Texas Adopts Plain Language Model Clauses for Consumer Loans Not Backed by Real Estate Weiner Brodsky Kider PC

The Texas Finance Commission recently passed changes to its rules to translate the requirements of the Texas Finance Code into clear text and added model clauses for clear text contracts for use in transactions where a lender funds the administration fee for a consumer unsecured installment loan. The changes took effect on March 8, 2018.

Prior to the change, the rules included model clauses only for consumer installment loan transactions not secured by real estate where the management fee was either paid in cash or not included in the prepayment on which interest was charged. As amended, while keeping the above model clauses (with updated amounts for tariff classes), the rules now include model clauses for plain text contracts for use in cases where a lender finances the administration fee for such transactions. The new model clauses include, among other things, an advance payment schedule to ensure that the contract specifies the specific amount on which the interest will be calculated.

A copy of the changes is available Here.