S.B. No. 1371

AN ACT
relating to the regulation of consumer credit transactions and the
regulatory authority of the consumer credit commissioner; changing
a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 393.628, Finance Code, is transferred to
Subchapter C, Chapter 14, Finance Code, redesignated as Section
14.113, Finance Code, and amended to read as follows:
Sec. 14.113 [393.628]. TEXAS FINANCIAL EDUCATION
ENDOWMENT. (a) As part of the licensing fee and procedures
described under Subchapter G, Chapter 393 [this subchapter], each
credit access business or [license] holder of a credit access
business license shall pay to the commissioner an annual assessment
to improve consumer credit, financial education, and
asset-building opportunities in this state. The annual assessment
may not exceed $200 for each license as specified by the finance
commission.
(b) The commissioner shall remit to the comptroller amounts
received under Subsection (a) for deposit in an interest-bearing
deposit account in the Texas Treasury Safekeeping Trust Company.
Money in the account may be spent by the finance commission only for
the purposes provided by this section. Amounts in the account may
be invested and reinvested under the prudent person standard
described by Section 11b, Article VII, Texas Constitution [in the
same manner as funds of the Employees Retirement System of Texas],
and the interest from those investments shall be deposited to the
credit of the account.
(b-1) The expenses of managing the investments may be paid
from the deposit account described by Subsection (b).
(c) The Texas Financial Education Endowment shall be
administered by the finance commission to support statewide
financial education and consumer credit building activities and
programs, including:
(1) production and dissemination of approved
financial education materials at licensed locations;
(2) advertising, marketing, and public awareness
campaigns to improve the credit profiles and credit scores of
consumers in this state;
(3) school and youth-based financial literacy and
capability;
(4) credit building and credit repair;
(5) financial coaching and consumer counseling;
(6) bank account enrollment and incentives for
personal savings; and
(7) other consumer financial education and
asset-building initiatives as considered appropriate by the
finance commission.
(d) In implementing this section, the finance commission
may make grants and may solicit gifts, grants, and donations for
this purpose.
(e) The finance commission may partner with other state
agencies and entities to implement this section.
(f) The finance commission shall adopt rules to administer
this section.
SECTION 2. Section 14.209(a), Finance Code, is amended to
read as follows:
(a) In addition to other remedies for the enforcement of a
restraining order or injunction, the court in which an action is
brought under Section 14.208(c) [14.208(b)] may impound and appoint
a receiver for the defendant’s property and business, including a
document relating to the property or business, as the court
considers reasonably necessary to prevent a violation through use
of the property and business.
SECTION 3. Section 156.554(b), Finance Code, is amended to
read as follows:
(b) The commissioner:
(1) may provide grants in an aggregate amount of not
more than $100,000 each year to an auxiliary mortgage loan activity
company or another nonprofit organization for the purposes of:
(A) providing to consumers financial education
relating to mortgage loans; and
(B) providing to other nonprofit organizations
training in order for those organizations to provide to consumers
financial education relating to mortgage loans;
(2) shall make disbursements from the fund to pay
claims made under Section 156.555 that meet the requirements for
payment under that section; and
(3) may make disbursements from the fund to provide
support for statewide financial education, activities, and
programs specifically related to mortgage loans for consumers,
including activities and programs described by Section 14.113(c)
[393.628(c)].
SECTION 4. Section 180.002(5), Finance Code, is amended to
read as follows:
(5) “Dwelling” has the meaning assigned by Section
103(w) [103(v)] of the Truth in Lending Act (15 U.S.C. Section
1602(w) [1602(v)]).
SECTION 5. Section 303.015(c), Finance Code, is amended to
read as follows:
(c) A variable rate agreement for credit extended primarily
for personal, family, or household use must include the disclosures
identified for variable rate contracts required by regulations
issued by the Federal Reserve Board and the Consumer Financial
Protection Bureau under the Truth in Lending Act (15 U.S.C. Section
1601 et seq.), as amended, except that if that Act does not apply
because of the amount of the transaction, the following disclosure
must be included in a size equal to at least 10-point type that is
boldface, capitalized, underlined, or otherwise set out from
surrounding material so as to be conspicuous:
“NOTICE TO CONSUMER: UNDER TEXAS LAW, IF YOU CONSENT TO THIS
AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 24 PERCENT
PER YEAR.”
SECTION 6. Section 303.402(a), Finance Code, is amended to
read as follows:
(a) A person who contracts for, charges, or receives under a
contract subject to Chapter 342, 345, 346, 347, 348, or 353,
including a contract for an open-end account, a rate or amount of
interest or time price differential that exceeds the maximum
applicable rate or amount authorized by the applicable chapter or
this chapter is subject to a penalty for that violation determined
under Chapter 349.
SECTION 7. Sections 308.002(c) and (e), Finance Code, are
amended to read as follows:
(c) In interpreting this section, an administrative agency
or a court shall be guided by the applicable advertising provisions
of:
(1) Part C of the Truth in Lending Act [15 U.S.C.
Chapter 41, Subchapter I] (15 U.S.C. Section 1661 [1601] et seq.);
(2) Regulation Z (12 C.F.R. Parts 226 and 1026) [12
C.F.R. Part 226] adopted by the Board of Governors of the Federal
Reserve System and the Consumer Financial Protection Bureau; and
(3) the Official Staff Commentary and other
interpretations of that statute and regulation by the Board of
Governors of the Federal Reserve System, the Consumer Financial
Protection Bureau, and the staff of those agencies [its staff].
(e) A creditor who complies with the Truth in Lending Act
(15 U.S.C. Section 1601 et seq.) and [Federal Reserve] Regulation Z
(12 C.F.R. Parts [Part] 226 and 1026) in advertising a credit
transaction is considered to have fully complied with this section.
SECTION 8. Section 341.301(a), Finance Code, is amended to
read as follows:
(a) In each advertisement that purports to offer credit
regulated by this subtitle, Subtitle C, or Chapter 394, the
advertiser shall disclose the legal or registered name of the
advertiser and:
(1) shall disclose the street address of the
advertiser’s place of business unless the advertisement:
(A) is located on the premises of the
advertiser’s place of business; or
(B) is broadcast by radio or television; or
(2) if the advertisement is broadcast by radio or
television, shall:
(A) disclose the telephone number of the
advertiser; and
(B) comply with the applicable disclosure
requirements of Regulation Z (12 C.F.R. Parts 226 and 1026) [12
C.F.R. Section 226.1 et seq. (Regulation Z)].
SECTION 9. Section 341.401(b), Finance Code, is amended to
read as follows:
(b) In interpreting this section, a court or administrative
agency shall be guided by the Equal Credit Opportunity Act (15
U.S.C. Section 1691 et seq.) and regulations under and
interpretations of that Act by the Federal Reserve Board and the
Consumer Financial Protection Bureau to the extent that Act and
those regulations and interpretations can be made applicable to
conduct prohibited by this section.
SECTION 10. Section 341.402(b), Finance Code, is amended to
read as follows:
(b) The liability of a person under this section is instead
of and not in addition to that person’s liability under the Equal
Credit Opportunity [Title VII of the Consumer Credit Protection]
Act (15 U.S.C. Section 1691 et seq.). If the same act or omission
violates Section 341.401 and applicable federal law, the person
aggrieved by that conduct may bring a legal action to recover
monetary damages either under this section or under that federal
law, but not both.
SECTION 11. Section 341.502(a-1), Finance Code, is amended
to read as follows:
(a-1) If the terms of the agreement for a loan under
Subsection (a) were negotiated in Spanish, a copy of a summary of
those terms and other pertinent information shall be provided to
the debtor in Spanish in a form identical to disclosures required
for a closed-end transaction under 12 C.F.R. Section 1026.18
[226.18].
SECTION 12. Section 341.602(f), Finance Code, is amended to
read as follows:
(f) The commissioner shall remit to the comptroller amounts
received under Section 341.603(a) for deposit in an
interest-bearing deposit account in the Texas Treasury Safekeeping
Trust Company. Amounts in the fund may be invested and reinvested
under the prudent person standard described by Section 11b, Article
VII, Texas Constitution [in the same manner as funds of the
Employees Retirement System of Texas], and the interest from those
investments shall be deposited to the credit of the fund. An
investment may not be made under this subsection if the investment
will impair the necessary liquidity required to satisfy payment of
claims [judgments awarded] under this subchapter.
SECTION 13. Section 342.160, Finance Code, is amended to
read as follows:
Sec. 342.160. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by complying with the
commissioner’s written instructions relating to license surrender
[delivering to the commissioner:
[(1) the license; and
[(2) a written notice of the license’s surrender].
SECTION 14. Section 342.556(a), Finance Code, is amended to
read as follows:
(a) An authorized lender shall maintain on file with the
commissioner the name and address of [a written appointment of a
resident of this state as] the lender’s registered agent for
service [of all judicial or other process or legal notice, unless
the lender has appointed an agent under another statute of this
state].
SECTION 15. Section 343.201, Finance Code, is amended to
read as follows:
Sec. 343.201. DEFINITIONS. In this subchapter:
(1) “High-cost home loan” means a loan that:
(A) is made to one or more individuals for
personal, family, or household purposes;
(B) is secured in whole or part by:
(i) a manufactured home, as defined by
Section 347.002, used or to be used as the borrower’s principal
residence; or
(ii) real property improved by a dwelling
designed for occupancy by four or fewer families and used or to be
used as the borrower’s principal residence;
(C) has a principal amount equal to or less than
one-half of the maximum conventional loan amount for first
mortgages as established and adjusted by the Federal National
Mortgage Association;
(D) is not:
(i) a reverse mortgage; or
(ii) an open-end account, as defined by
Section 301.002; and
(E) is a credit transaction described by 12
C.F.R. Section 1026.32 [226.32], as amended, except that the term
includes a residential mortgage transaction, as defined by 12
C.F.R. Section 1026.2 [226.2], as amended, if the total loan amount
is $20,000 or more and:
(i) the annual percentage rate exceeds the
rate indicated in 12 C.F.R. Section 1026.32(a)(1)(i)
[226.32(a)(1)(i)], as amended; or
(ii) the total points and fees payable by
the consumer at or before loan closing will exceed the amount
indicated in 12 C.F.R. Section 1026.32(a)(1)(ii)
[226.32(a)(1)(ii)], as amended.
(2) “Points and fees” has the meaning assigned by 12
C.F.R. Section 1026.32(b) [226.32(b)], as amended.
SECTION 16. Section 345.106, Finance Code, is amended to
read as follows:
Sec. 345.106. PROCESSING FEE FOR RETURNED CHECK. A retail
charge agreement may provide that the holder of the agreement may:
(1) charge the retail buyer, on return of a dishonored
check given in payment under the agreement, a reasonable processing
fee that does not exceed the amount prescribed by Section 3.506,
Business & Commerce Code [is not more than $15]; and
(2) add the fee to the unpaid balance under the
agreement.
SECTION 17. Section 345.351(a), Finance Code, is amended to
read as follows:
(a) A holder who is not an authorized lender under Chapter
342 or a credit union shall:
(1) register with the Office of Consumer Credit
Commissioner; and
(2) pay a fee in an amount determined under Section
14.107 [of $10] for each location at which a retail installment
transaction is originated, serviced, or collected.
SECTION 18. Section 347.451(a), Finance Code, is amended to
read as follows:
(a) A creditor who is not an authorized lender under Chapter
342 or a credit union shall:
(1) register with the Office of Consumer Credit
Commissioner; and
(2) pay a fee in an amount determined under Section
14.107 [of $15] for each location at which a credit transaction is
originated, serviced, or collected.
SECTION 19. Section 348.009(a), Finance Code, is amended to
read as follows:
(a) The disclosure requirements of Regulation Z (12 C.F.R.
Parts 226 and 1026) [12 C.F.R. Part 226 (Regulation Z)] adopted
under the Truth in Lending Act (15 U.S.C. Section 1601 et seq.) and
specifically 12 C.F.R. Sections [Section] 226.18(f) and
1026.18(f), regarding variable rate disclosures, apply according
to their terms to retail installment transactions.
SECTION 20. Section 348.404(d), Finance Code, is amended to
read as follows:
(d) A retail seller may include money advanced under
Subsection (b) in the retail installment contract only if it is
included as an itemized charge and may disclose money advanced
under Subsection (b) in any manner permitted by Regulation Z (12
C.F.R. Parts 226 and 1026) [12 C.F.R. Part 226 (Regulation Z)]
adopted under the Truth in Lending Act (15 U.S.C. Section 1601 et
seq.). Section 349.003 does not apply to this subsection. This
subsection does not create a private right of action. The
commissioner has exclusive jurisdiction to enforce this
subsection.
SECTION 21. Section 348.510, Finance Code, is amended to
read as follows:
Sec. 348.510. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by complying with the
commissioner’s written instructions relating to license surrender
[delivering to the commissioner:
[(1) the license; and
[(2) a written notice of the license’s surrender].
SECTION 22. Section 351.0022, Finance Code, is amended to
read as follows:
Sec. 351.0022. WAIVER PROHIBITED. Except as specifically
permitted by this chapter or Chapter 32, Tax Code, a property owner
may not waive or limit a requirement imposed on a property tax
lender by this chapter or Chapter 32, Tax Code.
SECTION 23. Section 351.160, Finance Code, is amended to
read as follows:
Sec. 351.160. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by complying with the
commissioner’s written instructions relating to license surrender
[delivering to the commissioner:
[(1) the license; and
[(2) a written notice of the license’s surrender].
SECTION 24. Section 352.006(b), Finance Code, is amended to
read as follows:
(b) If the commissioner proposes to revoke a registration,
the facilitator is entitled to notice and an opportunity for a
hearing before the commissioner or a hearings officer, who shall
propose a decision to the commissioner. The commissioner or
hearings officer shall prescribe the time and place of the hearing
if the facilitator makes a written request for a hearing not later
than the 30th day after the date on which the order of revocation is
served [20th day after the date the facilitator receives the notice
of the proposed revocation]. The hearing is governed by Chapter
2001, Government Code.
SECTION 25. Section 353.510, Finance Code, is amended to
read as follows:
Sec. 353.510. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by complying with the
commissioner’s written instructions relating to license surrender
[delivering to the commissioner:
[(1) the license; and
[(2) a written notice of the license’s surrender].
SECTION 26. Section 371.073(a), Finance Code, is amended to
read as follows:
(a) A pawnbroker shall maintain on file with the
commissioner the name and address of [a written appointment of a
resident of this state as] the pawnbroker’s registered agent for
service of [all judicial or other] process [or legal notice unless
the pawnbroker has appointed an agent under another statute of this
state].
SECTION 27. Section 371.157, Finance Code, is amended to
read as follows:
Sec. 371.157. PAWN TICKET. A pawnbroker, at the time a pawn
transaction is entered, shall deliver to the pledgor a pawn ticket
or other memorandum that clearly shows:
(1) the name and address of the pawnshop;
(2) the pledgor’s name, address, and physical
description and a driver’s license number, military identification
number, identification certificate number, or other official
number that can identify the pledgor;
(3) the date of the transaction;
(4) an identification and description of the pledged
goods, including serial numbers if reasonably available;
(5) the amount of cash advanced or credit extended to
the pledgor, designated as “Amount Financed”;
(6) the amount of the pawn service charge, designated
as “Finance Charge”;
(7) the total amount, consisting of the amount
financed plus the finance charge, that must be paid to redeem the
pledged goods on the maturity date, designated as “Total of
Payments”;
(8) the “Annual Percentage Rate,” computed according
to Regulation Z (12 C.F.R. Part 1026) adopted [regulations issued]
by the Consumer Financial Protection Bureau [Federal Reserve Board]
under the Truth in Lending Act (15 U.S.C. Section 1601 et seq.), as
amended;
(9) the maturity date of the pawn transaction; and
(10) a statement that:
(A) the pledgor is not obligated to redeem the
pledged goods; and
(B) the pledged goods may be forfeited to the
pawnbroker on the 31st day after the maturity date.
SECTION 28. Section 371.255, Finance Code, is amended to
read as follows:
Sec. 371.255. REVOCATION OR SUSPENSION OF PAWNSHOP EMPLOYEE
LICENSE. After notice and opportunity for a hearing, the
commissioner may revoke or suspend a pawnshop employee license if
the commissioner finds that:
(1) the license holder knowingly or recklessly
violated this chapter or a rule adopted or order issued under this
chapter;
(2) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original license
application, clearly would have justified refusal to issue the
license; or
(3) the business repute and general fitness of the
license holder do not warrant belief that the license holder will
operate the business lawfully and fairly within the provisions of
this chapter.
SECTION 29. Section 371.257(a), Finance Code, is amended to
read as follows:
(a) The holder of a pawnshop license or a pawnshop employee
license may surrender the license by complying with the
commissioner’s written instructions relating to license surrender
[delivering it to the commissioner with written notice of
surrender].
SECTION 30. Section 393.617, Finance Code, is amended to
read as follows:
Sec. 393.617. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this subchapter by complying with
the commissioner’s written instructions relating to license
surrender [delivering to the commissioner:
[(1) the license; and
[(2) a written notice of the license’s surrender].
SECTION 31. Section 394.2101(a), Finance Code, is amended
to read as follows:
(a) The commissioner shall compute and publish the dollar
amounts of fees or other charges in amounts different from the
amounts of fees or other charges specified in Section 394.210 to
reflect inflation, as measured by the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor or, if that index is not
available, another index adopted by finance commission rule. The
commissioner shall adopt a base year and adjust the dollar amounts,
effective on July 1 of each year, if the change in the index from the
base year, as of December 31 of the preceding year, is at least 10
percent. The dollar amounts [must be rounded to the nearest $100,
except that the amounts of the fees and other charges] specified in
Section 394.210 must be rounded to the nearest dollar.
SECTION 32. Section 394.212(a), Finance Code, is amended to
read as follows:
(a) A provider may not:
(1) purchase a debt or obligation of a consumer;
(2) receive or charge a fee in the form of a promissory
note or other negotiable instrument other than a check or a draft;
(3) lend money or provide credit to the consumer;
(4) obtain a mortgage or other security interest in
property owned by a consumer;
(5) engage in business with a for-profit business [an]
entity described by Section 394.204(c)(7) [394.204(c)(3)] without
prior consent of the commissioner, except that unless denied,
consent is considered granted 30 days after the date the provider
notifies the commissioner of the intent to engage in business with a
for-profit business entity [an organization] described by Section
394.204(c)(7) [394.204(c)(3)];
(6) offer, pay, or give a gift, bonus, premium,
reward, or other compensation to a person for entering into a debt
management services agreement;
(7) represent that the provider is authorized or
competent to furnish legal advice or perform legal services unless
supervised by an attorney as required by State Bar of Texas rules;
(8) use an unconscionable means to obtain a contract
with a consumer;
(9) engage in an unfair, deceptive, or unconscionable
act or practice in connection with a service provided to a consumer;
or
(10) require or attempt to require payment of an
amount that the provider states, discloses, or advertises to be a
voluntary contribution from the consumer.
SECTION 33. Sections 32.06(d-1) and (f-3), Tax Code, are
amended to read as follows:
(d-1) A right of rescission described by the Truth in
Lending Act (15 U.S.C. Section 1635) and Regulation Z (12 C.F.R.
Section 1026.23) [12 C.F.R. Section 226.23] applies to a transfer
under this section of a tax lien on residential property owned and
used by the property owner for personal, family, or household
purposes.
(f-3) Notwithstanding any contractual agreement with the
property owner, the transferee of a tax lien must provide the payoff
information required by this section to the greatest extent
permitted by the Gramm-Leach-Bliley Act (15 U.S.C. Section 6802)
and Regulation P (12 C.F.R. Part 1016) [15 U.S.C. Section 6802 and
12 C.F.R. Part 216]. The payoff statement must meet the
requirements of a payoff statement defined by Section 12.017,
Property Code. A transferee may charge a reasonable fee for a
payoff statement that is requested after an initial payoff
statement is provided. However, a transferee is not required to
release payoff information pursuant to a notice under Subsection
(f-1) unless the notice contains the information prescribed by the
Finance Commission of Texas.
SECTION 34. The following provisions of the Finance Code
are repealed:
(1) Section 342.551(c);
(2) Section 342.556(b);
(3) Sections 371.006(b), (c), and (d); and
(4) Section 371.073(b).
SECTION 35. This Act takes effect September 1, 2023.