Texas Register, Volume 25, Number 44, Pages 10833-11184, November 3, 2000 Page: 10,849
10833-11184 p. ; 28 cm.View a full description of this periodical.
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removal and replacement of incorrect citation with correct and
appropriate citations to the statute. These is no anticipated cost
to persons who are required to comply with the amendment as
proposed. There will be no adverse economic effect on small
businesses.
Comments on the proposed amendment may be submitted in
writing to Leslie L. Pettijohn, Consumer Credit Commissioner,
2601 North Lamar Boulevard, Austin, Texas 78705-4207.
The amendment is 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 Com-
mission to adopt rules for the enforcement of the consumer loan
chapter.
The statutory provisions (as currently in effect) affected Chapter
342, Texas Finance Code.
1.501. Maximum Interest Charge.
(a) Precomputed loans. An authorized lender may charge the
add-on rates authorized by 342.201(a), Texas Finance Code [Ar.
5069 3A.301(a) or the alternative simple interest rate authorized
by 342.201(d), Texas Finance Code [Ar 5069 A -01(d),] as
calculated by the scheduled installment earnings method, for precom-
puted loans that are either unsecured or secured by personal property.
Prepaid interest in the form of points is not permitted, unless expressly
authorized by statute (e.g. an administrative loan fee).
(b) Interest-bearing loans. An authorized lender may charge
any rate of interest that does not exceed the maximum rate authorized
by 342.201(d), Texas Finance Code [Art. 50693A4301(dr] as cal-
culated by the true daily earnings method or the scheduled installment
earnings method for an interest-bearing loan that is either unsecured or
secured by personal property. Prepaid interest in the form of points is
not permitted, unless expressly authorized by statute (e.g. an adminis-
trative loan fee).
(c) Method of calculation. An authorized lender making loans
under 342.201(d), Texas Finance Code [Artk 50693A.3.101(dl may
calculate the rate and amount of interest by any method of calculation
as long as the amount of interest charged does not exceed the maximum
rate or amount of interest set forth in 342.201(d), Texas Finance Code
[Ark 50693A.~3 01(d)] calculated using the specified earnings methods
of 342.201, Texas Finance Code. [Art 5069 3A.301.]
1.502. Treatment of Periods Less Than a Full Month Before the First
Installment Date.
(a) (No change.)
(b) An authorized lender may not charge more than the maxi-
mum authorized 342.201(a) or 342.201(d), Texas Finance Code [Ark
5069 2A.n0 (a) or 5069 A.n01(4~1 effective rate in calculating the in-
terest charge for the additional odd first period.
1.504. Default Charges.
(a) Precomputed loans. Additional interest for default may be
charged on a precomputed loans, whether regular or irregular, or on a
precomputed loan contracted for on a scheduled installment earnings
method, to the extent it is authorized by 342.203 or 342.206, Texas
Finance Code. [Art 5069 3A.303 or At4 5069 3A.306.]
(b) Interest-bearing loans. No additional interest for default
may be charged on an interest- bearing loan made pursuant to 342.201,
Texas Finance Code [Art4 3A.301,] except for a loan contracted for on
a scheduled installment earnings method.
(c) - (d) (No change.)(e) Pyramiding prohibited. An authorized lender seeking to
assess additional interest for default in a precomputed loan under
342.203 or 342.206, Texas Finance Code [Art. 5069 3A.303 or Art
5069 3A.306] must comply with the prohibition on the pyramiding
of late charges set forth in the Federal Trade Commission Credit
Practices Rule at 16 C.F.R. 444.4.
1.505. Deferment.
(a) - (d) (No change.)
(e) Computation of deferment charge for a regular transaction.
Each deferment charge on a regular loan transaction shall be computed
in accordance with the method prescribed by the loan contract. If the
loan contract does not provide for a deferment charge, then no defer-
ment charge may be assessed or collected. A lender may employ any
of the prescribed computational methods described herein so long as
the computational method employed is consistently utilized through-
out the term of the loan.
(1) (No change.)
(2) If any installment subsequent to the first installment is
deferred, the deferred installment period will be determined by dividing
the remaining precomputed balance owed on the account by the regular
scheduled installment amount. The dollar amount associated with the
deferred installment period must be rounded down to the nearest whole
integer. Additionally, no deferred installment period may have a default
charge assessed against the deferred installment period. After the deter-
mination of the deferred installment period, the additional interest for
the deferment may not exceed the difference between the refund that
would be required for prepayment in full for the determined deferred
installment and the refund that would be required for the prepayment in
full of the next succeeding installment. The resulting difference shall be
multiplied by the number of months in the deferment period. For exam-
ple, the terms of a precomputed 342.201(a), Texas Finance Code [Ar
5069- A 40 a)] loan are as follows: Date of loan: 09/01/1997; First
payment due date: 10/01/1997; Cash Advance: $2,576.61; Finance
Charge: $1,023.39; Total of Payments: $3,600.00; Term: 36 months;
Monthly Installment: $100; Refunding method: Sum of the periodic
balances; Annual Percentage Rate: 23.1935%. Assume a deferment is
agreed to roughly six months into the contract, and at that time the re-
maining precomputed balance owed on the account was $3,095.00 and
the regular scheduled installment amount was $100.00. The nearest
whole integer for the dollar amount associated with the deferred time
period would be 30 ($3,095.00 divided by $100 = 30.95; rounded down
to the nearest whole integer = 30). If a default charge had already been
assessed on the 30th remaining installment, the nearest whole integer
would be 29. Assuming no default charge had been assessed on the
30th remaining installment, the additional interest charge for the defer-
ment would be the difference between the interest refund of the 30th
and the 29th installments. This difference would be $46.10 (Interest
refund as of the 30th installment = $714.53; interest refund as of the
29th installment = $668.43; $714.53 - $668.43 = $46.10). A scheduled
installment earnings refund method would yield a slightly different re-
sult of $44.49.
(3) (No change.)
(f) - (i) (No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal author-
ity to adopt.
Filed with the Office of the Secretary of State, on October 20,
2000.
TRD-200007413PROPOSED RULES November 3, 2000 25 TexReg 10849
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Texas. Secretary of State. Texas Register, Volume 25, Number 44, Pages 10833-11184, November 3, 2000, periodical, November 3, 2000; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth113968/m1/18/: accessed May 21, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.