Update - March 2020
On February 28, 2020, the Office of Consumer Credit Commissioner issued an informal precomment draft of proposed amendments to the plain language contract rules applicable to Chapter 342, Subchapter F loans. The rules are found at 7 Tex. Admin. Code ch. 90. The OCCC invited stakeholders to participate in a stakeholders meeting on March 11 and to comment on the draft rules by March 25. TCFA is currently evaluating whether to submit comments.
The proposed rule amendments would:
- Specify that a contract submission must comply with the OCCC’s instructions, including submittal in a text-searchable PDF.
- For Subchapter E and F loans, add model clauses relating to servicing and collection contacts associated with the Telephone Consumer Protection Act (TCPA), as well as credit reporting under the Fair Credit Reporting Act (FCRA).
- Update rate bracket amounts for Subchapter E loans.
- Provide revised model contract examples.
The new model clauses are likely of interest to TCFA members. Model contracts (and associated model clauses) can be used without review and approval by the OCCC. However, if a lender desires to vary the language from that provided in a model clause, then the lender must submit the non-standard contract for review and approval.
The new servicing and collection contact provision seeks to give lenders a model clause to obtain consent for TCPA-covered contacts, such as calls made with automated dialing systems or using prerecording or artificial voice messages. It is questionable whether the proposed clause is sufficient for express consent under the TCPA, and it may be difficult for the OCCC to draft a clause that can be used in all scenarios. Thus, TCFA members should contact their own legal counsel to discuss the type of TCPA consent that is necessary in their respective circumstances. It may be that a lender needs a more robust TCPA consent clause, in which case that clause would need to be submitted with the contract for approval by the OCCC.
The new credit reporting disclaimer is a clause that is already frequently used by lenders in Texas, given that it is a pre-existing obligation arising under the FCRA. This rule amendment would simply clarify that the clause already in use by industry is considered a standard clause by the OCCC.
After the OCCC receives feedback on this informal precomment draft, it will publish the proposed rule amendment for formal comment. We will keep you apprised as these amendments move through the rulemaking process.
- Carl R. Galant
- McGINNIS LOCHRIDGE
- 600 Congress Avenue, Suite 2100
- Austin, TX 78701
- o 512-495-6083 f 512-505-6383