Texas Register, Volume 35, Number 1, Pages 1-140, January 1, 2010 Page: 12
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ceived numerous comments from stakeholders concerning al-
lowable fees, not only regarding actual amounts but also relat-
ing to calculation approaches and structure. With the proposed
rate structure, the agency has attempted to achieve an appro-
priate balance that is reasonable to consumers while providing
a certain degree of profitability to licensees. Note that the fee
schedules have been revised extensively for this re-proposal, as
outlined earlier.
Provisions common to both of the rate schedules contained in
figures 84.308(e)(1) and 84.308(e)(2) include: a structure in-
cluding tiers, the amount of the fee being based on the amount
financed, fee adjustment permitted to the nearest whole dollar,
and that the fee may be included in the amount financed and a
finance charge may be charged on that fee. Additionally, both
rate schedules set a minimum fee of $50 for a debt cancellation
agreement.
Section 84.308(f) outlines how unearned debt cancellation
agreement fees must be refunded. The notification of can-
cellation triggering a refund is described by 84.308(f)(1), as
added by this re-proposal. Paragraph (2) states that a refunding
method that is at least as favorable to the retail buyer as the
Rule of 78s must be used and that in the event of a cancelled
debt, the fee paid for the debt cancellation agreement is fully
earned and no refund is due. Proposed 84.308(f)(3) explains
how the cancellation date must be determined. Paragraph (4)
states that a refund credit may be rounded to the nearest whole
dollar, and paragraph (5) provides that a refund credit of less
than $1.00 is not required. The $1.00 figure has been used in
84.308(f)(5) in order to maintain consistency with the refunding
requirements of Texas Finance Code, 348.120. Proposed
84.308(f)(6) provides that a retail buyer must receive a com-
plete refund for the debt cancellation fee if the debt cancellation
agreement is cancelled within 30 days from the date of the
contract or the issuance of the debt cancellation agreement,
whichever is later, or such later day as may be provided under
the debt cancellation agreement. In addition, paragraph (6) also
states that a retail buyer may not cancel the debt cancellation
agreement and then receive any benefits under the agreement.
Section 84.308(g) explains that a licensee must comply with the
payment terms of a debt cancellation agreement within 60 days
of receiving a debt cancellation request form and all necessary
information needed by the holder or administrator to process the
request.
Section 84.308(h) delineates the allowable methods of calculat-
ing the amount to be cancelled under a debt cancellation agree-
ment, including two separate sets of provisions to maintain the
rule's bifurcated approach. As noted earlier, some technical cor-
rections and clarifying changes have been made to subsection
(h) for this re-proposal.
Section 84.308(i) discusses the proper calculations of refunds
for insurance and other cancelable items, and for time price dif-
ferential. All refunds should be calculated as of the date of loss.
Section 84.308(j), as added for this re-proposal, relates to
assignment and delegation of duties under a debt cancel-
lation agreement. Paragraph (1) states that a retail seller
or subsequent holder may delegate its duties under a debt
cancellation agreement, but that the delegating party remains
liable for those duties. The retail seller or subsequent holder
remains responsible for complying with the Texas Finance
Code. This continuing responsibility includes obtaining access
to documentation in order to determine the proper amount ofcancellation, the verification of outstanding amounts, or the
application of finance charges for usury purposes. Paragraph
(2) outlines recordkeeping requirements, and paragraph (3)
provides that the requirements under 84.308(j)(2) also apply
to a retail seller who negotiates a debt cancellation agreement
and subsequently assigns the retail installment sales contract.
Section 84.308(k) outlines the practices that are prohibited by
licensees providing debt cancellation agreements.
Leslie L. Pettijohn, Consumer Credit Commissioner, has deter-
mined that for the first five-year period the amendments and new
rule are in effect, there will be no fiscal implications for state or
local government as a result of administering the rule revisions.
For each year of the first five years the amendments and new rule
are in effect, Commissioner Pettijohn has also determined that
the public benefit anticipated as a result of the proposal will be in-
creased stability in the industry by providing uniform parameters
and standards which can have the effect of lowering the cost of
credit. Because the new rule implements the "reasonable" stan-
dard in the statute, retail sellers will have more confidence in
offering debt cancellation agreements.
Licensees will have the option of not offering debt cancellation
agreements, in which case, there will be no fiscal implications
for those licensees. For licensees who opt to provide debt can-
cellation agreements in connection with their motor vehicle retail
installment sales contracts, the fees charged in conjunction with
the debt cancellation agreements are anticipated to cover the
costs associated with creating and maintaining the agreements.
Thus, due to the fees that licensees may charge offsetting the
costs of the debt cancellation agreements, a neutral cost will re-
sult to persons who are required to comply with the proposal.
There will be no effect on individuals required to comply with the
amendments and new rule as proposed.
The agency is not aware of any adverse economic effect on
small or micro-businesses resulting from this proposal. But in
order to obtain more complete information concerning the eco-
nomic effect of these rule revisions, the agency invites comments
from interested stakeholders and the public on any economic im-
pacts on small businesses, as well as any alternative methods of
achieving the purpose of the proposal while minimizing adverse
impacts on small businesses.
Comments on the proposed amendments and new rule may
be submitted in writing to Laurie Hobbs, Assistant General
Counsel, Office of Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207 or by email to
laurie.hobbs@occc.state.tx.us. To be considered, a written
comment must be received on or before the 31st day after the
date the proposal is published in the Texas Register. At the
conclusion of the 31st day after the proposed amendments and
new rule are published in the Texas Register, no further written
comments will be considered or accepted by the commission.
The amendments and new rule are proposed under Texas Fi-
nance Code, 11.304, which authorizes the commission to adopt
rules to enforce Title 4 of the Texas Finance Code. The rule revi-
sions are also proposed under Texas Finance Code, 348.513,
which grants the commission the authority to adopt rules to en-
force the motor vehicle installment sales chapter. Additionally,
the amendments concerning ordinary vehicles are proposed un-
der Texas Finance Code, 348.0015, as enacted by SB 1965
(Acts 2009, 81st Leg.), which authorizes the commission to de-
termine by rule a motor vehicle that is of a type typically used for
personal, family, or household use.35 TexReg 12 January 1, 2010
Texas Register
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Texas. Secretary of State. Texas Register, Volume 35, Number 1, Pages 1-140, January 1, 2010, periodical, January 1, 2010; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth101165/m1/11/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.