PART 1. FINANCE COMMISSION OF TEXAS
CHAPTER 9. RULES OF PROCEDURE FOR CONTESTED CASE HEARINGS, APPEALS, AND RULEMAKINGS
The Finance Commission of Texas (the finance commission) adopts amendments to §9.1, concerning Application, Construction, and Definitions; and §9.12, concerning Default in 7 TAC, Chapter 9, concerning Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings. The amended rules are adopted without changes to the proposed text as published in the July 5, 2024, issue of the Texas Register (49 TexReg 4863). The amended rules will not be republished.
The amendment to §9.1 clarifies the authority of the Texas Department of Banking (DOB) to employ a hearings officer by adding a reference to Texas Finance Code, §11.202 which provides the statutory authority for the DOB to employ a hearings officer to serve the finance agencies.
The amendments to §9.12 clarify the procedures used by the finance agencies to dispose of a contested case in the event of default. The finance agencies are the DOB, the Department of Savings and Mortgage Lending (SML), and the Office of Consumer Credit Commissioner (OCCC). The amendments ensure 9.12 conforms to the State Office of Administrative Hearings (SOAH) procedural default rule (1 TAC §155.501), which was updated November 20, 2020.
The finance commission received no comments regarding the proposed amendments.
SUBCHAPTER A. GENERAL
The amendment to §9.1 is adopted pursuant to Texas Government Code, §2001.004(1), which requires all administrative agencies to adopt rules of practice stating the nature and requirements of all available formal and informal procedures.
The amendments are also adopted under specific rulemaking authority in the substantive statutes administered by the agencies. Texas Finance Code, §11.301, §31.003(a)(5), and 181.005(a)(5) authorize the finance commission to adopt rules necessary or reasonable to facilitate the fair hearing and adjudication of matters before the banking commissioner and the finance commission. Texas Finance Code, §152.052(a) authorizes the finance commission to adopt rules necessary to implement and clarify Chapter 152. Texas Finance Code, §154.051(b) authorizes the Department of Banking to adopt rules concerning matters incidental to the enforcement and orderly administration of Chapter 154.
Texas Finance Code, §11.302 authorizes the finance commission to adopt rules applicable to state savings associations or savings banks. Texas Finance Code, §66.002(3) authorizes the finance commission to adopt procedural rules for processing, hearing, and deciding applications filed with the savings and mortgage lending commissioner or SML under Texas Finance Code, Title 3, Subtitle B. Texas Finance Code, §96.002(a)(2) authorizes the finance commission to adopt procedural rules for processing, hearing, and deciding applications filed with the savings and mortgage lending commissioner or SML under Finance Code, Title 3, Subtitle C. Texas Finance Code, §11.306 authorizes the finance commission to adopt residential mortgage loan origination rules as provided by Texas Finance Code, Chapter 156; and, Texas Finance Code, §156.102(a) authorizes the finance commission to adopt rules to enforce such chapter. Texas Finance Code, §157.0023 authorizes the finance commission to adopt rules to enforce Chapter 157. Texas Finance Code, §158.003(b) authorizes the finance commission to adopt rules to enforce Chapter 158. Texas Finance Code, §159.108 authorizes the finance commission to adopt rules to enforce Chapter 159. Texas Finance Code, §180.004 authorizes the commission to adopt rules to enforce Chapter 180.
Texas Finance Code, §11.304 authorizes the finance commission to adopt rules necessary for supervising the consumer credit commissioner and for ensuring compliance with Texas Finance Code, Chapter 14, and Title 4. Texas Finance Code, §393.622 authorizes the finance commission to adopt rules to enforce Chapter 393. Texas Finance Code, §394.214 authorizes the finance commission to adopt rules to enforce Chapter 394. Texas Occupations Code, §1956.0611 authorizes the finance commission to adopt rules to enforce Subchapter B, Chapter 1956.
The statutory provisions affected by the adoption are contained in Texas Finance Code: Chapters 11, 14, 152, 154, 156-159, 180, 393, 394; Title 3, Subtitles A-C; Title 4; Texas Health and Safety Code, Chapter 712; and Texas Occupations Code, Chapter 1956.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403790
Robert K. Nichols
General Counsel
Finance Commission of Texas
Effective date: September 5, 2024
Proposal publication date: July 5, 2024
For further information, please call: (512) 475-1382
The amendments to §9.12 are adopted pursuant to Texas Government Code, §2001.004(1), which requires all administrative agencies to adopt rules of practice stating the nature and requirements of all available formal and informal procedures.
The amendments are also adopted under specific rulemaking authority in the substantive statutes administered by the agencies. Texas Finance Code, §11.301, §31.003(a)(5), and 181.005(a)(5) authorize the finance commission to adopt rules necessary or reasonable to facilitate the fair hearing and adjudication of matters before the banking commissioner and the finance commission. Texas Finance Code, §152.052(a) authorizes the finance commission to adopt rules necessary to implement and clarify Chapter 152. Texas Finance Code, §154.051(b) authorizes the Department of Banking to adopt rules concerning matters incidental to the enforcement and orderly administration of Chapter 154.
Texas Finance Code, §11.302 authorizes the finance commission to adopt rules applicable to state savings associations or savings banks. Texas Finance Code, §66.002(3) authorizes the finance commission to adopt procedural rules for processing, hearing, and deciding applications filed with the savings and mortgage lending commissioner or SML under Texas Finance Code, Title 3, Subtitle B. Texas Finance Code, §96.002(a)(2) authorizes the finance commission to adopt procedural rules for processing, hearing, and deciding applications filed with the savings and mortgage lending commissioner or SML under Finance Code, Title 3, Subtitle C. Texas Finance Code, §11.306 authorizes the finance commission to adopt residential mortgage loan origination rules as provided by Texas Finance Code, Chapter 156; and, Texas Finance Code, §156.102(a) authorizes the finance commission to adopt rules to enforce such chapter. Texas Finance Code, §157.0023 authorizes the finance commission to adopt rules to enforce Chapter 157. Texas Finance Code, §158.003(b) authorizes the finance commission to adopt rules to enforce Chapter 158. Texas Finance Code, §159.108 authorizes the finance commission to adopt rules to enforce Chapter 159. Texas Finance Code, §180.004 authorizes the commission to adopt rules to enforce Chapter 180.
Texas Finance Code, §11.304 authorizes the finance commission to adopt rules necessary for supervising the consumer credit commissioner and for ensuring compliance with Texas Finance Code, Chapter 14, and Title 4. Texas Finance Code, §393.622 authorizes the finance commission to adopt rules to enforce Chapter 393. Texas Finance Code, §394.214 authorizes the finance commission to adopt rules to enforce Chapter 394. Texas Occupations Code, §1956.0611 authorizes the finance commission to adopt rules to enforce Subchapter B, Chapter 1956.
The statutory provisions affected by the adoption are contained in Texas Finance Code: Chapters 11, 14, 152, 154, 156-159, 180, 393, 394; Title 3, Subtitles A-C; Title 4; Texas Health and Safety Code, Chapter 712; and Texas Occupations Code, Chapter 1956.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403791
Robert K. Nichols
General Counsel
Finance Commission of Texas
Effective date: September 5, 2024
Proposal publication date: July 5, 2024
For further information, please call: (512) 475-1382
SUBCHAPTER C. CONTRACT MONITORING
The Finance Commission of Texas (the finance commission) adopts amendments to §10.40, concerning enhanced contract and performance monitoring, and the posting of certain contracts on commission supervised finance agency websites. The amendments are adopted without changes to the proposed text as published in the July 5, 2024, issue of the Texas Register (49 TexReg 4865). The amended rule will not be republished.
The amendments remove a redundant provision of the rule and ensure §10.40 conforms with Texas Government Code, §2261.253 by clarifying the full scope of the rule and implementing minimum risk assessment factors required in each agency's contract management handbook to identify contracts that require enhanced contract or performance monitoring.
The finance commission received no comments regarding the proposed amendments.
The amendments are adopted pursuant to Texas Government Code, §2261.253(c), which requires each state agency to adopt rules establishing a procedure to identify each contract that requires enhanced contract or performance monitoring and submit information on the contract to the agency's governing body.
The statutory provisions affected by the adoption are contained in Texas Government Code, Chapter 2261.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403792
Robert K. Nichols
General Counsel
Finance Commission of Texas
Effective date: September 5, 2024
Proposal publication date: July 5, 2024
For further information, please call: (512) 475-1382
CHAPTER 33. MONEY SERVICES BUSINESSES
The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), adopts amendments to 7 TAC §33.27 (§33.27), concerning fees to obtain and maintain money transmission and currency exchange licenses. The amended rule is adopted without changes to the proposed text as published in the July 5, 2024, issue of the Texas Register (49 TexReg 4866). The amended rule will not be republished.
The proposed rule amendments were changed slightly from the draft approved for publishing by the commission in response to comments received from the Texas Register staff, at the Texas Secretary of State's office, prior to publication in the Texas Register. In the preamble, the changes were not substantive and were regarding confirmation that there would be no impact on rural communities. In the rule itself, non-substantive updates were made to the way in which paragraphs were designated.
The adopted amendments to §33.27: (i) update the assessment fee schedules in subsections (e)(1) and (e)(2) to reflect the assessments set forth in the attached Figure: 7 TAC §33.27(e)(1) and Figure: 7 TAC §33.27(e)(2), respectively; (ii) add subsection (e)(4) permitting the department to increase assessments based on the percentage change in an inflation index beginning September 1, 2025; and (iii) increase the hourly examination fees in subsections (d)(1)(A), (e)(3), (f)(1), (g)(3), (h)(2), and (h)(4) to $120 per hour.
The department determined that key regulatory functions are not adequately funded by the existing fee structure, primarily due to increase in labor and other costs. The amendments to §33.27 increase the allowable annual assessments paid by money services businesses to offset forecasted funding shortfalls.
The department observed increases in operational costs over the past few fiscal years. The department's costs for money services business programs, such as the required periodic examination of each licensed business, have increased over the years due to a variety of factors including the following: rising inflation impacting items such as travel costs; the necessity to attract, hire, and retain qualified personnel; and the additional time, resources, and attention required by the increasing complexity of money services business operations.
As a result, the staffing plan for full-time money services business financial examiners has increased from six in fiscal year 2021 to 12 in fiscal year 2023. Fiscal year 2024's staffing plan further increases the number of examiners to 15 in order to properly, and timely, examine license holders and anticipated new license holders as projected from current applications.
The department is also incurring new costs related to the passage of Chapter 160 of the Finance Code, which became effective September 1, 2023. Chapter 160 charges the department with ensuring money transmitters that qualify as digital asset service providers comply with certain standards. The build out of an expanded regulatory scheme to administer the new Chapter 160, which includes an expanded examination scope for the eligible digital asset service providers, generate costs to the department which have not been previously incurred.
Based on historical examination data and costs, coupled with the increased complexity of the examinations, the department constructed the adopted fee adjustments, including the inflationary adjustments, to provide the funding required to administer and enforce Finance Code, Chapters 152 and 160 in a manner that is fair and equitable to licensees.
The department received no comments regarding the proposed amendments. Notice of the intent to amend §33.27 was submitted to the Regulatory Compliance Division of the Office of the Governor (Division) as the rule has the potential to affect market competition. The Division also received no comments and approved the amendment without further revision.
The amendment is adopted pursuant to Finance Code, §§152.052 and 160.006, which authorize the commission to adopt rules to administer and enforce Texas Finance Code, Chapter 152, and Chapter 160, respectively. The commission may by rule impose and collect proportionate and equitable fees and costs for notices, applications, examinations, investigations, and other actions required to recover the cost of maintaining and operating the department, administering, and enforcing Chapter 152 and other applicable law, and achieve the purposes of Chapter 152 and Chapter 160. Chapter 152 was enacted by Senate Bill 895 and Chapter 160 was enacted by House Bill 1666 during the 88th Legislative Session.
Texas Finance Code §§152.107 and 160.005 are affected by the proposed amended sections.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403788
Robert K. Nichols
General Counsel
Texas Department of Banking
Effective date: September 5, 2024
Proposal publication date: July 5, 2024
For further information, please call: (512) 475-1382
The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), adopts an amendment to 7 TAC §33.51, concerning providing information to customers on how to file a complaint. The amendment is adopted without changes to the proposed text as published in the July 5, 2024, issue of the Texas Register (49 TexReg 4870). The amended rule will not be republished.
The amendment updates a citation referencing Chapter 151 to instead reference Chapter 152 of the Finance Code. The amendment arises from the passage of Senate Bill 895, sponsored by Senator Nathan Johnson, during the 88th legislative session. Effective September 1, 2023, Senate Bill 895 repealed Chapter 151 of the Texas Finance Code (Finance Code) and added Chapter 152 relating to the regulation of money services businesses.
The department received no comments regarding the proposed amendments.
The amendment is adopted pursuant to Finance Code, §152.052, which authorizes the commission to adopt rules to administer and enforce Finance Code, Chapter 152.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403789
Robert K. Nichols
General Counsel
Texas Department of Banking
Effective date: September 5, 2024
Proposal publication date: July 5, 2024
For further information, please call: (512) 475-1382
CHAPTER 86 RETAIL CREDITORS
SUBCHAPTER B. RETAIL INSTALLMENT CONTRACT
The Finance Commission of Texas (commission) adopts amendments to §86.201 (relating to Documentary Fee) in 7 TAC Chapter 86, concerning Retail Creditors.
The commission adopts the amendments to §86.201 without changes to the proposed text as published in the May 3, 2024, issue of the Texas Register (49 TexReg 2871). The rule will not be republished.
The commission received no official comments on the proposed amendments.
The rule at §86.201 relates to documentary fees for retail installment transactions under Texas Finance Code, Chapter 345. In general, the purpose of the rule changes to 7 TAC §86.201 is to adjust the maximum documentary fee amount under the rule.
The Office of Consumer Credit Commissioner (OCCC) distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held a stakeholder webinar regarding the rule changes. The OCCC received three written precomments on the rule text draft. The OCCC and the commission appreciate the thoughtful input provided by stakeholders.
Texas Finance Code, Chapter 345 governs retail installment transactions to purchase goods other than motor vehicles. Under Texas Finance Code, §345.251(a), a retail seller may charge a documentary fee in a retail installment transaction to purchase a motorcycle, moped, all-terrain vehicle, boat, boat motor, boat trailer, or towable recreational vehicle. Under Texas Finance Code, §345.251(b)(2), the documentary fee "may not exceed a reasonable amount agreed to by the retail seller and retail buyer for the documentary services, subject to a reasonable maximum amount set by rule by the finance commission."
Currently, §86.201 describes the maximum documentary fee in a Chapter 345 retail installment transaction. The rule distinguishes between retail installment transactions for covered land vehicles (i.e., motorcycles, mopeds, all-terrain vehicles, boat trailers, and towable recreational vehicles) and covered watercraft (i.e., boats and boat motors). Current §86.201(c) contains a $125 maximum documentary fee for the purchase of one or more covered land vehicles. Current §86.201(d) contains a $125 maximum documentary fee for the purchase of one or more covered watercraft. Current §86.201(e) contains a $175 maximum documentary fee for the purchase of one or more covered land vehicles and one or more covered watercraft.
In 2013, the commission adopted the $125 and $175 amounts in §86.201. The amounts have not been adjusted since then. As the commission explained in its preamble to the 2013 adoption, the rule's fee amounts and terminology are intended to correspond to different sets of titling and registration requirements. Land vehicles are subject to titling and registration requirements administered by the Texas Department of Motor Vehicles (TxDMV) under Texas Transportation Code, Chapters 501 and 502. Watercraft are subject to titling and registration requirements administered by the Texas Parks and Wildlife Department (TPWD) under Texas Parks and Wildlife Code, Chapter 31. As the commission explained, the higher $175 amount for the purchase of both types of vehicles "is intended to compensate the retail creditor for the documents and procedures that are necessary to title items with both TxDMV and TPWD." 38 TexReg 5707 (Aug. 30, 2013).
Adopted amendments throughout §86.201 adjust the maximum documentary fee for a Chapter 345 retail installment transaction. An amendment to §86.201(c) adjusts the documentary fee for a covered land vehicle from $125 to $200. An amendment to §86.201(d) adjusts the documentary fee for covered watercraft from $125 to $200. An amendment to §86.201(e) adjusts the documentary fee for both a covered land vehicle and covered watercraft from $175 to $250.
The commission and the OCCC believe that now is an appropriate time to revisit the maximum documentary fee amounts in §86.201 and to adjust them. The $75 adjustment corresponds to a similar adjustment recently adopted by the commission in amendments to 7 TAC §84.205 (relating to Documentary Fee), concerning documentary fees for motor vehicles. See 49 TexReg 4903 (July 5, 2024). The amendments to §84.205 adjusted the motor vehicle documentary fee amount considered reasonable from $150 to $225. That adoption was based on the OCCC's ongoing review of documentary fee cost analyses, as well as documentary fee amounts found to be reasonable in a recent contested case.
The commission and the OCCC believe that a corresponding $75 adjustment is appropriate for covered land vehicles and watercraft under §86.201. The $200 amount is appropriate because these vehicles are subject to similar document-related requirements that apply to motor vehicles; many, but not all, of the motor vehicle document requirements apply to vehicles under §86.201. For example, vehicles under §86.201 are subject to titling and registration requirements (as described earlier in this preamble) but generally are not subject to the requirements to provide a new car window sticker or a used car buyers guide. See 15 U.S.C. §1232 (requirement to provide new car window sticker applies to automobiles), Federal Trade Commission Used Car Rule, 16 C.F.R. §455.1(d)(2) (requirement to provide used car buyers guide applies to certain motorized vehicles other than motorcycles).
In informal precomments, stakeholders expressed general support for the proposed amendments. Two boating trade associations filed precomments supporting the proposed amendments. A third informal precomment was filed on behalf of a motorcycle trade association, a recreational vehicle association, and two boating trade associations. This precomment stated that the associations support the proposed amendments and stated: "We can confirm that our dealers conduct the same required administrative work to complete transactions as do automobile dealers: vehicle titling (which sometimes requires in-person visits to county offices), vehicle registration, submitting taxes, obtaining and mailing license plates, ensuring liens are correctly recorded and released, verifying a trade-in's value and whether it has open recalls, etc." The precomment also stated: "Costs have increased since 2013 due to general inflation, specific cost increases and heightened state and federal regulatory requirements. We have seen increased costs across multiple categories, including wages (up over 50% in some labor markets), real property leasing rates, technology (with specific new hardware, software and printers now mandated) and postage."
The rule amendments are adopted under Texas Finance Code, §345.251(b)(2), which authorizes the Finance Commission to adopt a rule establishing a reasonable maximum documentary fee amount, and Texas Finance Code, §345.251(e), which authorizes the commission to adopt rules to enforce Texas Finance Code, §345.251. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.
The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 345.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 16, 2024.
TRD-202403786
Matthew Nance
General Counsel
Office of Consumer Credit Commissioner
Effective date: September 5, 2024
Proposal publication date: May 3, 2024
For further information, please call: (512) 936-7660