
(v)
if the accident was not investigated by a law
enforcement officer, a copy of the Texas Department of Public Safety "Driver's
Accident Report" (Form ST-2) filed in connection with the total loss to the
motor vehicle, and;
(vi)
copies of the checks reflecting the settlement
amount paid by the licensee for the gap waiver agreement claim.
(11)
Advertising record.
(A)
Each licensee must maintain, either at the licensed
office or at a principal Texas office, so designated to the commissioner,
a complete record of all written and electronic communications soliciting
loans (including scripts of radio and television broadcasts, and reproductions
of billboards and signs not at the licensed place of business) for a period
of not less than one year from the date of use or until the next examination
by a representative of the commissioner. The date or period of use of each
solicitation or advertisement must be indicated.
(B)
If any language other than English is used in
any advertising material, a true and correct translation must appear along
with the advertising material.
(12)
Adverse action record. Each
licensee must maintain a record of all applications relating to Chapter 342
loans where the applicant was denied credit. The record must include those
records and documents required by Regulation B - Equal Credit Opportunity
Act, 12 C.F.R. §202.1 et. seq., including the loan application; any written
or recorded information used in evaluating the application; the adverse action
notice (if required); notice of incompleteness, if applicable; and counteroffer
notice, if applicable.
(13)
Official correspondence file.
Each licensee must maintain a separate file for all communications from the
Office of Consumer Credit Commissioner and for copies of correspondence and
reports addressed to the commissioner. This shall include a copy of the Texas
Credit Title and applicable regulations, electronic or paper hard-copy version,
and examination reports issued by the commissioner.
(14)
[
§1.831.Files and Records Required (Subchapter G Lenders).
Each licensee must maintain records with respect to each loan made
under Chapter 342, Subchapter G of the Texas Finance Code and each home equity
loan made under Article XVI, §50 of the Texas Constitution and make those
records available for examination.
The records required by this section
may be maintained by using either a paper or manual recordkeeping system,
electronic recordkeeping system, or optically imaged recordkeeping system
unless otherwise specified by statute or regulation. The records required
by this section must be retained and made available for inspection in the
same manner as that specified in §1.830(14) of this title.
(1)
A licensee must maintain the
following items in a substantially similar form to the respective provisions
of §1.830 of this title, as follows:
(A)
a loan register;
(B)
a transfer record;
(C)
general business and account records;
(D)
a record of daily transactions;
(E)
insurance loss registers;
(F)
an advertising record;
(G)
an adverse action record; and
(H)
an official correspondence file.
[
[
[
[
[
(2)
Record of individual borrower's account.
[
(A)
[
(B)
[
(i)
[
(ii)
[
(iii)
[
(iv)
[
(v)
[
(C)
[
(D)
[
(E)
[
(F)
[
(G)
[
(H)
[
(i)
[
(ii)
[
(iii)
[
(I)
[
(J)
[
(i)
[
(ii)
[
(iii)
[
[
(K)
[
(i)
Interest charges refunded, including the refund of any
unearned points, and;
(ii)
Credit life, accident and health, and personal property
insurance charges refunded, showing separately the refund applicable to each
separate insurance policy or coverage.
(L)
Collection contact history.
A licensee must make a written or an electronic record of each and every contact
made by a licensee with the borrower or any other person. The written or electronic
record must also include every contact made by the borrower with the licensee.
The written record must include the date, method of contact, contacted party,
person initiating the contact, and a summary of the contact.
(M)
Corrective entries. A licensee
can make corrective entries to the borrower's account record if the corrective
entry is justified. A licensee must maintain the reason and supporting documentation
for each corrective entry made to the borrowers account record. The reason
for the corrective entry can be recorded in the collection contact history
of the borrower's account record. The supporting documentation justifying
the corrective entry can be maintained in the individual borrower's account
file or properly stored and indexed in a licensee's optically imaged recordkeeping
system. If a licensee manually maintains the borrower's account record, the
licensee must properly correct an improper entry by drawing a single line
through the improper entry and entering the correct information above or below
the improper entry. No erasures or other obliterations may be made on the
payments received or collection contact history section of the manual borrower's
account record.
[
[
(3)
[
(A)
The amount of official fees collected at the time the loan
is made must be recorded on the individual borrower's account record.
(B)
Disbursement procedures.
(i)
Fees collected at the time a loan is made for recording,
amending, or continuing a notice of security interest must be disbursed to
the recording agency within 30 days from the date of collection from the borrowers.
(ii)
Each licensee should disburse, to the recording agency,
release of lien fees collected from borrowers within 30 days for the date
the loan is paid in full. If the
releases
[
[
(4)
[
(A)
An index of each foreclosure as it occurs and each legal
action by or against the licensee as it is initiated must be recorded. The
index must show the borrower's name, account number, and date of action.
(B)
All loan records, correspondence, and any other information
pertinent to the litigation or foreclosure must be maintained in the borrower's
account folders or files.
(5)
[
[
(A)
[
(B)
Supplemental insurance records.
Each licensee must maintain in the borrower's file supplemental records supporting
the settlement or denials of claims reported in the registers. If the reason
for the denial of a life insurance or an accident and health insurance claim
is based upon the medical records of the borrower, supplemental records supporting
the denial of the claim must be forwarded to the commissioner upon request.
A licensee must maintain supplemental insurance records in a form substantially
similar to §1.830(10)(B)(i) - (iii).
[
[
[
[
[
§1.832.Files and Records Required (Subchapter G Mortgage Brokers).
(a)
Each licensee must maintain records with respect to each
loan brokered under Chapter 342, Subchapter G and make those records available
for examination.
The records required by this section may be maintained
by using either a paper or manual recordkeeping system, electronic recordkeeping
system, or optically imaged recordkeeping systems unless otherwise specified
by statute or regulation. The records required by this section must be retained
and made available for inspection in the same manner as that specified in §1.830(14)
of this title.
(b) - (e)
(No change.)
(f)
A licensee must maintain the following items in a
substantially similar form to the respective provisions of §1.830 of
this title, as follows:
[
(1)
an advertising record;
(2)
an adverse action record; and
(3)
an official correspondence
file.
§1.834. Approval of Electronic Recordkeeping Systems and Optical Imaging Systems [
(a)
Records and accounting systems maintained in whole or in
part by electronic systems must contain the equivalent information as required
in §1.830 and §1.831 of this title relating to Files and Records
Required (Subchapter E and F Lenders) and Files and Records Required (Subchapter
G Lenders)[
(b)
Approval documentation.
(1)
A licensee or vendor seeking approval of a system
must make available a complete and detailed written description of the system
proposed to be utilized, including:
(A)
a statement specifying whether the system will
be used in its entirety;
(B)
operating manuals;
(C)
instructions;
(D)
a copy of the software to be used; and
(E)
a full description of backup systems in place
that will ensure business continuity and the protection of the data.
(2)
Amendments. Any change to a software system
is required to meet the minimum reporting requirements as established by this
section.
(c)
[
(d)
[
(1)
The optical image storage must be nonerasable "write once,
read many" ("WORM") that does not allow changes to the stored document or
record.
(2)
The stored document or record is made or preserved as part
of and in the regular course of business.
(3)
The custodian of the record is able to identify the stored
document or record, the mode of its preparation, and the mode of storing it
on the optical image storage.
(4)
The optical image storage system contains a reliable indexing
system that provides ready access to a desired document or record, appropriate
quality control of the storage process to ensure the quality of imaged documents
or records, and
date-ordered
[
(5)
The original documents must be maintained for one year
after the date of the loan.
If a licensee assigns loans to another authorized
lender and no longer services the loans, the licensee who sold the loans to
another lender is no longer required to maintain the original documents for
the transferred loans; however, the licensee must either maintain photocopies
of the original form documents for one year or enter into an agreement with
the authorized lender acquiring the loans to provide access to the original
form documents for a period of one year.
The optical imaged records
must be maintained for the entire required retention period.
(6)
[
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 August 19, 2005.
TRD-200503504
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 936-7611
7 TAC §1.833
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Finance Commission of Texas 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 §1.833, concerning other required records. The
commission has determined that the substance of §1.833 would more logically
be included as part of §§1.830 - 1.832, concerning the recordkeeping
requirements for authorized lenders. Proposed amendments elsewhere in this
issue of the
Texas Register
seek to incorporate
the old §1.833 within the other recordkeeping sections listed above.
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 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 email 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 §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
repeal are contained in Texas Finance Code, Chapter 342, Subchapter J.
§1.833.Other Required Records.
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 August 19, 2005.
TRD-200503505
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 936-7611
7 TAC §1.848
The Finance Commission of Texas (the commission) proposes
new §1.848, concerning the disclosure required when an automobile club
membership is offered in connection with a loan. The purpose of the new rule
is to establish the disclosure as required under §342.457 of the Texas
Finance Code, as enacted by the 79th Texas Legislature in HB 1088.
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 that new §1.848 as proposed will be in effect, the public
benefit anticipated as a result of the new rule will be the lenders' use of
clear, uniform language, as contained in the rule, for the disclosure concerning
automobile club memberships offered in connection with a loan. The language
utilized in §1.848 conforms to the plain language and readability requirements
of Texas Finance Code §341.502, as required in §342.457.
The sale of automobile club memberships is a voluntary sales program; however,
should a lender sell such memberships, the statutory disclosure is required.
For lenders who choose not to participate, there will be no anticipated cost.
For lenders who elect to participate, there is an anticipated, but negligible,
cost for lenders who will be required to comply with the rule as proposed.
However, as the rule for this disclosure provides the exact language, which
can be electronically entered into the lenders' existing forms or provided
on a separate document, the only cost involved to participating lenders would
be the potential cost of copies if a separate form is used. Furthermore, this
small cost would be offset by the proceeds earned from sales of automobile
club memberships. Thus, aside from the minimal cost of copies to participating
lenders, there will be little to no effect on persons who are required to
comply with the new rule as proposed. There will be no adverse economic effect
on small or micro businesses.
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 §342.551 authorizes the
commission to adopt rules for the enforcement of the consumer loan chapter.
The statutory provisions (effective September 1, 2005) affected by the
proposed new section will be contained in Texas Finance Code, §303.203
and §342.457.
§1.848.Disclosure When Automobile Club Membership Offered in Connection with a Loan.
(a)
If an automobile club membership is offered in connection
with a loan under Subchapter E of the Texas Finance Code, the disclosure contained
in subsection (c) of this section is sufficient to satisfy the requirements
of Texas Finance Code §342.457 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.
(b)
The text of the disclosure must be set in an easily readable
typeface. Typefaces considered to be readable include: Times, Scala, Caslon,
Century Schoolbook, Helvetica, Arial, and Garamond.
(c)
The lender shall provide this disclosure in both English
and Spanish to all borrowers who are offered an automobile club membership
in connection with their loans. The automobile club membership disclosure
shall read as follows:
(1)
"I AM NOT REQUIRED TO PURCHASE THIS AUTOMOBILE CLUB MEMBERSHIP
AS A CONDITION FOR APPROVAL OF THIS LOAN. I CAN CANCEL THIS MEMBERSHIP WITHIN
31 DAYS AND RECEIVE A FULL REFUND OF THE PURCHASE PRICE."
(2)
Spanish Translation: "NO SE REQUIERE QUE COMPRE ESTA MEMBRESIA
DE CLUB AUTOMOTRIZ COMO CONDICION PARA LA APROBACION DE ESTE PRESTAMO. PUEDO
CANCELAR ESTA MEMBRESIA DENTRO DE 31 DIAS Y RECIBIR UN REEMBOLSO TOTAL DEL
PRECIO DE COMPRA."
(d)
The disclosure contained in subsection (c) of this section
may be located in one of the following:
(1)
the enrollment agreement;
(2)
the loan contract; or
(3)
a separate document.
(e)
Evidence of the borrower's intent to purchase an automobile
club membership must be acknowledged in writing by the borrower's signature
or initials on the document containing the disclosure.
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 August 19, 2005.
TRD-200503503
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 936-7611
7 TAC §§1.1251 - 1.1256
The Finance Commission of Texas proposes new 7 TAC §§1.1251
- 1.1256, concerning required documents when loans under Chapter 342 or home
equity loans regulated by the Office of Consumer Credit Commissioner have
certain terms negotiated in Spanish. The new rules contained in 7 TAC §§1.1251
- 1.1256 outline applicability, the contract terms that constitute negotiation
in Spanish, model forms, items not requiring translation, contracts with multiple
creditors/debtors, and the status of the English language contract as the
legal document.
The purpose of these rules is to implement the amendments contained in
subsection (a-1) to Texas Finance Code §341.502, as enacted by the 79th
Texas Legislature in HB 1547. Section 341.502 requires contracts for consumer
loans under Chapter 342 to be written in plain language. The amendments to
the statute require that certain disclosures be provided in Spanish when the
terms of an agreement for the specified loans are negotiated in Spanish. The
rules propose model disclosure language that is designed to comply with the
plain language requirements of §341.502. A creditor may receive certain
legal benefits by using the prescribed model language; however, a creditor
may choose to use its own Spanish disclosure. A creditor is not required to
submit a Spanish disclosure for plain language review as contemplated in §341.502(c).
Section 1.1251 clarifies the types of transactions that are covered by
the provisions of the proposed rules. These rules only apply to closed-end
transactions as the provisions of §341.502(a-1) require that the Spanish
disclosure which must be delivered be identical to disclosures for a closed-end
transaction under 12 C.F.R. §226.18. Section 341.502(a-1) also requires
that the disclosure be given "if the terms of the agreement for a
loan
under Subsection (a) were negotiated in Spanish." (emphasis added)
Since the statutory language expressly limits the requirement to loans, retail
installment transactions under Chapter 348, which are not loans, are not covered
by §341.502(a-1) and the proposed rules. A creditor under Chapter 348
may choose to optionally comply with the proposed rules. Sections 341.001(9)
and 301.002, Texas Finance Code define a "loan" as an advance of cash as contrasted
to Texas Finance Code §348.007 which defines a retail installment transaction
as a credit sale of a motor vehicle.
Section 1.1252 details which contract terms, that when a creditor provides
information about credit items in Spanish in relation to a credit transaction
with a debtor, will constitute negotiation in Spanish, and hence require written
disclosure in Spanish.
Section 1.1253 outlines disclosure options, including figures containing
model forms that may be utilized.
Section 1.1254 provides a list of items that do not require translation,
such as names, addresses, brand names, and others.
Section 1.1255 discusses transactions with multiple creditors and/or multiple
debtors and the methods for providing disclosure.
Section 1.1256 states that the English language contract is the legal document.
HB 1547 becomes effective on September 1, 2005. Compliance with the proposed
rules will be deemed compliance with the statute effective September 1 until
the permanent rules are adopted.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the rules are in effect there will be no fiscal
implications for state or local government as a result of administering the
rules.
Commissioner Pettijohn has also determined that for each year of the first
five years the rules are in effect the public benefit anticipated as a result
of the new rules will be more complete disclosure to Spanish-speaking debtors,
enhanced compliance with the credit laws, and increased uniformity and consistency
in credit contracts.
Additional economic costs may be incurred by a person required to comply
with this proposal. These rules pertain only to those creditors who choose
to negotiate certain key terms of credit transactions in Spanish with consumers.
Because a licensee complies with the proposal by providing a Spanish translation
of the contract form, by using the model forms contained in §1.1253,
or by providing its own forms containing the necessary disclosures, the additional
costs imposed by the proposal are limited. In some cases creditors already
comply with these provisions and no additional costs would be required. For
those who will be required to comply, the anticipated costs would include
the costs associated with copying a contract or new forms, and costs attributable
to the loss of obsolete forms inventory. Additional copy costs are estimated
to be approximately $0.30-$0.40 per contract or new form. There will be no
adverse effect on small businesses as compared to the effect on large businesses.
Some licensees who use or lease specialized computer software programs for
their loan business may experience some additional costs. These costs are
impossible to predict. The agency has attempted to lessen these costs by providing
the software programmers with the text of the forms. Whether programmers will
use the adopted forms or provide Spanish translations of the full contracts
is not predictable. Whether the programmers will charge an additional fee
for a document they do not have to draft is also not predictable.
Comments on the proposed new rules 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.
These new sections are proposed under Texas Finance Code §11.304,
which authorizes the Finance Commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code §342.551
authorizes the Finance Commission to adopt rules for the enforcement of the
consumer loan chapter.
These rules affect Texas Finance Code Chapter 342, Subchapters E, F, and
G.
§1.1251.Applicability.
(a)
If a contract for loan under Chapter 342, Subchapters E,
F, or G is negotiated in Spanish, then a licensee must deliver a disclosure
to the debtor in Spanish.
(b)
If a retail installment transaction under Chapter 348 is
negotiated in Spanish, then a creditor may but is not required to deliver
a disclosure specified in §1.1253 of this title to the debtor in Spanish.
(c)
The disclosure requirement does not apply to open-end transactions.
§1.1252.Negotiation in Spanish.
(a)
The disclosure specified in §1.1253 of this title
must be given if a creditor provides information in relation to a credit transaction
with a debtor regarding any of the following credit terms in Spanish:
(1)
amount financed;
(2)
finance charge;
(3)
annual percentage rate;
(4)
the amount of any payment or schedule of payments;
(5)
total of payments; or
(6)
security interest.
(b)
Advertising exception. A creditor is not required to provide
a disclosure specified in §1.1253 of this title if a creditor advertises
credit terms in Spanish that are specified in this section.
§1.1253.Form of Disclosure.
(a)
The creditor may at its option provide a debtor one of
the following:
(1) a Spanish translation of the contract form that includes
a Spanish translation of the disclosure form under 12 C.F.R. §226.18;
(2) for transactions subject to Chapter 342, Subchapter E,
a copy of the "Notificacion de Credito Al Consumidor (Préstamo a Plazos)"
as prescribed in Figure: 7 TAC §1.1253(a)(2);
Figure: 7 TAC §1.1253(a)(2) (.pdf)
(3) for transactions subject to Chapter 342, Subchapter F:
(A) a copy of the "Notificacion de Credito Al Consumidor (Préstamo),"
as prescribed in Figure: 7 TAC §1.1253(a)(3)(A), selecting the appropriate
late charge payment option; and
Figure: 7 TAC §1.1253(a)(3)(A) (.pdf)
(i)
Late Charge Option 1: "Late Charge: If I don't pay an entire
payment within 10 days after it is due, you can charge me a late charge. The
late charge will be 5% of the scheduled payment."
(ii)
Late Charge Option 1 Spanish Translation: "Cargos por
Retrasos: Si no doy un pago completo dentro de 10 días después
de vencerse, me puedes cobrar un cargo por retraso. El cargo por retraso será
el 5% de la cantidad del pago."
(iii)
Late Charge Option 2: "Late Charge: For a loan that has
an amount financed of less than $100, the late charge for a payment that is
unpaid for 10 days after it is due is 5% of the amount of the installment.
For a loan that has an amount financed of $100 or more, the late charge for
a payment that is unpaid for 10 days after it is due is the greater of $10
or 5% of the amount of the installment."
(iv)
Late Charge Option 2 Spanish Transaltion: "Cargos por
Retrasos: Para un préstamo en el cual la cantidad financiada es menor
de $100, el cargo por retraso en un pago que no se liquida por 10 días
después de vencerse es 5% de la cantidad del pago. Para un préstamo
en el cual la cantidad financiada es de $100 o más, el cargo por retraso
en un pago que no se liquida por 10 días después de vencerse
es de $10 o 5% de la cantidad del pago atrasado, lo que sea mayor."
(B)
a copy of the "Conceptos Financieros," as prescribed in
Figure: 7 TAC §1.1253(a)(3)(B);
Figure: 7 TAC §1.1253(a)(3)(B) (.pdf)
(4)
for transactions subject to Chapter 342, Subchapter G,
a copy of the "Notificacion de Credito Al Consumidor (Préstamo de Segunda
Hipoteca)" as prescribed in Figure: 7 TAC §1.1253(a)(4); or
Figure: 7 TAC §1.1253(a)(4) (.pdf)
(5)
for transactions subject to Chapter 348, a copy of the
"Notificacion de Credito Al Consumidor (Contrato de Menudeo a Plazos para
Vehículo Automotor)" as prescribed in Figure: 7 TAC §1.1253(a)(5),
selecting the appropriate late charge payment option.
Figure: 7 TAC §1.1253(a)(5) (.pdf)
(b)
Creditors may delete inapplicable provisions of the disclosure.
Creditors may also delete any of the English portions of Figure: 7 TAC §1.1253(a)(4).
§1.1254.Items Excluded from Translation Requirement.
The summary or translation required under §341.502(a-1) may retain
the following elements in English without translation to Spanish:
(1)
names and titles of individuals, companies and other persons;
(2)
addresses;
(3)
brand names, trade names, trademarks, registered service
marks, or full or abbreviated designations of the make and model of goods
or services;
(4)
alphanumeric codes, numerals, dollar amounts expressed
in numerals, or dates; or
(5)
words or expressions not having a generally-accepted Spanish
translation.
§1.1255.Multiple-Party Transactions.
If there are multiple creditors in the transaction, only one creditor
needs to provide the information required by §1.1253 of this title. If
there are multiple debtors in a transaction, the creditor may deliver the
information required by this section to any one or more of the debtors. The
information may, but need not be, signed by the borrower or creditor.
§1.1256.Legal Document.
The agreement entered in the English language is the legal document
and determines the rights and obligations of the parties.
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 August 19, 2005.
TRD-200503502
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 936-7611
Chapter 25.
PREPAID FUNERAL CONTRACTS
Subchapter B. REGULATION OF LICENSES
7 TAC §25.23, §25.24
The Finance Commission of Texas (commission) proposes to
amend §25.23, concerning application and renewal fees, and §25.24,
concerning examination fees. The proposed amendments implement Finance Code, §154.051(a)(1),
which authorizes the commission to adopt reasonable rules to defray the costs
of administering Finance Code, Chapter 154 (Chapter 154), and other sections
of Chapter 154 that specifically authorize the commission to establish examination
and license renewal fees.
The proposed amendments to §25.23 and §25.24 require a Chapter
154 license holder to pay, respectively, its annual renewal and examination
fees by ACH debit of the license holder's bank account initiated by the department.
The commission believes that the proposed amendments are necessary to and
will promote the department's operational efficiency in collecting annual
renewal and examination fees. Collection of these fees by department-initiated
ACH debit will virtually eliminate the processing of incoming payments. The
system will require little, if any, reconciliation with respect to the amount
a license holder owes, whether payment has been received, and the actual amount
paid. The proposed ACH debit requirement will enable the department to streamline
its operational procedures and thereby save administrative time and reduce
administrative costs.
In implementing the proposed ACH debit requirement, the department will
utilize the same procedures it has already developed and is using to collect
annual fees and assessments through ACH debit from its other regulated industries,
such as state banks, check sellers, and perpetual care cemeteries.
Stephanie Newberg, Deputy Commissioner of the Texas Department of Banking,
has determined that, for each year of the first five years that the amendments
as proposed are in effect, there will be no fiscal implication for state or
local governments.
Ms. Newberg has further determined that, for each year of the first five
years that the amendments as proposed are in effect, the anticipated public
benefit will be increased efficiency and time and cost-savings in connection
with the department's administration of Chapter 154. For each year of such
first five years, there will be no economic costs to persons required to comply
with the proposed amendments and the proposed amendments will not have an
adverse effect upon small businesses or micro-businesses.
To be considered, comments concerning the proposed amendments must be submitted
within 30 days of publication to Sarah Shirley, Assistant General Counsel,
Texas Department of Banking, 2601 North Lamar Boulevard, Suite 300, Austin,
Texas 78705-4294 or by e-mail to sarah.shirley@banking.state.tx.us.
The proposed amendments implement Finance Code, §154.051(a)(1),
which authorizes the commission to adopt reasonable rules to defray the costs
of administering Chapter 154; Finance Code, §154.054, which directs the
commission to establish examination fees in an amount sufficient to cover
the costs of examination, the equitable or proportionate cost of maintaining
and operating the department, and the cost of enforcing Chapter 154; and Finance
Code, §154.108, which directs the commission to set the fee a prepaid
funeral contract license holder must pay to renew its license.
Finance Code, Chapter 154, is affected by the proposed amendments.
§25.23.Application and Renewal Fees.
(a)
(No change.)
(b)
Application fees. The application fees set forth in this
subsection have been set in accordance with the Finance Code, Chapter 154,
for the purpose of defraying the cost of administering the Finance Code, Chapter
154. Except as otherwise provided in this subsection, all fees are due at
the time the application is filed and are nonrefundable. An application submitted
without the appropriate filing fee will be deemed incomplete and will not
be considered.
(1)
(No change.)
(2)
Renewal fee. The renewal fee
for an existing permit
is based on the number of outstanding contracts as of the last examination
, as specified in the Renewal Fee Schedule following this paragraph. You must
pay the renewal fee by ACH debit on or before March 1 of each year, or by
another method if directed to do so by the department. At least 15 days prior
to the scheduled ACH transfer, the department will send you a notice specifying
the amount of the renewal fee and the date the department will initiate payment
of the fee by ACH debit, which will be March 1 of each year or, if March 1
is a holiday, the last business day immediately preceding March 1
. [
Figure: 7 TAC §25.23(b)(2) (No change.)
(3) - (4)
(No change.)
§25.24.What fees must I pay for an examination?
(a) - (b)
(No change.)
(c)
How will the department bill me for the examination fees
and when must I pay them?
(1)
Your annual examination fee may be billed in quarterly
or fewer installments each fiscal year. You must pay
a billed installment
by ACH debit or by another method if directed to do so by the department.
At least 15 days prior to the scheduled ACH transfer, the department will
send you a notice specifying the amount of the payment due and the date the
department will initiate payment by ACH debit
[
(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 August 19, 2005.
TRD-200503485
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: October 21, 2005
For further information, please call: (512) 475-1300
7 TAC §33.61
The Finance Commission of Texas (commission) proposes new §33.61,
concerning the Applicability of Sale of Checks and Currency Exchange Rules,
in new Chapter 33, relating to the recently enacted Money Services Act, to
be codified at Finance Code, Chapter 151.
During its 79th Regular Session, the Texas Legislature enacted the Money
Services Act (Act of May 26, 2005, 79th Legislature, Regular Session, House
Bill 2218, §1), effective September 1, 2005. The Money Services Act ("MSA"),
to be codified as Finance Code, Title 3, Subtitle E, Chapter 151, regulates
persons that engage in money services businesses in Texas, specifically the
businesses of money transmission and currency exchange. The MSA provides for
the regulation of these businesses in one statute and repeals existing Finance
Code, Chapter 152, the Sale of Checks Act, and Finance Code, Chapter 153,
Currency Exchange, Transportation or Transmission, effective September 1,
2005. The MSA clarifies and simplifies the requirements and procedures that
exist under current law and also establishes a statutory framework that treats
money services businesses that engage in functionally similar transactions
in a uniform manner.
Because of the enactment of the MSA, the commission will in time enact
new regulations for money services businesses under the authority of the MSA.
The new regulations, to be located in new Chapter 33, will replace existing
Chapters 4 and 29 of this title concerning currency exchange and the Sale
of Checks Act, respectively. These existing chapters will eventually be repealed.
Proposed new §33.61 is a transition section. The proposed section
provides and confirms that until the commission adopts regulations to implement
the new MSA, the regulations contained in Chapters 4 and 29 of this title,
including sections relating to fees and assessments, apply to a person engaged
in the sale of checks, money transmission, or currency exchange business or
in activities subject to the new MSA, to the extent applicable and not inconsistent
with the new law.
Assuming its adoption, the commission intends to repeal §33.61 after
the new regulations necessary to implement the MSA are proposed and adopted.
As a result, proposed new §33.61 is likely to be in effect only for a
relatively short period.
Stephanie Newberg, Deputy Commissioner of the Texas Department of Banking,
has determined that for the period the proposed new section is in effect,
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the proposed new section.
Ms. Newberg has also determined that, for each of the years the new section
as proposed will be in effect, the anticipated public benefit will be the
elimination of any possible ambiguity regarding the continued applicability
of existing Chapters 4 and 29 of this title during the implementation of the
MSA, and an orderly and clear transition to regulation of money services businesses
in Texas under the new MSA. No economic cost will be incurred by a person
required to comply with the proposed new section, and there will be no adverse
impact on small businesses or micro businesses.
To be considered, comments on the proposed new section must be submitted
in writing not later than 30 days after the date of publication of this notice.
Comments should be addressed to Sarah Shirley, Assistant General Counsel,
Texas Department of Banking, 2601 North Lamar Boulevard, Suite 300, Austin,
Texas 78705-4294, or by e-mail to sarah.shirley@banking.state.tx.us.
The new section is proposed under Government Code, §2001.006,
which authorizes a state agency to adopt rules in preparation for the implementation
of legislation; Finance Code, §151.101, effective September 1, 2005,
which authorizes the commission to adopt rules to administer and enforce Finance
Code, Chapter 151; and House Bill 2218, Section 2(e), which authorizes the
commission to adopt rules to provide for the orderly transition to the licensing
and regulation of money services businesses under the Money Services Act.
If adopted, the proposed section will not take effect until after the effective
date of the Money Services Act, September 1, 2005.
The Money Services Act (Act of May 26, 2005, 79th Legislature, Regular
Session, House Bill 2218, §1, effective September 1, 2005) is affected
by the proposed new section.
§33.61.Applicability of Sale of Checks and Currency Exchange Rules.
Because of the enactment of the Money Services Act (Act of May 26,
2005, 79th Leg., R.S., H.B. 2218, §1, effective September 1, 2005) codified
as Finance Code, Title 3, Subtitle E, Chapter 151 ("MSA"), the commission
will in time enact new regulations for money services businesses under the
authority of the MSA. Until the commission proposes and adopts new regulations,
a person engaged in the money transmission business or the currency exchange
business and required to be licensed under the MSA must comply with all applicable
regulations contained in Chapter 4 of this title, relating to currency exchange,
transportation or transmission, and Chapter 29 of this title, relating to
the Sale of Checks Act, including the sections regarding fees and assessments,
to the extent not inconsistent with the MSA.
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 August 19, 2005.
TRD-200503486
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: October 21, 2005
For further information, please call: (512) 475-1300
Chapter 79.
MISCELLANEOUS
Subchapter C. HOLDING COMPANIES
7 TAC §79.47
The Finance Commission of Texas ("Finance Commission") proposes
to adopt new 7 TAC §79.47, Mutual Holding Companies. The new section
is proposed to implement new
Finance Code
Chapter
97, Subchapter B, (
Finance Code
§97.051
et seq.) relating to the organization by a savings bank of a mutual holding
company. The proposed rule establishes the procedural requirements and documents
required to organize a mutual holding company.
A savings bank may desire to reorganize as a stock savings bank and a mutual
holding company. For mutual savings banks, such a reorganization provides
a mechanism to raise outside capital. New
Finance
Code
Chapter 97, Subchapter B provides that a savings bank may organize
a subsidiary stock savings bank and transfer the assets of the savings bank
to the new subsidiary, thus converting the existing entity into a mutual holding
company. In forming the new subsidiary the rule provides that the articles
of incorporation and bylaws of the new savings bank entity should contain
the same provisions as those of any other state chartered savings bank. The
rule also provides that approval is conditioned upon approval of the holding
company by the appropriate federal regulator.
Danny Payne, Savings and Loan Commissioner, has determined that for the
first five-year period that the new section, as proposed, will be in effect,
there will be no fiscal implications for state and local government as a result
of enforcing or administering the section and is therefore not expected to
increase or decrease the net revenue of the Department from the industry.
Mr. Payne estimates that for the first five years the proposed new section
is in effect, the public will benefit by having clearer direction as to the
process and information necessary to file for a mutual holding company. No
difference will exist between the cost of compliance for small business and
the cost of compliance for the largest business affected by the new section.
Comments on the proposed new section may be submitted in writing to Danny
Payne, Commissioner, Texas Savings and Loan Department, 2601 North Lamar,
Suite 201, Austin, Texas 78705-4294, or e-mailed to TSLD1@tsld.state.tx.us,
no later than 30 days from the date that this proposed new rule is published
in the
Texas Register
. If comments are submitted
by email after September 1, 2005, the comments should be sent to SMLinfo@sml.state.tx.us.
The new section is proposed pursuant to
Finance Code
§11.302(a) authorizing the Finance Commission to
adopt rules applicable to state savings associations and savings banks.
The new section is affected by the
Finance Code
, Chapter 97, Subchapter B, Mutual Holding Companies (
Finance Code
§97.051 et seq.).
§79.47.Mutual Holding Companies.
(a)
A savings bank may reorganize as a mutual holding company
by complying with the provisions of
Finance Code
Chapter 97, Subchapter B, (
Finance Code
§97.051).
The savings bank shall provide to the commissioner an application to reorganize
in a form specified by the commissioner. The applicant shall provide one signed
original and at least one copy of the application together with complete exhibits.
The application shall include:
(1)
two copies of the articles of incorporation for the proposed
subsidiary savings bank which shall comply with the requirements of
(2)
two copies of the bylaws for the proposed subsidiary;
(3)
two copies of the proposed restated articles of incorporation
and bylaws of the mutual holding company;
(4)
the complete plan of reorganization;
(5)
a certification by the president or secretary as to how
that the reorganization, including the amendments to the articles of incorporation
and bylaws of the mutual holding company have been approved by a majority
of the members or shareholders of the reorganizing savings bank in accordance
with
Finance Code
Chapter 97, Subchapter B.
(6)
A fee which shall be in the amount of the fee required
for the conversion of a mutual savings bank into a stock savings bank under §79.106
of this title.
(b)
On receipt of the application, the commissioner may conduct
an examination of the applicant savings bank.
(c)
The commissioner shall approve the reorganization without
a hearing if the commissioner determines:
(1)
that the resulting savings bank will be in sound condition
and meets all requirements of
Finance Code
Chapter
92, Subchapter B, and relevant rules of the commissioner and the finance commission;
and
(2)
the applicant has received all approvals required under
federal law for the creation of a bank or thrift holding company.
(d)
If the commissioner denies an application to reorganize,
the applicant may appeal in the same manner as provided in
Finance Code
§92.304.
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 August 22, 2005.
TRD-200503518
John Fleming
General Counsel
Texas Savings and Loan Department
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 475-1353
Subchapter B. PROFESSIONAL CONDUCT
7 TAC §80.9
The Finance Commission of Texas ("Finance Commission") proposes
to amend 7 TAC §80.9 Required Disclosures, which requires mortgage brokers
and loan officers to provide certain information to applicants describing
the relationship of the applicant and mortgage broker; information as to how
the mortgage broker will be compensated; and information related to the recovery
fund. The purpose of the amendment is to clarify that certain fees paid to
a mortgage broker may be subject to refund because of the exercise of a right
of rescission under the Truth in Lending Statute, 12 U.S.C. §1600, et
seq and its implementing regulation, Regulation Z, 12 C.F.R. Part 226 or in
connection with a home equity loan governed by Article XVI Sec. 50 of the
Texas Constitution. The amendment also updates the regulation to reflect the
renaming of the Texas Savings and Loan Department to the Department of Savings
and Mortgage Lending and the new web address of the Department.
The Mortgage Broker Licensing Act (the "Act") became effective September
1, 1999. It requires that mortgage brokers and the loan officers who work
for them meet certain requirements, that they obtain licenses, that they adhere
to certain standards of conduct, and that they provide required disclosures
to mortgage loan applicants. The Act directs the Finance Commission to promulgate
regulations to implement the Act (the "Regulations") and specifically
The form currently used in the regulation contains the following disclosure:
"Of this amount, $_______ is not refundable under any conditions."
When properly completed, this permits the mortgage broker to collect certain
fees prior to closing and to retain those fees in the event the loan does
not close or is not funded. However, when a mortgage loan transaction is subject
to a right of rescission under the federal Truth in Lending Act or under the
home equity provisions of the Texas Constitution, the current disclosure may
not adequately describe the ability of a consumer to obtain a refund of the
prepaid fees. The proposed amendment clarifies that the fees, even if otherwise
not subject to refund, may be subject to refund if required by applicable
state or federal law.
The 79th Texas Legislature enacted H.B. 955. Section 3.02 adds new
The Act establishes a Mortgage Broker Advisory Committee to advise the
Commissioner and the Finance Commission on the promulgation of forms and regulations
and the implementation of the Act. The Advisory Committee met on August 3,
2005, and discussed the proposed amendments. The Advisory Committee by a record
vote unanimously recommended publication for comment of the amendments.
Danny Payne, Savings and Loan Commissioner, has determined that for the
first five-year period that the amended section, as proposed, will be in effect,
there will be no fiscal implications for state and local government as a result
of enforcing or administering these sections and is not expected to increase
or decrease the net revenue of the Department from the industry.
Mr. Payne estimates that for the first five years that the proposed amended
section is in effect, the public will benefit by having a disclosure that
clarifies when a consumer might be entitled to a refund of certain fees. No
difference will exist between the cost of compliance for small business and
the cost of compliance for the largest business affected by the new sections.
Comments on the proposed amendments may be submitted in writing to Danny
Payne, Commissioner, Texas Savings and Loan Department, 2601 North Lamar,
Suite 201, Austin, Texas 78705-4294, or e-mailed to TSLD1@tsld.state.tx.us,
no later than 30 days from the date that these proposed rules are published
in the
Texas Register
. If comments are submitted
by email after September 1, 2005, the comments should be sent to SMLinfo@sml.state.tx.us
The amended section is proposed under
Finance Code
, Section 11.306, which authorizes the Finance Commission
to adopt mortgage broker rules as provided by Chapter 156 of the Act, and
under
Finance Code
, Section 156.102(a) and
(b), which authorizes the Commissioner of the Texas Savings and Loan Department,
subject to review and compliance with the directives of the Finance Commission,
to adopt and enforce rules necessary for the intent of or to ensure compliance
with the Act.
The section of the Act affected by the proposed amended section is
§80.9.Required Disclosures.
(a) (No change.)
(b) In order to let its consumers know how to file complaints
and to inform them of the Mortgage Broker Recovery Fund, Mortgage Brokers
and Loan Officers must include the following notice in the disclosure required
by subsection (a) of this section:
(c) Anytime a Mortgage Broker or Loan Officer charges or receives
from a Mortgage Applicant a fee for a service that is provided by a third
party and retains any portion of the fee so charged or received:
(1) The portion retained by the Mortgage Broker or Loan Officer
and a description of the service actually rendered by the Mortgage Broker
or Loan Officer shall be disclosed to the Mortgage Applicant in writing and
(2) The portion so retained by the Mortgage Broker or Loan
Officer shall not exceed the reasonable value of services actually rendered
by the Mortgage Broker or Loan Officer for the benefit of the Mortgage Applicant.
(3)
Any Mortgage Broker or Loan Officer retaining any portion
of any fee or fees charged by third parties, however denominated, shall maintain
appropriate documentation to substantiate the basis for the retention of such
monies, including the reasonable value of the services rendered for such fee
or fees.
(4) Affiliated business arrangements, as provided for under
the Real Estate Settlement Procedures Act, and payments made pursuant thereto
shall be disclosed to Mortgage Applicants as provided for by the Real Estate
Settlement Procedures Act and the regulations implementing that act.
(d) - (e) (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 August 22, 2005.
TRD-200503514
John Fleming
General Counsel
Texas Savings and Loan Department
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 475-1353
7 TAC §80.14
The Finance Commission of Texas ("Finance Commission") proposes
to amend 7 TAC §80.14, Approval of Courses by adding a new subsection
(f). The purpose of the amendment is to more particularly define those courses
which directly relate to residential mortgage lending. The proposal is intended
to implement the provisions of S.B. 988 passed by the 79th Legislature.
The Mortgage Broker Licensing Act (the "Act") became effective September
1, 1999. It requires that mortgage brokers and the loan officers who work
for them meet certain requirements, that they obtain licenses, that they adhere
to certain standards of conduct, and that they provide required disclosures
to mortgage loan applicants. The Act directs the Finance Commission to promulgate
regulations to implement the Act (the "Regulations") and specifically authorizes
the Finance Commission to adopt rules to prohibit false, misleading, or deceptive
practices by mortgage brokers and loan officers. The Commissioner of the Texas
Savings and Loan Department ("Department") is charged with administration
of the Act.
The Act establishes a Mortgage Broker Advisory Committee to advise the
Commissioner and the Finance Commission on the promulgation of forms and regulations
and the implementation of the Act. The Advisory Committee met on August 3,
2005, and discussed the proposed amendments. The Mortgage Brokerage Advisory
Committee by record vote unanimously recommended the proposed amendments.
Danny Payne, Savings and Loan Commissioner, has determined that for the
first five-year period that the amended section, as proposed, will be in effect,
there will be no fiscal implications for state and local government as a result
of enforcing or administering these sections and is not expected to increase
or decrease the net revenue of the Department from the industry.
Mr. Payne estimates that for the first five years that the proposed amended
section is in effect, the public will benefit by having more detailed notice
of how to file a complaint, including more detailed information as to contact
with the Department. This will further the ability of the Department to detect
and enforce violations of the Act, and provide improved consumer protection.
No difference will exist between the cost of compliance for small business
and the cost of compliance for the largest business affected by the new sections.
Comments on the proposed amendments may be submitted in writing to Danny
Payne, Commissioner, Texas Savings and Loan Department, 2601 North Lamar,
Suite 201, Austin, Texas 78705-4294, or e-mailed to TSLD1@tsld.state.tx.us,
no later than 30 days from the date that these proposed rules are published
in the
Texas Register
. If comments are submitted
by email after September 1, 2005, the comments should be sent to SMLinfo@sml.state.tx.us.
The amended section is proposed under
Finance Code
, Section 11.306, which authorizes the Finance Commission
to adopt mortgage broker rules as provided by Chapter 156 of the Act, and
under
Finance Code
, Section 156.102(a) and
(b), which authorizes the Commissioner of the Texas Savings and Loan Department
, subject to review and compliance with the directives of the Finance Commission,
to adopt and enforce rules necessary for the intent of or to ensure compliance
with the Act. The new subsection is also proposed under new
Finance Code
Section 156.208(i) which requires the Finance Commission
to adopt a rule requiring that at least eight out of the required fifteen
hours of continuing education courses be in courses relating to residential
mortgage lending.
The section of the Act affected by the proposed new subsection is
§80.14.Approval of courses.
(a) - (e)
(No change.)
(f)
The Mortgage Broker License
Act requires that each licensee complete at least fifteen hours of continuing
education courses during the term of his or her current license. The Mortgage
Broker License Act further requires that at least eight of the fifteen hours
relate to residential mortgage lending.
(1)
Courses which relate to residential mortgage lending and
satisfy the eight hour requirement are those courses covering the following
subject matters provided that the courses meet the other requirements of the
Department's rules:
(A)
courses related to ethics in origination of residential
mortgage loans;
(B)
courses relating to the state and federal laws governing
residential mortgage lending including the Mortgage Broker License Act and
the Department's rules, the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. Section 2601 et seq.), the Truth in Lending Act (15 U.S.C. Section
1601 et seq.), the Equal Credit Opportunity Act (15 U.S.C. Section 1691 et
seq.), the Texas Constitution, statutes, and official interpretations relating
to home equity loans; and
(C)
courses relating to predatory lending and deceptive trade
practices in residential mortgage lending.
(2)
The remaining seven hours may be satisfied by taking courses
which cover any of the following subjects provided that the courses meet the
other requirements of the Department's rules: courses that are related to
finance, financial consulting, lending, real estate contracts, discrimination
laws, or real property conveyances.
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 August 22, 2005.
TRD-200503515
John Fleming
General Counsel
Texas Savings and Loan Department
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 475-1353
7 TAC §80.22
The Finance Commission of Texas ("Finance Commission") proposes
to amend 7 TAC §80.22, Loan Status Forms, which requires mortgage brokers
and loan officers to provide certain information relating to the approval
status of a mortgage loan application. The purpose of the amendment is to
revise the existing rule to conform to the recently adopted rule for loan
status forms used by mortgage bankers, 7 TAC §81.2. Additionally, minor
spelling corrections were made of a non-substantive nature. The Finance Commission
believes that uniformity of practice in the origination of mortgage loans
benefits consumers by providing information in a manner that is readily understandable
and that includes sufficient information to keep the consumer and those with
whom the consumer is transacting business reasonably informed as to the status
of the loan approval process.
The Mortgage Broker Licensing Act (the "Act") became effective September
1, 1999. It requires that mortgage brokers and the loan officers who work
for them meet certain requirements, that they obtain licenses, that they adhere
to certain standards of conduct, and that they provide required disclosures
to mortgage loan applicants. The Act directs the Finance Commission to promulgate
regulations to implement the Act (the "Regulations") and specifically
The Act establishes a Mortgage Broker Advisory Committee to advise the
Commissioner and the Finance Commission on the promulgation of forms and regulations
and the implementation of the Act. The Mortgage Broker Advisory Committee
met on August 3, 2005, and discussed the proposed amendments. The Mortgage
Broker Advisory Committee by a record unanimously recommended the proposed
amendments.
Danny Payne, Savings and Loan Commissioner, has determined that for the
first five-year period that the amended section, as proposed, will be in effect,
there will be no fiscal implications for state and local government as a result
of enforcing or administering these sections and is not expected to increase
or decrease the net revenue of the Department from the industry.
Mr. Payne estimates that for the first five years that the proposed amended
section is in effect, the public will benefit by having uniform information
as to the loan status as required by the act. Further, because the form required
to be used by mortgage bankers and mortgage brokers will be uniform, market
efficiency will be enhanced by reducing overall opportunity search costs and
transaction negotiation costs to all parties in the affected market. No difference
will exist between the cost of compliance for small business and the cost
of compliance for the largest business affected by the new sections.
Comments on the proposed amendment may be submitted in writing to Danny
Payne, Commissioner, Texas Savings and Loan Department, 2601 North Lamar,
Suite 201, Austin, Texas 78705-4294, or e-mailed to TSLD1@tsld.state.tx.us,
no later than 30 days from the date that these proposed rules are published
in the
Texas Register
. If comments are submitted
by email after September 1, 2005, the comments should be sent to SMLinfo@sml.state.tx.us
The amended section is proposed under
Finance Code
, Section 11.306, which authorizes the Finance Commission
to adopt mortgage broker rules as provided by Chapter 156 of the Act, and
under
Finance Code
, Section 156.102(a) and
(b), which authorizes the Commissioner of the Texas Savings and Loan Department,
subject to review and compliance with the directives of the Finance Commission,
to adopt and enforce rules necessary for the intent of or to ensure compliance
with the Act.
The section of the Act affected by the proposed amended section is
§80.22.Loan Status Forms.
(a)
Unless exempted under subsection (c), whenever
[
(1) The descriptive heading "Conditional Qualification Letter"
may not be
[
(2)
Additional aspects of the Loan may be described as long
as they are not misleading;
(3)
Additional items that the mortgage broker or loan officer
has review may be described; and
(4)
Additional terms, conditions, and requirements may be added
; and
[
(5)
An alternative form may be
used if it provides at least the same information as is set forth in the approved
form.
(b)
Whenever a mortgage broker or loan officer provides a loan
applicant with confirmation that an application for a mortgage loan has been
approved as to credit but not as to collateral, the licensee may use the form
attached as Form B below. Such form maybe modified as follows:
(1)
The descriptive heading "Conditional Approval Letter"
may not be
[
(2)
Additional aspects of the Loan may be described as long
as they are not misleading;
(3)
Fees charged may be disclosed but such disclosure shall
not serve as a substitute for the disclosure required by §156.004 of
the Act or the Good Faith Estimate required by the Real estate Settlement
Procedures Act;
(4)
Additional items that the mortgage broker or loan officer
has reviewed may be described;
(5)
Additional terms, conditions, and requirements may be added;
(6)
An alternative form [
(c)
A mortgage broker who makes
a "firm offer of credit" as defined in the Fair Credit Reporting Act (the
"FCRA", 15 USC §1681 et seq.), is exempted from the requirement to use
the Conditional Qualification Letter as required by subsection (a) provided
that the firm offer of credit is made in conformity with the requirements
of the FCRA.
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 August 22, 2005.
TRD-200503516
John Fleming
General Counsel
Texas Savings and Loan Department
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 475-1353
Chapter 85.
RULES OF OPERATION FOR PAWNSHOPS
Subchapter D. OPERATION OF PAWNSHOPS
7 TAC §85.402, §85.405
The Finance Commission of Texas (the commission) proposes
amendments to §85.402 and §85.405, concerning the operation of pawnshops.
In general, the purpose of the amendments is to modernize the recordkeeping
rules for pawnbrokers, so that the rules better accommodate the prevalence
of automated recordkeeping systems used by the vast majority (over 90%) of
our licensees today. Subsection (g) has been added to §85.402 to clarify
established electronic recordkeeping procedures. An explanation concerning
the proper destruction of the law enforcement copy when such information is
electronically exchanged with law enforcement agencies is also contained in §85.402(g).
In §85.405, a clarification has been added explaining that the original
pawn ticket may be maintained in the numerical pawn ticket file. Furthermore,
the rule reconfirms that the original pawn ticket may be filed chronologically
by date if the pawnshop maintains the pawnshop records electronically. The
remaining changes to §85.405 are technical corrections and nonsubstantive
in nature.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period the 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 rules 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.
Regarding the addition of subsection (g) to §85.402, this subsection
formalizes the requirements of the current practice of computer software approval.
Part of subsection (g) involves the requirement that pawnbrokers have a disaster
recovery plan. Such a plan can be easily achieved by simply saving pawn transaction
data to a disk and keeping that disk at a separate location. From the agency's
experience, most electronic recordkeeping systems used by pawnbrokers already
have back-up capabilities. Thus, the requirements outlined by §85.402(g)
should not present any additional cost to licensees. Likewise, in §85.405,
the proposed change concerning the proper destruction of the law enforcement
copy when such information is electronically exchanged with law enforcement
agencies, should not impose any additional cost on licensees.
Therefore, 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.
§85.402.Recordkeeping.
(a) - (f)
(No change.)
(g)
Requirements of an electronic
record system. In an electronic recordkeeping system, the pawn ticket must
be a three-part form. Entries made to the top copy of the pawn ticket must
be legible and simultaneously reproduced on the remaining parts. The form
must provide a perforated stub to be utilized in labeling and identifying
pledged goods. Each part of the pawn ticket must be numbered sequentially
by the supplier of the pawn ticket form unless the commissioner approves,
in writing, an alternative method of numbering the pawn ticket. The stub must
be numbered simultaneously with the same sequential number. The second part
of the pawn ticket (law enforcement copy) may be omitted or properly destroyed
(i.e., pawn ticket is completely shredded or incinerated) if the pawn and
purchase ticket information is exchanged electronically, directly or indirectly,
with the primary law enforcement agency in the jurisdiction that the pawnshop
is located.
(1)
Required electronic information. A pawnbroker
who chooses to maintain pawn and purchase ticket information electronically
must comply with the requirements of Chapter 371 of the Texas Finance Code
and the rules governing electronic records. The information relating to the
dates and amounts of all payments made on the pawn transaction, the final
disposition or status of the pawn transaction (i.e., renewed, redeemed, voided,
forfeited, or seized), and the final disposition date, must be either manually
recorded on the hard card pursuant to subsection (f) of this section, or electronically
stored pursuant to this subsection. The final disposition or closing date
is the date that the pawn transaction is renewed, redeemed, voided, or the
pledged goods are forfeited by the pledgor or seized by a law enforcement
agency. For the electronic system, the final disposition information must
be stored and accessible for the entire record retention period required by
Texas Finance Code, §371.152(b). If subsection (g)(2) of this section
applies, the loan disposition report and supplemental loan disposition report
must be timely printed or stored as an electronically imaged record.
(2)
Loan disposition report and supplemental loan
disposition report. For the purposes of this paragraph, a calendar month means
every day from the first day of the month to the last day of the month.
(A)
Loan disposition report. The loan disposition
report is a listing of all pawn transactions that were made in a calendar
month. The loan disposition report is printed or stored as an electronically
imaged record and is sorted by using the field of the date made as recorded
on the pawn ticket.
(B)
Supplemental loan disposition report. The supplemental
loan disposition report is a listing of all pawn transactions that were closed
(i.e., renewed, redeemed, voided, forfeited, or seized) in a calendar month.
The supplemental loan disposition report is printed or stored as an electronically
imaged record and is sorted by using the field of the final disposition or
closing date. A supplemental loan disposition report is only required to be
printed or stored as an electronically imaged record if the pawnbroker extends
the maturity date of the pawn transaction using a memorandum of extension
or if the pawnbroker does not exercise the option to forfeit pledged goods
on the day after the last day of grace recorded on the pawn ticket.
(C)
Content.
(i)
Required information. The loan disposition report
and the supplemental loan disposition report must contain the following:
(I)
pawn or loan ticket number;
(II)
name of the pledgor;
(III)
the original date made;
(IV)
the original maturity date;
(V)
the loan amount or amount financed;
(VI)
the original pawn service charge;
(VII)
the final disposition or closing date;
(VIII)
the action taken to close the pawn transaction
(i.e., renewed, redeemed, voided, forfeited, or seized);
(IX)
if applicable, the date and dollar amount of
each memorandum of extension payment; and
(X)
if applicable, the dollar amount paid to redeem
or renew the pawn transaction (i.e., amount paid itemized to show the allocation
between the amount financed, pawn service charge, additional daily charges,
and the lost pawn ticket statement).
(ii)
The loan disposition report may contain active
or open pawn transactions. If a pawn transaction is active or open when the
loan disposition report is printed or electronically imaged, the closing date
should be left blank and the action taken to close the pawn transaction should
be shown as "active" or "open."
(D)
Timing. If required, the loan disposition report
and supplemental loan disposition report must be printed or stored as an electronically
imaged record every month.
(i)
The loan disposition report must capture all
pawn transactions, including active or open, that were made for a particular
calendar month. The report must be produced four or five months after the
completion of the reporting period, depending upon the length of the grace
period. If a 30-day grace period is offered, the report must contain information
for pawn transactions made four months prior. If a 60-day grace period is
offered, the report must contain information for pawn transactions made five
months prior. As an example, in May, 2005, the loan disposition report must
be printed or electronically imaged to include all pawn transactions that
were made during the calendar month of December, 2004 (60-day grace period)
or January, 2005 (30-day grace period).
(ii)
The supplemental loan disposition report must
be printed to capture all pawn transactions that were closed or have had a
final disposition (i.e., renewed, redeemed, voided, forfeited, or seized)
in the previous calendar month. As an example, in May, 2005, the supplemental
loan disposition report must include all pawn transactions that were closed
in the previous month of April, 2005 (i.e., April 1, 2005 to April 30, 2005).
(3)
Disaster recovery plan. A pawnbroker must maintain
a sufficient disaster recovery plan to ensure that the pawn and purchase ticket
information is not destroyed, lost, or damaged.
(4)
Access by agency personnel. The pawnbroker must
provide reasonable access to a computer terminal capable of accessing and
retrieving the pawn and purchase ticket information throughout the examination
or investigation conducted by the commissioner or the commissioner's representatives.
A pawnbroker may provide the commissioner or the commissioner's representatives
the same information in physical form as an alternative to reasonable access
to a computer terminal.
§85.405.Pawn Transaction.
(a)
Pawn Ticket.
(1)
Prescribed form.
(A)
The front and back of the original pawn ticket are prescribed
in Figures 1 and 2: 7 TAC
§
85.405(a)(1)(A). The original portion
of the pawn ticket must be given to the pledgor when the pawn transaction
is made.
Figure 1: 7 TAC §85.405(a)(1)(A) (.pdf)
Figure 2: 7 TAC §85.405(a)(1)(A) (.pdf)
(B)
The prescribed back of the printed copy of the pawn ticket,
as shown in Figure: 7 TAC
§
85.405(a)(1)(B), must be maintained
in the numerical pawn ticket file.
Figure: 7 TAC §85.405(a)(1)(B) (.pdf)
(2)
(No change.)
(3)
Information required on pawn ticket. The pawn ticket must
contain all information required in the Texas Finance Code, §371.157,
and satisfy the requirements of the
Truth in Lending
[
(4)
Prescribed copies.
(A)
Original. The top original copy is to be given to pledgor.
This is the copy that is to be presented upon redemption and filed with the
numerical file of redemptions and renewals.
The original copy of the
pawn ticket, presented to the pawnbroker upon redemption of the pledged goods
and renewal of the pawn transaction, may be kept in chronological order by
date if through the use of an automated system, the records pertaining to
the pawn transaction may be readily located. Additionally, the original copy
of the pawn ticket may be maintained in the numerical pawn ticket file.
(B) - (D)
(No change.)
(5)
Legible information. Reasonable procedures must be in place
to ensure that all information on the original pawn ticket and all copies
of the pawn ticket
are
[
(6)
(No change.)
(b) - (f)
(No change.)
(g)
Items usually sold as a set in a retail transaction or
pledged together with their accessories.
(1) - (2)
(No change.)
(3)
Items that may usually
be
sold as a set in a
retail transaction or pledged together with their accessories, but which are
pledged on separate days will not normally be considered to fall within the
provisions in paragraph (2) of this subsection.
(4)
(No change.)
(h)
(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 August 19, 2005.
TRD-200503508
Leslie L. Pettijohn
Commissioner
Office of Consumer Credit Commissioner
Earliest possible date of adoption: October 2, 2005
For further information, please call: (512) 936-7611
Subchapter A. REGISTRATION PROCEDURE
Subchapter
] E and F
of the Texas Finance Code, and make those records available for examination.
The records required by this section may be maintained by using either a paper
or manual recordkeeping system, electronic recordkeeping system, or optically
imaged recordkeeping system unless otherwise specified by statute or regulation.
or transaction log
].
Each
licensee must maintain a loan register that contains the information required
by subparagraphs (A) - (D) of this paragraph for each Chapter 342, Subchapter
E and F loan made by a licensee. The loan register can be maintained either
as a paper or an electronic record. If the loan register is maintained as
an electronic record, a licensee must be able to sort, generate, and print,
as a separate record, the loan register for each day the licensee originated
or acquired Chapter 342, Subchapter E and F loans. A licensee may incorporate
the loan register as part of the record of daily transactions required by
paragraph (7) of this section if the loan register is a separate and distinct
section of the daily report. If the loan register is maintained as a paper
record, the
[
A
] loan register must be maintained currently.
A licensee may file, in chronological order, copies of any loan document or
form prepared at the time a loan is made reflecting the information set forth
in subparagraphs (A) - (D) of this paragraph to serve as a loan register.
A loan register must contain the following information:
coborrower
], or other obligor on the loan and
the loan number assigned each loan must be maintained.
A licensee may
maintain the alphabetical index of current borrowers either as a paper or
an electronic record. If the alphabetical index of current borrowers is maintained
as an electronic record, a licensee must be able to sort, generate, and print,
as a separate record, the alphabetical index of current borrowers in strict
alphabetical order. A licensee can maintain the alphabetical index of current
borrowers by creating a rolodex of current borrowers. In lieu of creating
a rolodex of current borrowers, a licensee may maintain the alphabetical index
of current borrowers by filing the loan files of the borrowers or individual
borrower's account records in strict alphabetical order. The manual recordkeeping
system for maintaining the alphabetical index of current borrowers must be
currently maintained and include a card, file, or record for each co-borrower
or other obligor.
(A)
]
A separate
paper or electronic
record
must be maintained for the account of each borrower
. The paper or electronic
borrower's account record must be readily available by reference to either
a name or loan number. The borrower's account record
[
and the record
] must contain at least the following information on each loan:
(i)
] Loan number as recorded on
loan register;
(ii)
] Loan schedule and terms itemized
to show:
(I)
] Date of loan;
(II)
] Number of installments;
(III)
] Due date of installments;
(IV)
] Amount of each installment,
and;
(V)
] Maturity date.
(iii)
] Name, address, and telephone
number of borrower;
(iv)
] Names and addresses of
co-borrowers
[
coborrowers
] or other obligors, if any;
(v)
] Type or brief description
of security; if none, so indicate;
(vi)
] Total of payments (amount
of loan);
(vii)
] Amount financed (cash advance);
(viii)
] Total interest charges
itemized to show:
[
on Subchapter E loans, including additional
days charges for irregular installments; or, if the loan is made under Subchapter
F, the acquisition charge and the installment account handling charge shown
separately;
]
(ix)
] Amount of premium charges
for insurance
, gap waiver agreements, and authorized ancillary products
itemized to show:
(I)
] Credit life insurance;
(II)
] Credit accident and health
(disability) insurance;
(III)
] Personal property insurance;
(IV)
]
Collateral protection
[
Automobile
] physical damage insurance
(single interest
or dual interest coverage)
;
(V)
] Nonfiling insurance [
, and
];
(VI)
] Involuntary unemployment
insurance
;
[
.
]
(x)
] Amount of official fees for
recording, amending, or continuing a notice of security interest that
is
[
are
] collected at the time the loan is made and which
is to be disbursed within the period of 30 days as prescribed in paragraph
(6)(D)(i)
[
(5)(D)(i)
] of this section;
(xi)
] Amount of personal property
insurance when the
coverage
amount of insurance is not equal to
the
amount of the total of payments (amount of loan), and;
(xii)
] Individual payment entries
itemized to show:
(I)
] Date payment received; dual
postings are acceptable if date of posting is other than date of receipt;
(II)
] Amounts received for application
to principal and [
precomputed
] interest, and;
(III)
] Amounts received for default,
deferment, or other authorized charges.
(B)
Corrective entries are permitted
when justified.]
(C)
]
Refunds of unearned interest,
insurance charges, gap waiver agreements, and authorized ancillary products,
if any.
[
In the event a loan is prepaid in full, refunds of unearned
charges and unearned insurance premiums are required.
] A licensee is
responsible for substantiating final entries and that refunds were paid to
the borrower. Refund amounts must be itemized to show:
single
] interest
(single interest
or dual interest coverage)
, and personal property insurance charges
refunded, showing separately the refund applicable to each separate insurance
policy or coverage[
, and
];
.
]
(D)
When an error is made on the
individual borrower's account record, a line must be drawn through the improper
entry and the correct entry made above or below. No erasures or other obliterations
may be made on the payments received section of a manual individual record.]
(E)
]
Transfer record. A licensee
must maintain a transfer record, whether paper or electronic, when any Chapter
342 loan accounts made by or acquired by the licensee
[
When accounts
] are transferred from its licensed location [
, a separate record
of these accounts must be maintained by the transferor
]
.
The
record must show the name of the borrower, the account number, the date of
transfer, and the location to which the accounts are transferred.
(F)
Separate individual borrower's
account records must be maintained for open and closed loans. Any systematic
method of filing may be utilized so long as any account record may be readily
located by reference to either a name or loan number.]
(4)
]
General business and
accounting records.
[
Borrower disbursement record.
]
General business and accounting records concerning the financial transactions
of the loan business must be maintained. The business and accounting records
must include
[
The loan contract, statement of loan or account record,
or single separate disbursement record must show the individual amounts paid
out at the borrower's direction or request on his behalf or for his benefit.
Each disbursement must be substantiated by
] receipts, documents, canceled
checks, or other records[
.
]
for each disbursement made at
the borrower's direction or request on his behalf or for his benefit, including
repossession, foreclosure, or legal fees applied to the borrower's account.
(5)
]
Official fee
[
Fee
] record
(Subchapter E loans only)
.
§9.403
] of the Uniform Commercial Code, the licensee must follow the procedure
outlined in subparagraph (B) of this paragraph. (Note: Subparagraph (E)(i)
of this paragraph summarizes the filing requirements of
§9.515
[
§9.403
] of the Uniform Commercial Code.)
five year
] period or past the initial maturity date.
§9.403
] of the Uniform Commercial Code.
(6)
] Record of daily transactions.
Each licensee must maintain sufficient records
, paper or electronic,
to adequately reflect, on an individual account basis, the business
occurring during each day. The records must reflect the date on which each
transaction occurred.
(7)
] Record of loans in litigation
and repossession.
(8)
Loan records and documents.]
(A)
All obligations signed by the borrower, including
promissory notes and security agreements, must be kept at an office in the
state designated by the licensee or made available in the state, except when
transferred under an agreement which gives the commissioner access to the
documents. Copies of loan documents, financing statements, loan applications,
records of insurance policies issued by or through the licensee in connection
with the loan, and books and records required by this rule must be maintained
in the licensed location or be made available at some place in the state designated
by the licensee in writing to the commissioner. Documents may be maintained
out of state if the licensee has in writing acknowledged responsibility for
either making the records available within the state for examination or by
acknowledging responsibility for additional examination costs associated with
examinations conducted out of state.]
(B)
Loan documents and other records must be maintained
as required to evidence compliance with applicable state and federal laws
and regulations, including but not limited to, the Equal Credit Opportunity
Act and the Truth in Lending Act.]
(C)
If tangible personal property is taken as collateral
on a loan, the loan documents or attachments must describe the property in
detail sufficient to identify each individual item taken.]
(D)
Copies of receipts on cash payments collected
outside the licensed office must be maintained.]
(E)
If an automobile insurance policy is required,
a copy of the policy or insurance application and other pertinent records
relating to the rating of the policy as finally issued must be maintained
in the borrower's file.]
Loss Registers
]. Each licensee must maintain a register
, paper or electronic,
reflecting information on life, accident and health, property insurance,
involuntary unemployment, and single interest insurance claims whether paid
or denied by the insurance carrier.
Insurance Claims
]. The register pertaining to life insurance claims must show the name
of the borrower, the account number, and the date of death. [
The borrower's
individual file or account record must disclose the amount of indebtedness
at the time of death, the gross amount of the claim paid, the amount of insurance
benefits paid beneficiaries other than the licensee which is in excess of
the net amount necessary to pay the indebtedness and the check number or numbers
by which the amount is paid beneficiaries other than the licensee.
]
losses
]. The register pertaining to personal property insurance claims must
show the name of the borrower, the account number, the amount of insurance
written on tangible personal property other than a motor vehicle, the amount
of the settlement, and a notation as to whether the loss is a total or partial
loss.
(10)
] Retention
and availability
of records. All required books and records must be available for inspection
at any time by the commissioner or the commissioner's authorized representatives,
and must be retained for a period of four years from the date of the loan,
or two years from the date of the final entry made thereon, whichever is later.
All obligations authenticated by the borrower, including promissory notes
and security agreements, must be kept at an office in the state designated
by the licensee or made available in the state, except when transferred under
an agreement which gives the commissioner access to the documents. Copies
of loan documents, financing statements, loan applications, records of insurance
policies issued by or through the licensee in connection with the loan, and
books and records required by this rule must be maintained in the licensed
location or be made available at some location in the state designated by
the licensee in writing to the commissioner. Documents may be maintained out
of state if the licensee has in writing acknowledged responsibility for either
making the records available within the state for examination or by acknowledging
responsibility for additional examination costs associated with examinations
conducted out of state.
(1)
Loan register or transaction
log. A loan register must be maintained. A licensee may file, in chronological
order, copies of any loan document or form prepared at the time a loan is
made reflecting the information set forth in subparagraphs (A) - (D) of this
paragraph to serve as a loan register. A loan register must contain the following
information:]
(A)
Date of loan day (day, month, and year);]
(B)
Surname of borrower;]
(C)
Total of payments (amount of loan), and;]
(D)
Loan number.]
(A)
]
A separate record must be maintained for
the account of each borrower and the record must contain at least the following
information on each loan:
(i)
] Loan number as recorded on
loan register;
(ii)
] Loan schedule and terms itemized
to show:
(I)
] Date of loan;
(II)
] Number of installments;
(III)
] Due date of installments;
(IV)
] Amount of each installment,
and;
(V)
] Maturity date.
(iii)
] Name, address, and telephone
number of borrower;
(iv)
] Names and addresses of
co-borrowers
[
coborrowers
], if any;
(v)
] Legal description of real
property;
(vi)
] Principal amount;
(vii)
] Total interest charges,
including
the scheduled base finance charge, the administrative loan
fee, points, and odd days interest on the first installment period
[
additional days charges for irregular installments and points
];
(viii)
] Amount of premium charges
for insurance itemized to show:
(I)
] Credit life insurance;
(II)
] Credit accident and health
(disability) insurance
, and
;
(III)
] Personal property insurance
.
[
;
]
(ix)
] Amount of official fees for
recording, amending, or continuing a notice of security interest that are
collected at the time the loan is made
;
[
.
]
(x)
] Individual payment entries
itemized to show:
(I)
] Date payment received; dual
postings are acceptable if date of posting is other than date of receipt;
(II)
] Actual amounts received
for application to principal and interest, and;
(III)
] Actual amounts paid for
default, deferment, or other authorized charges.
(B)
Corrective entries are permitted
when justified.]
(C)
] In the event a loan is prepaid
in full, refunds of unearned charges and unearned insurance premiums may be
required. A licensee is responsible for substantiating final entries and for
substantiating that refunds due were paid to borrowers. Refund amounts must
be itemized to show:
(D)
When accounts are transferred
from a licensed location, a separate record of these accounts must be maintained
by the transferor. The record must show the name of the borrower, the account
number, the date of transfer, and the location to which the accounts are transferred.]
(3)
Borrower disbursement record.
The loan contract, statement of loan or account record, or single separate
disbursement record must show the individual amounts paid out at the borrower's
direction or request on his behalf or for his benefit. Each disbursement must
be substantiated by receipts, documents, canceled checks, or other records.]
(4)
] Fee record.
release
]
of lien fees are not disbursed within this period, the fees must be returned
to the borrowers and the release of lien effected and the expense borne by
the licensee.
(5)
Record of daily transactions.
Each licensee must maintain sufficient records to adequately reflect, on an
individual account basis, the business occurring during each day. The records
must reflect the date on which each transaction occurred.]
(6)
] Record of loans in litigation
and foreclosure.
(7)
] Loan records and documents.
(A)
All obligations authenticated
signed by the borrower, including promissory notes and security agreements,
must be kept at an office in the state designated by the licensee or made
available in the state, except when transferred under an agreement which gives
the commissioner access to the documents. Copies of loan documents, closing
statements, loan applications, records of insurance policies issued by or
through the authorized lender in connection with the loan, and books and records
required by this rule must be maintained in the licensed location or made
available at some place in the state designated by the licensee in writing
to the commissioner. Documents may be maintained out of state if the licensee
has in writing acknowledged responsibility for either making the records available
within the state for examination or by acknowledging responsibility for additional
examination costs associated with examinations conducted out of state.]
(B)
] Loan documents and other records
must be maintained as required to evidence compliance with applicable state
and federal laws and regulations including, but not limited to, the Real Estate
Settlement Procedures Act, the Equal Credit Opportunity Act, and the Truth
in Lending Act.
(8)
Insurance Loss Registers.
Each licensee must maintain a register reflecting information on life, accident
and health, and property insurance claims whether paid or denied by the insurance
carrier.]
(A)
Life Insurance Claims. The register pertaining
to life insurance claims must show the name of the borrower, the account number,
and the date of death. The borrower's individual file or account record must
disclose the amount of indebtedness at the time of death, the gross amount
of the claim paid, the amount of insurance benefits paid beneficiaries other
than the licensee which is in excess of the net amount necessary to pay the
indebtedness and the check number or numbers by which the amount is paid beneficiaries
other than the licensee.]
(B)
Accident and health insurance claims. The register
pertaining to accident and health insurance claims must show the name of the
borrower, the account number, and the date of the initial filing of a claim
for any continuous period of disability.]
(C)
Personal property insurance losses. The register
pertaining to personal property insurance claims must show the name of the
borrower, the account number, the amount of insurance written on tangible
personal property other than a motor vehicle, the amount of the settlement,
and a notation as to whether the loss is a total or partial loss.]
(9)
Retention of records. All
required books and records must be available for inspection at any time by
the commissioner or the commissioner's authorized representatives, and must
be retained for a period of four years from the date of the loan, or two years
from the date of the final entry made thereon, whichever is later.]
Record retention. All required books and
records must be available for inspection at any time by the commissioner or
the commissioner's authorized representative, and must be retained for a period
of four years or a longer period if required by applicable state or federal
laws or regulations.
]
Records ].
)
].
An approved software system must be used unless
a manual system that complies with §1.830 or §1.831 of this title
is used or a licensee is using a proprietary electronic software system that
is not sold or distributed to other licensees.
A licensee must provide
documentation of the system to the commissioner that explains how the required
information is maintained within the system.
(b)
] If an examination of the system
demonstrates that the required records are not being maintained appropriately
the commissioner may disapprove the use of the system. A licensee will have
90 days to bring the electronic system into compliance.
(c)
] Records may be retained and
stored using optical image storage media, provided the following requirements
are satisfied:
date ordered
] arrangement
of stored documents or records to assure a consistent and logical flow of
paperwork to preclude unnecessary search time.
(d)
] A licensee will maintain at
the licensee's office a method of viewing documents or records stored pursuant
to this section. A licensee must provide a hard copy of any document or record
requested by the Commissioner.
Subchapter Q. CHAPTER 342, PLAIN LANGUAGE CONTRACT PROVISIONS
Part 2.
TEXAS DEPARTMENT OF BANKING
To renew an existing permit you must pay the fee specified in the following
table:
]
this fee no later
than the 15th day after the date of the department's billing
].
Chapter 33.
MONEY SERVICES BUSINESSES
Part 4.
TEXAS SAVINGS AND LOAN DEPARTMENT
Chapter 80.
MORTGAGE BROKER AND LOAN OFFICER LICENSING
Subchapter C. ADMINISTRATION AND RECORDS
Subchapter J. FORMS
Whenever
] a mortgage broker or loan officer provides a
prospective
loan applicant with written confirmation of the
prospective loan
applicant's conditional qualification for a
[
status of a
]
mortgage loan that has not been approved, the licensee shall use the form
attached as Form A below. Such form may be modified as follows:
maybe
] omitted;
.
]
may be
] omitted;
prepared by an attorney licensed
in Texas
] may be used if it provides at least the same information as
is set forth in the approved form.
Part 5.
OFFICE OF CONSUMER CREDIT COMMISSIONER
Truth-in-Lending
] Act, 15 U.S.C. §1601 et seq., and Regulation Z, 12
C.F.R.
[
CFR
] §226.1 et seq. The pawn ticket must disclose
the date that is thirty (30) days following the maturity date, and it must
be captioned "last day of grace." The system used to create and store information
about pawn transactions must include alphabetical or numerical characters
sufficient to identify the pawnshop employee or owner writing the pawn ticket
and handling the renewal or redemption of the pawn transaction. All parts
of the pawn ticket form must be sequentially numbered by the automated information
system unless produced manually in accordance with the requirements of §85.402(f)
of this title [
, of this chapter
].
is
] legible.
Chapter 88.
CONSUMER DEBT MANAGEMENT SERVICES