Source: http://www.sos.state.tx.us/texreg/archive/November32017/Proposed%20Rules/7.BANKING%20AND%20SECURITIES.html
Timestamp: 2018-01-17 03:20:22
Document Index: 526524815

Matched Legal Cases: ['§2', '§2', '§180', '§180', '§2', '§180', '§2', '§5104', '§2', '§5104', '§180', '§180', '§180', '§180', '§180', '§2', '§5104', '§5104', '§15', '§33', '§1', '§1', '§31', '§33', '§33', '§15', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§151', '§151', '§151', '§33', '§151', '§151', '§151', '§33', '§33', '§33', '§33', '§33', '§33', '§33', '§151', '§151', '§151', '§151', '§33', '§33', '§151', '§151', '§151', '§33', 'art 1005', '§1005', '§33', '§151', '§151', '§33', '§33', '§33', '§33', '§33', '§278', '§278', '§33', '§2116', '§151', '§151', '§80', '§80', '§80', '§156', '§80', '§80', '§80', '§80', '§80', '§81', '§80', '§80', '§80', '§80', '§80', '§81', '§81', '§81', '§157', '§81', '§81', '§180', '§180', '§81', '§81', '§81', '§81', '§81', '§83', '§83', '§342', '§83', '§83', '§342', '§341', '§11', '§83', '§342', '§341', '§342', '§83', '§342', '§342', '§342', '§90', '§90', '§90', '§342', '§90', '§90', '§90', '§11', '§90', '§341', '§90', '§342', '§90', '§342', '§342', '§90', '§342', '§342', '§90']

SUBCHAPTER A. APPLICATION PROCEDURES FOR OFFICE OF CONSUMER CREDIT COMMISSIONER APPLICANTS
7 TAC §2.107
The Finance Commission of Texas (commission) proposes new §2.107, concerning Prelicensing Education, in 7 TAC, Chapter 2, concerning Residential Mortgage Loan Originators Applying for Licensure with the Office of Consumer Credit Commissioner Under the Secure and Fair Enforcement for Mortgage Licensing Act.
In general, the purpose of the new rule is to implement HB 3342, which the Texas Legislature passed in the 2017 legislative session. HB 3342 authorizes the commission to set the expiration period for prelicensing education of residential mortgage loan originators. Specifically, HB 3342 amends Texas Finance Code, §180.056(h), which currently states: "An individual who fails to maintain a residential mortgage loan originator license for at least five consecutive years must retake the prelicensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act." HB 3342 amends this provision by replacing "at least five consecutive years" with "the period of time established by rule of the rulemaking authority." In this provision, "rulemaking authority" refers to the commission, as provided by Texas Finance Code, §180.002(21). HB 3342 will go into effect on January 1, 2018.
The agency circulated an early draft of the proposed rule to interested stakeholders. The agency did not receive any informal written precomments on the draft.
Proposed new §2.107 provides a five-year expiration period for prelicensing education. This is the same period described by current Texas Finance Code, §180.056(h). The five-year period is currently used by the Nationwide Multistate Licensing System (NMLS), the system for licensing residential mortgage loan originators.
Proposed §2.107(a) states that if an individual completes the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), and fails to obtain a valid license or federal registration within five years from the date of completion, then the individual must retake the 20 hours of prelicensing education in order to be eligible for licensure. Proposed §2.107(b) states that if an individual obtains a license or federal registration and fails to maintain the license or registration for at least five consecutive years, then the individual must retake the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), in order to be eligible for licensure.
The State Regulatory Registry (SRR) has proposed reducing the five-year expiration period to three years, as explained in SRR's "Response to Comments Received During the SRR Comment Period on the Proposed Pre-Licensure Education Expiration Policy," dated July 21, 2015. However, this change has not yet taken effect in the NMLS system. The agency anticipates that the change will occur as part of an NMLS update currently scheduled for fall 2018. The agency intends to revisit the rule in 2018. Because the change to a three-year period will take some time to be effective, the commission is currently proposing a five-year period consistent with current requirements.
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.
Commissioner Pettijohn also has determined that for each year of the first five years the new rule is in effect, the public benefit anticipated as a result of the new rule will be that the prelicensing education requirements for residential mortgage loan originators will be more easily understood by applicants and licensees, will be more easily enforced, will be consistent with legislation recently passed by the legislature, and will provide guidance and clarity to applicants and licensees.
There is no anticipated cost to persons who are required to comply with the new rule. There will be no adverse economic effect on rural communities or small or micro-businesses. There will be no effect on individuals required to comply with the new rule as proposed.
The new rule is proposed under Texas Finance Code, §180.004(b), which grants the commission the authority to implement rules to comply with Texas Finance Code, Chapter 180. Additionally, Texas Finance Code, §180.056(h), as amended by HB 3342, authorizes the commission to adopt a rule establishing the period of time after which an individual must retake prelicensing education requirements. Texas Finance Code, §180.056(a) authorizes the commission to adopt rules providing additional requirements for prelicensing education. Texas Finance Code, §180.061(4) authorizes the commission to adopt rules establishing requirements for any activity the agency considers necessary for participation in NMLS.
The statutory provisions affected by the proposed new rule are contained in Texas Finance Code, §180.056.
§2.107.Prelicensing Education.
(a) Failing to obtain license. If an individual completes the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), and fails to obtain a valid RMLO license or federal registration within five years from the date of completion, then the individual must retake the 20 hours of prelicensing education in order to be eligible for licensure.
(b) Failing to maintain license. If an individual obtains an RMLO license or federal registration and fails to maintain the license or registration for at least five consecutive years, then the individual must retake the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), in order to be eligible for licensure.
Filed with the Office of the Secretary of State on October 20, 2017.
TRD-201704237
The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to amend §15.81, concerning application for acquisition or change of control of a state bank. The amended rule is proposed to implement recent statutory changes.
Finance Code §33.002 was amended effective September 1, 2017, by §1 of SB 1400 (Acts 2017, 85th Leg., R.S., Ch. 915, §1), to require the banking commissioner to promptly notify an applicant for acquisition or change of control of a state bank of the date the banking commissioner determines the application to be informationally complete and accepted for filing. This rule amendment is proposed to conform to the statutory change, and to establish a deadline within which the applicant must publish notice of the application that is based upon the date that the commissioner notifies the applicant of acceptance of the filing.
Mr. Daniel Frasier, Director of Corporate Activities, Texas Department of Banking, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the rule.
Mr. Frasier also has determined that, for each year of the first five years the rule as proposed is in effect, the public benefit anticipated as a result of enforcing the rule is that the time for publication of notices of application for acquisition or change of control will follow the date that the application is accepted for filing, as required by the statutory change. This will provide greater clarity for all stakeholders.
· create or eliminate a government program;
· require the creation of new employee positions or the elimination of existing employee positions;
· require an increase or decrease in future legislative appropriations to the agency;
· require an increase or decrease in fees paid to the agency;
· create a new regulation;
· expand, limit or repeal an existing regulation;
· increase or decrease the number of individuals subject to the rule's applicability; and
· positively or adversely affect this state's economy.
To be considered, comments on the proposed amended section must be submitted no later than 5:00 p.m. on December 4, 2017. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.
The amendment is proposed under Finance Code, §31.103, which provides that the commission may adopt rules to accomplish the purposes of Subchapter A.
Finance Code, §33.002, is affected by the proposed amended section.
(d) Public notice. Not later than 21 days from the date the banking commissioner notifies the applicant of acceptance [Within 14 days prior to or 14 days after submission] of the initial application, the applicant must publish notice as required by the Finance Code, §33.002(d), and §15.5 of this title (relating to Public Notice) in the county where the state bank's or bank holding company's home office is located. One publication under this subsection is adequate unless the banking commissioner expressly requires additional notice.
(i) Approval. Automatic approval; conditional approval. If an application filed under this section is not approved by the banking commissioner or is not set for hearing on or before the 60th day after the [later of the] date notice is published [or the application is accepted for filing], the transaction may be consummated. Before the expiration of the initial 60-day period, the banking commissioner may give the applicant written notice that the application is approved; upon receipt of the notice, the applicant may immediately consummate the transaction. Before the expiration of the initial 60-day period, the banking commissioner may also give an applicant written notice that the application is conditionally approved subject to certain conditions. The applicant must enter into a written agreement with the banking commissioner concerning these conditions on or before the 30th day after the date the applicant receives notification of conditional approval. An agreement entered into by the applicant and the banking commissioner concerning conditional approval is enforceable against the applicant and the bank and is considered for all purposes an agreement under the provisions of the Finance Code. If an applicant receives conditional approval, but does not enter into an agreement with the banking commissioner as required by this subsection, the banking commissioner will set the matter for hearing.
TRD-201704228
7 TAC §§33.3, 33.13, 33.15, 33.27, 33.51, 33.71 - 33.75
The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to amend §33.3, concerning the exclusion from licensing for bank agents; §33.13, concerning new license applications; §33.15, concerning violation of new license application processing times; §33.27, concerning fees, assessments and reimbursements; and §33.51, concerning providing information to customers about how to file a complaint. The commission also proposes to adopt new §33.71, concerning security required for depository agents; §33.72, concerning net worth required for depository agents; §33.73, concerning depository agent recordkeeping; §33.74, concerning depository agent receipts; and §33.75, concerning exemptions. The new and amended rules are proposed to implement and administer Subchapter J of the Money Services Act, which creates a new type of money services license for depository agents.
During the 84th legislative session, the Texas Legislature created the Texas Bullion Depository (the depository) within the Office of the Comptroller of Public Accounts (the comptroller) (Act of June 19, 2015, 84th Leg., R.S., H.B. 483). The depository will hold certain bullion and specie acquired by the state or a political subdivision of the state, as well as receive and hold such deposits for private entities. The bill also created a new license and corresponding regulatory structure for depository agents, which are private, independently managed firms and institutions authorized to act as intermediaries to conduct retail transactions on behalf of the depository with current and prospective depository account holders. The bill placed responsibility for regulating depository agents under the purview of the department by amending several existing sections of Chapter 151 of the Texas Finance Code, the Money Services Act, and adding new Subchapter J. The depository is scheduled to begin accepting deposits of bullion and specie on January 1, 2018.
The proposed amendments to §33.13 make conforming changes and set out the requirements for what must be included in an application for a new depository agent license. Conforming changes are made in subsections (a) and (b). Subsection (d)(1)(F) establishes the specific application requirements.
The proposed amendments to §33.27 add references to depository agent licenses and set out the fees that an applicant must pay to obtain a new or temporary depository agent license. Subsection (a) is amended to add references to depository agents. Subsection (c) is amended to add statutory references to the list of statutes that authorize fees, assessments and reimbursements. Subsection (d)(1) is amended to set the fee for obtaining a new depository agent license. Subsection (d)(3) is added to set the fee for obtaining a temporary depository agent license. Subsection (f) is added to set the fee for maintaining a depository agent license. Subsection (g) is amended to add references to depository agent business. Subsection (j) is amended to add a reference to subsection (d)(3).
Proposed new §33.71 specifies the requirements for the security that a depository agent must provide. Subsection (a) establishes the acceptable forms of security. Subsection (b) sets the amount of required security. Subsection (c) sets out specific requirements for the security. Subsection (d) specifies who may bring a suit on the security. Subsection (e) establishes that the commissioner may collect delinquent costs from the security. Subsection (f) specifies that the security must remain in effect until cancelled and that cancellation does not affect previous liability. Subsection (g) requires that the security cover claims for at least one year after the license holder surrenders its license, but gives the commissioner authority to permit the amount of security to be reduced or eliminated as obligations are reduced or eliminated. Subsection (h) allows the commissioner to require new or additional security as reasonably required. Subsection (i) sets out specific requirements for a license holder or applicant that provides a deposit of cash in lieu of a bond. Subsection (j) sets out the specific requirements for a license holder or applicant that provides a deposit of bullion or specie in lieu of a bond. Subsection (k) establishes that the security is held in trust and is not considered an asset of the license holder.
Proposed new §33.72 specifies the net worth required for depository agents. Subsection (a) requires a license holder or applicant to maintain a minimum net worth and sets out what that minimum net worth is, based on the locations where business is conducted. Subsection (b) authorizes the commissioner to increase the amount of net worth required and sets out the criteria to be considered. Subsection (c) requires that 50 percent of net worth be in tangible net worth.
Proposed new §33.73 specifies the records a license holder must maintain related to depository agent services transactions. Subsection (a) clarifies to whom the proposed new section applies and subsection (b) sets out general recordkeeping requirements. Subsection (b) permits a depository agent license holder to retain the information in a log or by any other means that allows the information to be readily retrieved. Subsection (c) sets out the specific recordkeeping requirements that apply to depository agent services transactions. Subsection (d) authorizes the banking commissioner to waive a requirement of §33.73 in appropriate circumstances.
Proposed new §33.74 requires that a receipt be issued in connection with all depository agent services transactions. Subsection (a) clarifies to whom the section applies and subsection (b) explains and establishes the specific receipt requirements. Paragraph (1) of subsection (b) defines "receipt" in a manner that applies to electronic or online transactions, in addition to in person transactions. Paragraph (2) identifies the information the receipt must include and also requires that the receipt be linked to the depository agent transaction records required under proposed new §33.73. Finally, paragraph (3) provides that a license holder may use one receipt to satisfy the requirements of both proposed new §33.74 and Finance Code, Chapter 278.
Proposed new §33.75 creates two exemptions from licensing. Subsection (a) affirms that the depository, as an agency of this state in the office of the comptroller, is exempt from all money services licensing. Subsection (b) creates a new exemption from depository agent licensing for the individual, partnership or corporation that operates the depository pursuant to a contract with the comptroller.
The remaining sections (§§33.3, 33.15 and 33.51) are modified with conforming changes.
Stephanie Newberg, Deputy Commissioner, Texas Department of Banking, has determined that for the first five-year period the proposed rules are in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the proposed rules.
Ms. Newberg has also determined that, for each year of the first five years the rules as proposed are in effect, the public benefit anticipated as a result of enforcing the rules is clear, consistent regulation of depository agents through administrative rules that implement and conform to current law, as well as the preservation and protection of the safety and soundness of depository agents, protection of the interests of purchasers of depository agent services, and protection against money laundering and similar financial crimes.
For each year of the first five years that the new and amended rules will be in effect, there will be economic costs to persons required to comply with the rules as proposed. Persons required to comply with these rules will incur costs of $5,000 as an initial application fee, approximately $3,000 as an annual examination fee (based on the expectation of one examiner for 40 hours at $75 per hour), and approximately $5,000 to $25,000 as an annual cost to maintain a surety bond (based on a fee of 1-5% of the amount of the bond, which must be at least $500,000). There may be some additional expense for creating compliant receipts and drafting and printing consumer complaint notices.
· require an increase or decrease in future legislative appropriations to the agency; or
· positively or adversely affect this state’s economy.
For the first five years the rules will be in effect, they will:
· create new regulations for entities seeking to become licensed as depository agents;
· expand existing regulations of money services businesses to include depository agents as a new category of licensees of the department;
· increase the number of individuals subject to the rule’s applicability; and
· increase fees paid to the department.
There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There will be no difference in the cost of compliance for small businesses as compared to large businesses.
To be considered, comments on the proposed amendments and new rules must be submitted no later than 5:00 p.m. on December 4, 2017. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.
The amendments and new rules are proposed under Finance Code, §151.102, which provides that the commission may adopt rules to administer and enforce Texas Finance Code, Chapter 151. The amendments and new rules are also proposed under Finance Code, §151.855, which authorizes the commission to establish the amount of the application fee, the minimum net worth required for applicants, and the requirements for the security that applicants must file with the department, and Finance Code, §151.857, which authorizes the commission to establish the amount of the temporary license fee.
Finance Code, Chapter 151, Subchapter J, is affected by the proposed amended and new sections.
§33.3.How Do I Claim an Exclusion from Licensing because I Am an Agent for a Federally Insured Financial Institution or a Foreign Bank Branch or Agency?
(a) This section applies if you:
(1) provide marketing, sales or other services related to money transmission or depository agent services either directly or through your own agents or subagents;
(2) provide these services only as agent for a federally insured financial institution described in Finance Code, §151.003(3), or a foreign bank branch or agency described in Finance Code, §151.003(4); and
(3) want to be excluded from licensing under Finance Code, §151.003(5), the agent exclusion.
(b) To provide services related to money transmission or depository agent services under the agent exclusion, you must first obtain the Department's written determination that the statutory conditions for the exclusion are satisfied. You must submit to the Department:
(1) a general description of your business plan;
(2) an executed agreement or other signed documents between you and the federally insured financial institution or foreign bank branch or agency in which the financial institution:
(A) assumes all legal responsibility [in the State of Texas] for satisfying the money services obligations owed to [Texas] purchasers of the money transmission or depository agent services upon receipt of the purchaser's money, [or] monetary value, bullion or specie by you or your agents or subagents;
(B) assumes all risk of loss that a purchaser may suffer as a result of the failure of you or one of your agents or subagents to transmit the purchaser's funds, bullion or specie to the entity; and
(C) appoints you as its agent for purposes of money transmission, depository agent services, or both, sets out the limits of your authority, and includes your agreement to act only within the scope of that authority; and
(3)any other information the Department reasonably requests to determine if you qualify for the exclusion.
§33.13.How Do I Obtain a New License and What are the Deadlines Associated with Applications?
(a) Does this section apply to me? This section applies if you seek a new money transmission, [or ]currency exchange or depository agent license under Finance Code, Chapter 151. The time tables and deadlines established in this section also apply to a request for approval of a proposed change of control of a money services business licensed under Finance Code, Chapter 151.
(b) What must I do to apply for a license? To apply for a new money transmission, [or] currency exchange or depository agent license, you must:
(2) fully complete the application form and provide the information and documentation as specified in the application and the department's instructions.
(c) What does the application process generally involve? The banking commissioner will review your application and, as authorized by Finance Code, Chapter 151, investigate you, your principals including officers, directors and shareholders of a publicly [publically ] traded parent if the principal has 25% or more ownership of the applicant, and all related facts to determine if you possess the qualifications and satisfy the requirements for the license for which you apply. At any time during the review and investigation process, the commissioner may require such information as the commissioner considers necessary to evaluate your application, including an opinion of counsel or an opinion, review or compilation prepared by a certified public accountant. It is your responsibility to provide or cause to be provided all the information the commissioner requires.
(ii) a financial statement demonstrating your solvency or;[.]
(F) if you are applying for a depository agent license:
(i) security in the amount of $500,000 that complies with §33.71 of this title (relating to Security Required for Depository Agents) and an undertaking to increase the amount of the security if additional security is required under that section; and
(ii) audited financial statements demonstrating that you satisfy the minimum net worth requirement established by §33.72 of this title (relating to Net Worth Required for Depository Agents), and that, if the license is issued, you are likely to maintain the required minimum.
(e) - (j) (No change.)
§33.15.What May I Do If the Department Does Not Comply with the New License Application Processing Times?
(a) Does this section apply to me? This section applies if you applied for a new money transmission, [or] currency exchange or depository agent license under Finance Code, Chapter 151, and you believe that the department failed to comply with the application processing times specified in §33.13(e) or (h) of this title (relating to Application for New License).
(b) May I file a complaint? Yes. If the department does not process your application for a new money transmission, [or] currency exchange or depository agent license within the time periods specified in §33.13(e) or (h) of this title (relating to Application for New License), you may file a written complaint with the banking commissioner. The complaint must set out the facts regarding the delay and the specific relief you seek. The department must receive your complaint on or before the 30th day after the date the commissioner approves or denies your license application.
§33.27.What Fees Must I Pay to Get and Maintain a License?
(a) Does this section apply to me? This section applies if you hold a money transmission, [or] currency exchange or depository agent license issued under Finance Code, Chapter 151, or are an applicant for a new money transmission, [or] currency exchange or depository agent license, as applicable. This section also applies if you are a person other than a license holder or applicant and are investigated under the authority of Finance Code, §151.104.
(c) What provisions of Finance Code, Chapter 151, authorize the fees, assessments, and reimbursements required under this section? The fees, assessments, and reimbursements established by or required under this section are authorized by one or more of the following provisions of Finance Code, Chapter 151: §§151.102(a)(5), 151.104(e), 151.207(b)(1), 151.304(b)(1), 151.306(a)(5), 151.504(b)(1), 151.605(c)(3), [and] 151.605(i), 151.855(b)(1), and 151.857(a)(5).
(1) You must pay a non-refundable $10,000 application fee to obtain a new money transmission license, [or] a non-refundable $5,000 application fee to obtain a currency exchange license or a non-refundable $5,000 application fee to obtain a depository agent license. You may also be required to pay the following additional fees:
(3) To apply for a temporary depository agent license authorized under Finance Code, §151.857, you must pay a non-refundable $2,500 temporary license application fee in addition to the fees required under paragraph (1) of this subsection.
(4) [(3)] The commissioner may reduce the fees required under paragraphs (1), [or] (2) or (3) of this subsection, if the commissioner determines that a lesser amount than would otherwise be collected is necessary to administer and enforce Finance Code, Chapter 151, and this chapter.
(e) What fees must I pay to maintain my money transmission or currency exchange license? You must pay your annual assessment. Subject to paragraph (3) of this subsection, the amount of your annual assessment is determined based on the total annual dollar amount of your Texas money transmission and or currency exchange transactions, as applicable, as reflected on your most recent annual report filed with the department under Finance Code, §151.207(b)(2).
(1) If you hold a currency exchange license, you must pay the annual assessment specified in the following table:
Figure: 7 TAC §33.27(e)(1) (No change.)
(2) If you hold a money transmission license, you must pay the annual assessment specified in the following table:
Figure: 7 TAC §33.27(e)(2) (No change.)
(3) If you are a new license holder and have not yet filed your first annual report under Finance Code, §151.207(b)(2), you must pay the minimum annual assessment specified by paragraph (1) or (2) of this subsection, as applicable, prorated for the number of quarters remaining in the department's fiscal year after the date your license is issued.
(f) What fees must I pay to maintain my depository agent license? You must pay your annual license fee. The amount of your annual license fee is the cost of your annual examination, which is calculated at a rate of $75 per hour for each examiner and all associated travel expenses for an examination. The annual license fee will be calculated in this manner for all license fees owed from September 1, 2017 to August 31, 2019.
(g) [(f)] What fees must I pay in connection with a proposed change of control of my money transmission, [or] currency exchange or depository agent business?
(3) If the department's review of your change of control application or prior determination request requires more than eight employee hours, you must pay an additional review fee of $75.00 per employee hour for every hour in excess of eight hours.
(h) [(g)] What fees must I pay in connection with a department investigation?
(i) [(h)] What other fees must I pay?
(1) If the department does not receive your completed annual report on or before the due date prescribed by the commissioner under Finance Code, §151.207, you must pay a late fee of $100 per day for each business day after the due date that the department does not receive your completed annual report.
(3) If you are a new license holder and have not yet filed your first annual report required under Finance Code, §151.207(b)(2), you must pay an examination fee of $75 per hour for each examiner and all associated travel expenses for an examination. The portion of this fee attributable to hourly charges shall be reduced by an amount equal to 50% of the annual assessment you paid pursuant to subsection (e)(3) of this section, but not below zero.
(j) [(i)] How and when do I need to pay for the fees required by this section?
(1) You must pay the license application fees required under subsection (d)(1)-(3) [subsections (d)(1) and (d)(2)] of this section at the time you file your application for a license.
(2) The department will bill you by written invoice for any investigation and third-party screening service fees under subsection (d)(1)(A), (B), or (C) [subsections (d)(1)(A), (B), or (C)] of this section. You must pay the fees within 10 days of receipt of the department's written invoice.
(3) Your annual assessment required under subsection (e) of this section may be billed in quarterly or fewer installments in such periodically adjusted amounts as reasonably necessary to pay for the costs of examination and to administer Finance Code, Chapter 151. You must pay the annual assessment fee 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. The commissioner may decrease your annual assessment if it is determined that a lesser amount than would otherwise be collected is necessary to administer the Act.
(4) You must pay the filing fees required by subsection (g) [(f)] of this section at the time you file your proposed change of control or prior determination request. You must pay any required additional fees within 10 days of receipt of the department's written invoice.
(5) You or another person must pay the investigation fee required under subsection (h) [(g)] of this section within 10 days of receipt of the department's written invoice.
(6) If you owe a late fee as provided by subsection (i)(1) [(h)(1)] of this section, you must pay this fee immediately upon receipt of the department's written invoice.
(7) The department will bill you for any additional examination fees required under subsection (i)(2), (3), (4), or (5) [subsections (h)(2), (3), (4), or (5)] of this section by written invoice. You must pay this additional examination fee within 10 days of receipt of the department's written invoice.
(k) [(j)] What if I cannot afford the annual assessment?
§33.51.How do I Provide Information to My Customers about How to File a Complaint?
(a) Does this section apply to me? This section applies if you hold a money transmission, [or] currency exchange or depository agent license issued by the department under Finance Code, Chapter 151.
(b) Definitions. Words used in this section that are defined in Finance Code, Chapter 151, have the same meaning as defined in the Finance Code. The following words and terms, when used in this section, shall have the following meanings unless the text clearly indicates otherwise.
(1) Conspicuously posted--Displayed so that a customer with 20/20 vision can read it from the place where he or she would typically conduct business with you or, alternatively, on a bulletin board, in plain view, on which you post notices to the general public (such as equal housing posters, licenses, Community Reinvestment Act notices, etc.).
(2) Customer--As to money transmission or currency exchange, "customer" means any Texas resident [Any person] to whom, either directly or through an authorized delegate, you provide or have provided money transmission or currency exchange products or services or for whom you conduct or have conducted a money transmission or currency exchange transaction. As to depository agent services, "customer" means any person to whom you provide or have provided depository agent services or for whom you conduct or have conducted a depository agent services transaction.
(3) Privacy notice--Any notice regarding a person's right to privacy that you are required to give under a specific state or federal law.
(4) Required notice--The notice described in subsection (d) of this section.
(c) Must I provide notice to customers about how to file complaints? Yes. You must tell each of your [Texas] customers how to file a complaint concerning the money transmission, [or] currency exchange or depository agent business you conduct under Finance Code, Chapter 151, in accordance with this section.
(d) What must the notice say?
(1) You must use:
(A) a notice that conforms to the complaint notice requirements of the Remittance Transfer Rule of Regulation E (12 C.F.R. Part 1005, Subpart B), such as described by 12 C.F.R. §1005.31(b)(2)(vi), if the Remittance Transfer Rule applies to you; or
(B) a notice that substantially conforms to the language and form of the following notice: If you have a complaint, first contact the consumer assistance division of (Name of License Holder) at (License Holder consumer assistance telephone number), if you still have an unresolved complaint regarding the company's (money transmission, currency exchange or depository agent) [money transmission or currency exchange] activity, please direct your complaint to: Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705, 1-877-276-5554 (toll free), www.dob.texas.gov.
(2) You must provide the required notice in the language in which the transaction is conducted.
(e) How and where must I provide the required notice?
(1) If a state or federal law requires you to send a privacy notice to your customers, you must include the required notice with each privacy notice.
(2) If you maintain a website by which a customer may remit money for transmission, complete a depository agent services transaction or obtain information about you or the customer's transaction or an existing account, you must include the required notice on your website. The notice must be prominently displayed on the initial page the customer uses to initiate the remittance, transaction or access the information, or on a page available no more than one link from the initial page. The link must clearly describe the information available by clicking the link, e.g., "Texas customers click here for information about filing complaints about our money transmission or currency exchange product or service" or "Customers click here for information about filing complaints about our depository agent services."
(3) In addition to including the required notice in a privacy notice in accordance with paragraph (1) of this subsection and on your website in accordance with paragraph (2) of this subsection, you must tell customers how to file complaints by one or more of the following methods:
(A) You may include the required notice in at least 8 point type, on each payment instrument or other access device or receipt used in connection with your money transmission, [or] currency exchange or depository agent business, provided that:
(i) the payment instrument or other access device constitutes the only means of accessing the money, bullion or specie received for transmission; or
(ii) you issue a receipt for every money transmission, [or] currency exchange or depository agent service transaction you conduct.
(B)If you personally receive all the funds, bullion or specie paid by your customers, you may conspicuously post the required notice where you conduct money transmission, [or] currency exchange or depository agent activities with customers on a face to face basis.
(C) You may provide each customer with the required notice separately, provided that:
(i) not later than the time the transaction is conducted, you deliver the required notice in a form that your customer can retain; or
(ii) if you use an access device, such as a stored value card, in your money services business and mail the device to your customer, you include the required notice in the mailing; and
(iii) if the same access device may be used continuously, such as a reloadable stored value card, you also deliver the required notice to your customer at least once every twelve months. You may include the required notice with a privacy statement, with or on another statement, or by another means so long as the customer actually receives the notice within each twelve-month period.
(4) If your business is entirely internet based, so that account relationships and transactions are initiated solely by means of the internet, the additional disclosures described in paragraph (3) of this subsection are not required.
§33.71.Security Required for Depository Agents.
(a) An applicant for a depository agent license must provide, and a depository agent license holder must maintain at all times, security consisting of a surety bond, an irrevocable letter of credit, or a deposit in cash, bullion or specie instead of a bond in accordance with this section.
(b) The amount of the required security is equal to the greater of $500,000 or one percent of the license holder's total yearly dollar volume of depository agent services business or the applicant's projected total volume of depository agent services business for the first year of licensure, up to a maximum of $2 million. When the amount of the required security exceeds $1 million, the applicant or license holder may, in the alternative, provide security in the amount of $1 million, plus a dollar for dollar increase in the net worth of the applicant or license holder over the amount required under §151.855(b)(3).
(2) be payable to any claimant or to the commissioner, on behalf of a claimant or this state, for any liability arising out of the license holder's depository agent services business, incurred under, subject to, or by virtue of this chapter; and
(3) if the security is a bond, be issued by a qualified surety company authorized to engage in business in this state and acceptable to the commissioner or, if the security is an irrevocable letter of credit, be issued by a financial institution acceptable to the commissioner.
(e) The commissioner may collect from the security or proceeds of the security any delinquent fee, assessment, cost, penalty, or other amount imposed on and owed by a license holder. If the security is a surety bond, the commissioner shall give the surety reasonable prior notice of a hearing to impose an administrative penalty against the license holder, provided that a surety may not be considered an interested, aggrieved, or affected person for purposes of an administrative proceeding under §151.801 or Chapter 2001, Government Code.
(g) The security shall cover claims for at least one year after the license holder surrenders its license or otherwise ceases to engage in activities for which a license is required under this subchapter. However, the commissioner may permit the amount of the security to be reduced or eliminated before that time to the extent that the amount of the license holder's obligations to the department and to purchasers is reduced. The commissioner may permit a license holder to substitute another form of security when the license holder ceases to provide depository agent services.
(j) Instead of providing all or part of the amount of the security required by this section, an applicant or license holder may deposit, with an independent vault or depository that is acceptable to the commissioner, an aggregate amount of bullion or specie that equals the total amount of the required security or the remaining part of the security, plus an additional 15 percent to account for fluctuations in the value of the bullion or specie. The deposit of bullion or specie:
(k) The security is considered by operation of law to be held in trust for the benefit of this state and any individual to whom an obligation arising under this chapter is owed, and may not be considered an asset or property of the license holder in the event of bankruptcy, receivership, or a claim against the license holder unrelated to the license holder's obligations under this chapter.
§33.72.Net Worth Required for Depository Agents.
(a) An applicant for a depository agent license must possess, and a depository agent license holder must maintain at all times, a minimum net worth computed in accordance with generally accepted accounting principles of:
(1) $100,000, if business is proposed to be or is conducted at four or fewer locations; or
(2) $500,000, if business is proposed to be or is conducted at five or more locations or over the internet.
(2) the number of locations at or through which depository agent services is or will be conducted;
(c) At least 50 percent of the applicant’s or license holder’s total net worth under this section must be tangible net worth.
§33.73.What Records Must I Keep Related to Depository Agent Services Transactions?
(a) Does this section apply to me? This section applies to you if you hold a depository agent license issued by the department under Finance Code, Chapter 151.
(b) What are the general recordkeeping requirements?
(1) As a general matter, you must maintain:
(A) records of all filings made, and that contain all information required, under applicable federal laws and regulations, including the Bank Secrecy Act and 31 CFR Chapter X (collectively BSA);
(B) in addition to the records required under Finance Code, Chapter 151, the records required under this section related specifically to depository agent services transactions;
(C) records sufficient to enable you to file accurate and complete reports with the commissioner or department in accordance with Finance Code, Chapter 151 and Chapter 33 of this title (relating to Money Services Businesses); and
(D) records sufficient to enable you to file accurate and complete reports with the comptroller in accordance with Government Code, Chapter 2116.
(2) You must obtain and retain the information required under this section in a log or by another means of retention that allows the information to be readily retrieved. In addition, you must:
(A) maintain your records in such a manner that you can identify and make available to the department the records related to your depository agent services activity; and
(B) make your records available to the department within the time period reasonably requested.
(c) What specific records must I keep related to depository agent services transactions?
(1) For purposes of paragraph (2) of this subsection, "identifying number" means the taxpayer identification number (e.g., social security, employee identification number) or passport number of your customer or the person on whose behalf your customer conducts the transaction, as applicable, or, if your customer or other person has no such number and is an alien, then the number of an alien identification card or other official document evidencing foreign nationality or residence, such as a foreign driver's license or foreign voter registration card.
(2) You must keep a record for each transaction that contains:
(A) the name, address and telephone number of your customer;
(B) an identifying number for your customer and, if applicable, the person on whose behalf your customer is conducting the transaction;
(C) the type of photograph identification presented by your customer;
(D) the identity of the issuer of the photograph identification;
(E) your customer's date of birth;
(F) your customer’s account number at the depository or, if applicable, the account number of the person on whose behalf your customer is conducting the transaction;
(G) the amount of the transaction, recorded in the amount of precious metals bullion or specie and/or United States dollars, as applicable;
(H) the date of the transaction;
(I) the time of day the transaction is conducted;
(J) the location of the office where the transaction is conducted;
(K) the exchange rate used for pricing the transaction;
(L) the amount of any fee charged for the transaction;
(M) the method of payment (e.g., cash, check, credit card);
(N) any payment instructions received from the customer with the transaction order;
(O) any form relating to the transaction that is completed or signed by the person placing the transaction; and
(P) the unique number of the receipt required under §33.74 of this title (relating to What Receipts Must I Issue Related to Depository Agent Transactions?).
(d) May I obtain a waiver of the recordkeeping requirements? The commissioner may waive any requirement of this section upon a showing of good cause if the commissioner determines that:
(1) you maintain records sufficient for the department to examine your depository agent business; and
(2) the imposition of the requirement would cause an undue burden on you and conformity with the requirement would not significantly advance the state's interest under Finance Code, Chapter 151.
§33.74.What Receipts Must I Issue Related to Depository Agent Services Transactions?
(a) Does this section apply to me? This section applies if you hold a depository agent license issued under Finance Code, Chapter 151.
(b) Must I issue a receipt in connection with the depository agent services transactions I conduct?
(1) For purposes of this section "receipt" means a receipt, electronic record or other written confirmation. If the customer conducts the transaction online or electronically, the term includes a means by which the customer can save or print a receipt or other record of the transaction that contains the information required under this section.
(2) You must issue a receipt for each transaction that:
(A) can be linked to the transaction records required under §33.73(c)(3) of this title (relating to What Records Must I Keep Related to Depository Agent Services Transactions?); and
(i) the name of your licensed business and the business address and telephone number;
(ii) the unique transaction or identification number;
(iii) the date of the transaction;
(iv) the amount of the transaction in precious metals bullion or specie and/or United States dollars, as applicable;
(v) the exchange rate used for pricing the transaction;
(vi) the estimated date that the precious metals bullion or specie will be delivered to the depository, as applicable; and
(vii) the amount of any fee charged for the transaction.
(3) With respect to a currency transmission transaction subject to Finance Code, Chapter 278, you must provide the receipt required under Finance Code, §278.051 and §278.053, as applicable. The information required under those sections may be included on the receipt required under paragraph (2) of this subsection.
§33.75.Exemptions for the Texas Bullion Depository and an individual, partnership or corporation that operates the Texas Bullion Depository pursuant to a contract with the Comptroller.
(a) The depository, as defined by §2116.001, Government Code, to the extent that it conducts money services as defined by Finance Code §151.002, need not obtain a license under Finance Code, Chapter 151.
(b) An individual, partnership or corporation who conducts depository agent services as defined by Finance Code §151.002, need not obtain a license under Finance Code, Chapter 151, so long as that individual, partnership or corporation:
(1) is under written contract with the comptroller to operate the depository; and
(2) acts only within the scope of authority conferred by that contract.
(c) Any individual, partnership or corporation exempted from licensing under subsection (b) of this section must immediately contact the Department of Banking in the event that any of the conditions listed in subsection (b) of this section change.
TRD-201704231
7 TAC §80.2
The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), proposes to amend 7 TAC §80.2, relating to definitions.
In general, the purpose of the proposal is to clarify and better organize the requirements regarding physical offices.
7 TAC §80.2 is amended to simplify the definition of a physical office to mean an actual office where the business of mortgage lending and/or the business of taking or soliciting residential mortgage loan applications are conducted.
Caroline C. Jones, the Savings and Mortgage Lending Commissioner, has determined that for the first five-year period the proposed rules would be in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering this rule.
Commissioner Jones also has determined that for each year of the first five years the proposal would be in effect, the public benefits anticipated as a result of the proposal would be an increase in the readability and clarity of the regulations that pertain to physical offices.
There will be no effect on the individuals who are required to comply with the proposal. There will be no adverse economic effect on small or micro businesses and no difference in the cost of compliance for small businesses as compared to large businesses.
Government Growth Impact Statement. Commissioner Jones has determined that during the first five years the rule as proposed would be in effect:
(3) implementation of the proposed rule does not require an increase or decrease in future legislative appropriations to the agency;
(6) the proposed rule does not expand, limit, or repeal an existing regulation;
Comments on the proposed amendments may be submitted in writing to Devyn F. Wills, Associate General Counsel, Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705 or by email to smlinfo@sml.texas.gov within 30 days of publication in the Texas Register.
The proposal is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to Tex. Fin. Code §156.102.
The statutory provisions affected by the proposal are contained in Tex. Fin. Code, chapter 156.
TRD-201704230
Devyn F. Wills
For further information, please call: (512) 475-2434
7 TAC §80.200, §80.206
The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), proposes to amend 7 TAC §80.200, relating to required disclosures, and proposes new §80.206, relating to physical offices.
In general, the purpose of the proposal is to reduce regulatory burden and create parity between the Texas Mortgage Company and Mortgage Banker Disclosures, as found in 7 TAC §80.200 and §81.200, respectively, and to clarify and better organize the requirements regarding physical offices.
Section 80.200 is amended to simplify the information contained in the Texas Mortgage Company Disclosure, thus creating parity with the Texas Mortgage Banker Disclosure. In addition, the Texas Mortgage Company Disclosure is amended to add clarifying language, including that residential mortgage loan originators will be paid in compliance with Regulation Z.
The proposed new §80.206 outlines the requirements a physical office must meet and that the physical office of a licensee need not be the location at which such person's required records are maintained, but the location at which such required records are maintained must be accessible to the Commissioner or the Commissioner's designee for inspection during normal business hours.
Commissioner Jones also has determined that for each year of the first five years the proposal would be in effect, the public benefits anticipated as a result of the proposal will be a reduction of regulatory burden by reducing the contents of the notice and clarifying that residential mortgage loan originator will be paid in compliance with Regulation Z.
There will be no effect on the individuals who would be required to comply with the proposal. There will be no adverse economic effect on small or micro businesses and no difference in the cost of compliance for small businesses as compared to large businesses.
Government Growth Impact Statement. Commissioner Jones has determined that during the first five years the new rule as proposed would be in effect:
(5) the proposed rule does not creates a new regulation;
(8) the proposed rule does not positively or adversely affects this state's economy.
Comments on the proposal may be submitted in writing to Devyn F. Wills, Associate General Counsel, Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705 or by email to smlinfo@sml.texas.gov within 30 days of publication in the Texas Register.
§80.200.Required Disclosure.
(a) An originator sponsored under Finance Code, Chapter 156 shall include the following notice, Figure: 7 TAC §80.200(a), to a residential mortgage loan applicant with an initial application for a residential mortgage loan:
Figure: 7 TAC §80.200(a) (.pdf)
[Figure: 7 TAC §80.200(a)]
TRD-201704232
7 TAC §81.2
The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), proposes to amend 7 TAC §81.2, relating to definitions.
In general, the purpose of this proposal is to clarify and better organize the requirements regarding physical offices.
Proposed 7 TAC §81.2 is amended to simplify the definition of a physical office to mean an actual office where the business of mortgage lending and/or the business of taking or soliciting residential mortgage loan applications are conducted.
Commissioner Jones also has determined that for each year of the first five years this proposal would be in effect, the public benefits anticipated as a result of this proposal would be an increase in the readability and clarity of the regulations that pertain to physical offices.
There will be no effect on the individuals who are required to comply with this proposal. There will be no adverse economic effect on small or micro businesses and no difference in the cost of compliance for small businesses as compared to large businesses.
This proposal is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to Tex. Fin. Code §157.0023.
The statutory provisions affected by this proposal are contained in Tex. Fin. Code, chapter 157.
TRD-201704233
7 TAC §81.109
The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), proposes new 7 TAC §81.109, relating to pre-licensing education.
In general, the purpose of creating this rule is to implement H.B. 3342, which the Texas Legislature passed in the 85th regular legislative session.
H.B. 3342 amended Tex. Fin. Code §180.056(h) and changed the period during which an individual who fails to maintain a residential mortgage loan originator license is required to retake the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act, from at least five consecutive years, to a period established by rule of the Finance Commission.
H.B. 3342 further requires the Finance Commission to adopt the rules required by the newly amended Tex. Fin. Code §180.056(h) not later than December 1, 2017. The change in the law applies only to an application for a license filed on or after December 1, 2017. An application for a license filed before December 1, 2017,is governed by the law in effect on the date the application was filed, and the former law is continued in effect for that purpose.
The proposed §81.109 provides the circumstance under which an individual must retake the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act.
Caroline C. Jones, the Savings and Mortgage Lending Commissioner, has determined that for the first five-year period this proposal would be in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering this rule.
Commissioner Jones has also determined that, for each year of the first five years the new rule as proposed would be in effect, the public benefit anticipated as a result will be that the Finance Commission may modify the applicable pre-licensing education requirements, as required by the S.A.F.E. Mortgage Licensing Act, without having to wait for the next legislative session to convene.
There will be no effect on individuals required to comply with this proposal. There will be no adverse economic effect on small or micro businesses and no difference in the cost of compliance for small businesses as compared to large businesses.
Government Growth Impact Statement. Commissioner Jones has determined that during the first five years the new rule as proposed is in effect:
This proposal is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to H.B. 3342.
The statutory provisions affected by this proposal are contained in Tex. Fin. Code, chapter 180.
§81.109.Pre-licensing Education.
An individual must retake the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act if the individual:
(1) fails to acquire a valid residential mortgage loan originator license or federal registration within five years from the date of completing the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act; or
(2) has obtained a residential mortgage loan originator license or federal registration but did not maintain an active license or federal registration for five consecutive years.
TRD-201704234
7 TAC §81.206
The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), proposes new §81.206, relating to physical offices.
The proposed new 7 TAC §81.206 outlines the requirements a physical office must meet and that the physical office of a licensee need not be the location at which such person's required records are maintained, but the location at which such required records are maintained must be accessible to the Commissioner or the Commissioner's designee for inspection during normal business hours.
TRD-201704235
7 TAC §83.503
The Finance Commission of Texas (commission) proposes amendments to §83.503 in Chapter 83, concerning Regulated Lenders and Credit Access Businesses.
In general, the purpose of the rule amendments is to specify that in a consumer loan under Texas Finance Code, Chapter 342, Subchapter E, the administrative fee may be included in the cash advance or principal balance on which interest is computed.
In 2013, the Texas Legislature passed SB 1251, which amended Texas Finance Code, §342.201 to provide that the Subchapter E administrative fee is not considered interest, and authorized the commission to set the maximum amount of the administrative fee. The administrative fee is a flat, nonrefundable charge paid to the lender. The commission adopted a rule at current 7 TAC §83.503(1), specifying that the maximum amount of the administrative fee is $100. Since 2013, the agency has received questions from stakeholders about whether the administrative fee can be included in the cash advance or principal balance on which interest is computed. This issue is not addressed in the current rules.
The agency circulated an early draft of the rule changes to interested stakeholders. The agency received two informal written precomments, both supporting the draft as written.
Proposed §83.503(5) explains that the administrative fee may be included in the cash advance or principal balance on which interest is computed. This amendment is consistent with Texas Finance Code, §342.201(f), which specifies that the administrative fee is not interest. The amendment is also consistent with the definition of "cash advance" in Texas Finance Code, §341.001(3), which includes an "amount that is paid at the borrower's direction or request, on the borrower's behalf, or for the borrower's benefit." In addition, the amendment is consistent with Texas case law governing the calculation of the principal balance for a loan. See Tanner Dev. Co. v. Ferguson, 561 S.W.2d 777, 782 (Tex. 1977) (holding that the true principal of a loan is calculated by subtracting interest from the amount advanced to the borrower).
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the amendments are in effect there will be no fiscal implications for state or local government as a result of administering the amendments.
Commissioner Pettijohn also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of the changes will be that the commission's rules will provide clearer guidance and will be more easily understood. Another public benefit of these rule amendments will be increased uniformity and consistency in loan contracts.
There is no anticipated cost to persons who are required to comply with the proposed amendments. There will be no adverse economic effect on rural communities or small or micro businesses. There will be no effect on individuals required to comply with the amendments as proposed.
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, the amendment to §83.503 is proposed under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Chapter 342.
The statutory provisions affected by the proposed amendments are contained in Texas Finance Code, §341.502 and §342.201.
§83.503.Administrative Fee.
An authorized lender may collect an administrative fee pursuant to Texas Finance Code, §342.201(f), on interest-bearing and precomputed loans.
(5) The administrative fee may be included in the cash advance on which interest is computed under Texas Finance Code, §342.201(a) or (e). The administrative fee may be included in the principal balance on which interest is computed under Texas Finance Code, §342.201(d).
TRD-201704247
The Finance Commission of Texas (commission) proposes amendments to §90.203 in Chapter 90, concerning Chapter 342, Plain Language Contract Provisions.
Proposed amendments to §90.203(b)(7) add model plain language clauses to be used in transactions where the lender finances the administrative fee. Lenders that do not finance the administrative fee will be able to continue using the current model clauses in §90.203(b)(7). The amendments specify that the current model clauses should be used when the administrative fee is paid in cash or is not included in the cash advance on which interest is computed. The current model clauses are amended to include updated rate bracket amounts under Texas Finance Code, §342.201. The amendments also add new clauses to be used when the administrative fee is financed. Each of the new clauses includes a statement of the amount of the cash advance, in order to ensure that the contract discloses the specific amount on which interest will be computed.
Current figures in §90.203(b)(7)(A), (b)(7)(C), and (b)(7)(E), have been amended and renumbered as (b)(7)(A)(i), (b)(7)(C)(i), and (b)(7)(E)(i). New figures have been added at §90.203(b)(7)(A)(ii), (b)(7)(C)(ii), and (b)(7)(E)(ii), for use when the administrative fee is financed.
Commissioner Pettijohn also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of the changes will be that the commission's rules will provide clearer guidance and will be more easily understood. Another public benefit of these rule amendments will be increased uniformity and consistency in loan contracts. The new model clauses in §90.203 will help lenders reduce the current cost of developing new loan contracts and submitting them as non-standard plain language contracts.
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. The amendments to §90.203 are proposed under Texas Finance Code, §341.502, which authorizes the commission to adopt rules governing the form of plain language contracts for loans under Chapter 342.
§90.203.Model Clauses.
(b) Model clauses for a Chapter 342, Subchapter E secured consumer installment loan contract.
(7) Finance charge earnings and refund method. The model finance charge earnings and refund method clauses include rate bracket amounts that are updated annually in the Texas Credit Letter. The model finance charge earnings and refund method clause options read:
(A) For contracts using the scheduled installment earnings method, Texas Finance Code, §342.201(a):
[Figure: 7 TAC §90.203(b)(7)(A)]
(i) For use when the administrative fee is paid in cash or is not included in the cash advance on which interest is computed:
(ii) For use when the administrative fee is financed:
(B) For contracts using the scheduled installment earnings method, Texas Finance Code, §342.201(d):
(i) For use when the administrative fee is paid in cash or is not included in the principal balance on which interest is computed: "The annual rate of interest is ___%. This interest rate may not be the same as the Annual Percentage Rate. You figure the Finance Charge by applying the scheduled installment earnings method as defined by the Texas Finance Code to the unpaid cash advance. The unpaid cash advance does not include the administrative fee, late charges, and returned check charges. If I prepay my loan in full before the final payment is due, I may save a portion of the Finance Charge. I will not get a refund if the refund would be less than $1.00. You base the Finance Charge and Total of Payments as if I will make each payment on the day it is due. My final payment may be larger or smaller than my regular payment."
(ii) For use when the administrative fee is financed: "The cash advance is $____. The annual rate of interest is ___%. This interest rate may not be the same as the Annual Percentage Rate. You figure the Finance Charge by applying the scheduled installment earnings method as defined by the Texas Finance Code to the unpaid cash advance. The unpaid cash advance includes the administrative fee, but does not include late charges and returned check charges. If I prepay my loan in full before the final payment is due, I may save a portion of the Finance Charge. I will not get a refund if the refund would be less than $1.00. You base the Finance Charge and Total of Payments as if I will make each payment on the day it is due. My final payment may be larger or smaller than my regular payment."
(C) For contracts using the scheduled installment earnings method, Texas Finance Code, §342.201(e):
[Figure: 7 TAC §90.203(b)(7)(C)]
(D) For contracts using the scheduled installment earnings method, Texas Finance Code, §342.201(d):
(i) For use when the administrative fee is paid in cash or is not included in the principal balance on which interest is computed: "The annual rate of interest is _____%. This interest rate may not be the same as the Annual Percentage Rate. You figure the Finance Charge by applying the true daily earnings method as defined by the Texas Finance Code to the unpaid portion of the cash advance. You base the Finance Charge and Total of Payments as if I will make each payment on the day it is due. You will apply payments on the date they are received. This may result in a different Finance Charge or Total of Payments. My final payment may be larger or smaller than my regular payment."
(ii) For use when the administrative fee is financed: "The cash advance is $____. The annual rate of interest is _____%. This interest rate may not be the same as the Annual Percentage Rate. You figure the Finance Charge by applying the true daily earnings method as defined by the Texas Finance Code to the unpaid portion of the cash advance. You base the Finance Charge and Total of Payments as if I will make each payment on the day it is due. You will apply payments on the date they are received. This may result in a different Finance Charge or Total of Payments. My final payment may be larger or smaller than my regular payment."
(E) For contracts using the true daily earnings method, Texas Finance Code, §342.201(e):
[Figure: 7 TAC §90.203(b)(7)(E)]
(8) - (27) (No change.)
TRD-201704248