The 84th Texas Legislative Session gets underway in just over a month.  Session starts on Tuesday January 13th, 2015.  So far from what I can tell there have been (3) bills filed having to due with payday loans, installment loans, and/or auto title loans.

The Texas Legislature meets in a regular session every two years, convening on the second Tuesday in January of every odd-numbered year. These biennial sessions are limited to 140 days. The governor can also call additional special sessions as necessary, which cannot exceed 30 days. The 84^th Legislative Session is January 13, through June 1, 2015.

Here is a write up on the three bills out at this point:  SB 91, SB 92, and SB 121.

SB 91, Written by Senator Ellis: Proposes an APR Cap, the APR will include all interest and fees associated with the transaction, and the cap is set at 36% APR.

SB 92, written by Senator Ellis, the rules in this bill DO NOT pre-empt city ordinances, if there is a conflict, the more “stringent” rule would control. (Wondering who decides what more stringent is – the borrower, the City, or Ellis!) The contracts must be provided before signing, in the language in which the deal was negotiated, and must be read in its entirety! Must disclose info on Non Profits who may help the borrower, documents must be available in English & Spanish, PDL loan amounts no more than 20% of monthly income, title loans no more than 3% of annual income, max 70% of value of vehicle, must verify income, no more than 4 installments, 25% reduction in principal for each installment, no refinances on multipayment loans! Single payment loans cannot be refinanced more than 3 times. A new loan within 7 days of the last loan is considered a re-finance. Transfer or assignment of licenses is prohibited. Docs must be kept for 3 years instead of 25 months.

SB 121 has so much in it I decided bullet points are needed.  Last session we had the ugly baby bill, this one should be called the “kitchen sink” bill because everything is in it but the kitchen sink!  See below:

• Database.
• 7 day cool off or it’s a re-fi.
• Extended payment plans, and notices of extended payment plans.
• Fines of $2,000 per instance, plus damages up to $10,000 per violation
• Cannot evade the City Ordinance, cannot transfer loan to another sister location.
• CAB applications must have the Third Party Lender agreement included.
• Unsecured loans max 90 days, title loans max 180 days, $5,000 fines for this category.
• Spanish language contracts.
• Only one loan rule, customer has to sign a form stating they have no other CAB loans out, CAB must try to confirm this, $1,000 fine for violations on this.
• Must establish and verify income.
• Cap on loan amounts: unsecured is max 20% of income.
• No less than 10 days and no more than 35 days on a single payment loan, max re-fi’s is (3.)
• Extended payment plans must be offered if there has not been one in (12) months.
• Multi-payment loan payments cannot exceed 10% of the monthly income if less than $28k annually, 15% if they earn more, no more than 12 installments, max 180 days, must be fully amortizing.
• Single payment title loan amounts are capped at 6% of annual income if they earn less than $28k, if they earn above, then it goes to 8%, limit of 70% of vehicle value, no more than 3 re-fi’s.
• Multi-payment title loans cannot exceed 70% of value, each payment cannot exceed 20% of the gross monthly income if earn below $28k, or 30% if they earn above $28k, must be fully amortizing, no more than 6 installments, max 180 days, no re-po without extended payment plan default.
• Effective date: 9-1-2015

Michael Brown is President of the Texas Organization of Financial Service Centers, and President of CAB Consulting.  Contact information:  214-293-8676 or Michael@CreditAccessBusiness.com.