HBA-NLM H.B. 3056 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3056 By: Edwards Financial Institutions 4/3/1999 Introduced BACKGROUND AND PURPOSE One method for lenders to determine the interest rate for a borrower is to base the interest rate on the borrower's credit history. Using this method leads to higher interests rates for some borrowers, and lower rates for others. The purpose of this bill is to ensure that the policy used to determine a borrower's interest rate does not include credit history evaluation. H.B. 3056 prohibits a contract for an extension of credit secured by a lien on a homestead from providing a precomputed interest charge, and from exceeding the lowest rate offered by the lender on the date of the contract to any other borrower for such a loan, plus one percent. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 344, Finance Code, by adding Section 344.1025, as follows: Sec. 344.1025. MAXIMUM INTEREST RATE: HOME EQUITY LOAN. Prohibits a contract, notwithstanding another provision of this title, for an extension of credit secured by a lien on a homestead authorized by Section 50(a)(6) (relating to an extension of credit secured by lien or an extension of credit that is not secured but designated for other purposes), Article XVI, Texas Constitution, from providing for a precomputed interest charge, and from exceeding the lowest rate offered by the lender on the date of the contract to any other borrower for such a loan, plus one percent. SECTION 2. Amends Subchapter G, Chapter 342, Finance Code, by adding Section 342.3015, to make a conforming change. SECTION 3. (a) Provides that this Act takes effect September 1, 1999, except as provided by Subsections (b) and (c) of this section. (b) Provides that Section 1 of this Act takes effect only if the Act of the 76th Legislature, Regular Session, 1999, relating to nonsubstantive additions to and corrections in enacted codes does not take effect. (c) Provides that Section 2 of this Act takes effect only if the Act of the 76th Legislature, Regular Session, 1999, relating to nonsubstantive additions to and corrections in enacted codes takes effect. SECTION 4. Emergency clause.