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.