Texas Register, Volume 25, Number 44, Pages 10833-11184, November 3, 2000 Page: 10,851
10833-11184 p. ; 28 cm.View a full description of this periodical.
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permitted by 302.101, Texas Finance Code [Te Rev ~i S Art
5069 !C.101,] does not exceed the applicable interest limit in Texas
Finance Code, Chapter 303 [Te- Re~ i Stat., Art 50694D],
Subchapter A.
(c) Method of calculation. An authorized lender making loans
under 342.301(c), Texas Finance Code [Article 50_69 2A. 01(] 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 342.301, Texas Finance Code
[Article 5069-3A.501] calculated using the specified earnings methods
contained in 342.301, Texas Finance Code [Article 5069 3A.501].
1.702. Treatment of Periods Less Than a Full Month.
(a)-(b) (No change.)
(c) An authorized lender may not contract for or charge more
than the maximum rate authorized by Texas Finance Code, Chapter
303 [Art. 5069 Chapter 4D], Subchapter A in calculating the interest
charge for the additional odd days in the first installment period.
1.703. Default Charges.
(a) Precomputed loan. Additional interest for default may be
charged in a precomputed secondary mortgage loan, whether regular or
irregular, or on a secondary mortgage loan that employs the scheduled
installment earnings method, to the extent it is authorized by 342.302
or 342.305, Texas Finance Code [Tex- Rev. Ci S-tat A4 069-
3A.502 or Art4 5069 3A.505].
(b)-(e) (No change.)
(f) Pyramiding prohibited. An authorized lender seeking to
assess additional interest for default in a precomputed secondary mort-
gage loan under 342.302 or 342.305, Texas Finance Code [Tex- Rev
C~ Stat Article 50693A.502 or Article 5069 3A.505] 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
or in Regulation AA, 12 C.F.R. Part 227, promulgated by the Board of
Governors of the Federal Reserve Board, as applicable.
1.704. Deferment.
(a)-(c) (No change.)
(d) 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 in Chapter 342 [Chap-
ter 3A] so long as the computational method employed is consistently
utilized throughout 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 342.301(a), Texas Finance Code[Art5069 3A.501(a ] loan are as follows: Date of loan: 09/01/1997; First
payment due date: 10/01/1997; Cash Advance: $2,766.48; Finance
Charge: $833.52; Total of Payments: $3,600.00; Term: 36 months;
Monthly Installment: $100; Refunding method: Sum of the periodic
balances; and Annual Percentage Rate: 18%. 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 regularly 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 $37.54 (interest
refund as of the 30th installment = $581.96; interest refund as of the
29th installment = $544.42; $581.96 - $544.42 = $37.54). A scheduled
installment earnings refund method would yield a slightly different re-
sult of $36.69.
(3) (No change.)
(e)-(h) (No change.)
1.705. Amounts Authorized To Be Charged after Consummation.
(a) Generally. A secondary mortgage loan contract may pro-
vide for any one or more of the four listed categories of charges set
forth in 342.307, Texas Finance Code [Te Rev Giv Stat. Art
5069 -A.507]. These charges may then be assessed and collected by
an authorized lender after consummation of the loan if appropriately
included in the contract.
(b) (No change.)
1.706. Amounts Authorized To Be Collected on or before Closing.
(a) Generally. On or before the closing of a secondary mort-
gage loan, an authorized lender may collect any one or more of the eight
categories of charges set forth in 342.308(a), Texas Finance Code
[Tex7 Rev tat Artm 5069 3An508(a)].
(b) Administrative loan fee. An authorized lender may collect
an administrative loan fee pursuant to 342.308(a)(9), Texas Finance
Code [Acts 1997, 7-5th Legislature Chapter 464] on interest bearing
and pre-computed loans.
(1)-(2) (No change.)
(3) Interest may not be assessed, charged, or received on an
administrative fee if the assessment causes the total amount of interest
to exceed the maximum amount authorized under Chapter 342 [34A].
(c) (No change.)
(d) Cost of credit report. An authorized lender may collect the
cost paid to a credit reporting agency to obtain a credit report pursuant
to 342.308(a)(5), Texas Finance Code [Te Re Giv Stat Art.
5069 2 A.508(a)(5)] but may not charge an additional fee for reviewing
or evaluating a credit report.
(e)-(f) (No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal author-
ity to adopt.
Filed with the Office of the Secretary of State, on October 20,
2000.
TRD-200007415PROPOSED RULES November 3, 2000 25 TexReg 10851
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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/m1/20/: accessed May 21, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.