| (A) For contracts using the scheduled installment earnings
method: "I promise to pay the Total of Payments to the order of you.
(The "principal" or "cash advance" is $________. This amount plus
interest must be paid by _________ (maturity date).) I will make payments
to you at the address above or as you direct. I will make the payments
on the dates and in the amounts shown in the Payment Schedule."
(B) For contracts using the true daily earnings method:
"I promise to pay the cash advance plus the accrued interest to the
order of you. (The "principal" or "cash advance" is $________. This
amount plus interest must be paid by _________ (maturity date).) I
will make payments to you at the address above or as you direct. I
will make the payments on the dates and in the amounts shown in the
Payment Schedule."
(C) The model payment schedule reads:
Attached Graphic
(5) Late charge.
(A) Generally. The general model late charge provision
for contracts using the scheduled installment earnings method or the
true daily earnings method reads: "If I don't pay all of a payment
within 10 days after it is due, you can charge me a late charge. The
late charge will be 5% of the scheduled payment."
(B) High-cost mortgage loans. The model late charge
provision for high-cost mortgage loans subject to the limitation on
late charges in Regulation Z, 12 C.F.R. §1026.34(a)(8), reads:
"If I don't pay all of a payment within 15 days after it is due, you
can charge me a late charge. The late charge will be 4% of the amount
of the payment past due."
(6) After maturity interest. The model clause specifies
the maximum interest rate allowed by law for after maturity interest
for contracts using the scheduled installment earnings method. A licensee
may always choose a lower rate. The model provision for after maturity
interest reads: "If I don't pay all I owe when the final payment becomes
due, I will pay interest on the amount that is still unpaid. That
interest will be the higher of the rate of 18% per year or the maximum
rate allowed by law. That interest will begin the day after the final
payment becomes due."
(7) Prepayment clause. The model prepayment clause
options read:
(A) For contracts using the scheduled installment earnings
method: "I can make a whole payment early. Unless you agree otherwise
in writing, I may not skip payments. If I make a payment early, my
next payment will still be due as scheduled."
(B) For contracts using the true daily earnings method:
"I can make any payment early. Unless you agree otherwise in writing,
I may not skip payments. If I make a payment early, my next payment
will still be due as scheduled."
(8) Finance charge earnings and refund method. The
model provision options specifying the finance charge earnings and
refund method read:
(A) For contracts using the scheduled installment earnings
method - Section 342.301 rate loans, the model language reads:
Attached Graphic
(B) For contracts using the scheduled installment earnings
method with prepayments option - Section 342.301 rate loans, the model
language reads:
Attached Graphic
(C) For contracts using the true daily earnings method
- Section 342.301 rate loans, the model language reads:
Attached Graphic
(9) Deferment. The model provision regarding deferment
reads: "If I ask for more time to make any payment and you agree,
I will pay more interest to extend the payment. The extra interest
will be figured under the Finance Commission rules."
(10) Fee for dishonored check clause. The model clause
specifies the maximum allowable dishonored check fee. A licensee may
always choose a lesser amount. The model fee for dishonored check
provision reads: "I agree to pay you a fee of up to $30 for a returned
check. You may add the fee to the amount I owe or collect it separately."
(11) Default. The model provision specifying the conditions
causing default reads:
Attached Graphic
(12) Property insurance. The model provision regarding
property insurance reads:
Attached Graphic
(13) Credit insurance. If single premium credit insurance
is offered, a permissible change to the disclosure can be to offer
a single charge for the entire term of the loan. The term for the
single premium charge should be shown for the original term of the
loan, unless otherwise specified. The licensee has the option of including
language that reads: "The insurance will cancel on the date when the
total past due premiums equal or exceed (insert number) times the
first month's premium." The industry standard regarding the relationship
between total past due premiums and the first month's premium in this
equation appears to be four times. However, if a different time frame
is more appropriate, that time frame may be used. The model credit
insurance disclosure box reads:
Attached Graphic
(14) Mailing of notices to borrower. The duty to give
notice is satisfied when it is mailed by first class mail. The model
provision regarding the mailing of notices to the borrower reads:
"You or I may mail or deliver any notice to the address above. You
or I may change the notice address by giving written notice. Your
duty to give me notice will be satisfied when you mail it."
(15) Statement of truthful information. The model provision
specifying that the borrower gave truthful information reads: "I promise
that all information I gave you is true."
(16) Due on sale clause, notice of intent to accelerate,
and notice of acceleration. The model provision regarding the due
on sale clause, notice of intent to accelerate, and notice of acceleration
reads: "If all or any interest in the Property is sold or transferred
without your prior written consent, you may require immediate payment
in full of all that I owe under this Loan Agreement. You will not
exercise this option if prohibited by law. If you exercise this option,
you will give me notice that you are demanding payment of all that
I owe. This notice will give me a period of not less than 21 days
from the date of the notice within which I must pay all that I owe
under this Loan Agreement. If I fail to pay all that I owe before
the end of this period, you may use any remedy allowed by the Loan
Agreement."
(17) No waiver of the lender's rights. The model provision
expressing no waiver of the lender's rights reads: "If you don't enforce
your rights every time, you can still enforce them later."
(18) Collection expenses. The model collection expenses
clause reads: "If you require me to pay all that I owe at once, you
will have the right to be paid back by me for all of your costs and
expenses in enforcing this Loan Agreement to the extent not prohibited
by Applicable Law. These expenses include, for example, reasonable
attorneys' fees."
(19) Joint liability. The model provision providing
for joint liability reads: "I understand that you may seek payment
from only me without first looking to any other Borrower."
(20) Usury savings. The model usury savings clause
reads: "I do not have to pay interest or other amounts that are more
than Applicable Law allows."
(21) Savings clause. The model savings clause stating
that if any part of the contract is invalid, the rest remains valid
reads: "If any part of this Loan Agreement is declared invalid, the
rest of the Loan Agreement remains valid. If any part of this Loan
Agreement conflicts with any law, that law will control. The part
of the Loan Agreement that conflicts with any law will be modified
to comply with the law. The rest of the Loan Agreement remains valid."
(22) Prior agreements. For loan agreements exceeding
$50,000, this notice must be boldfaced, capitalized, underlined, or
otherwise set out from the surrounding written material to be conspicuous.
The model clause stating that there are no prior agreements between
the parties regarding the loan agreement reads: "This written Loan
Agreement is the final agreement between you and me. It may not be
changed by prior, current, or future oral agreements between you and
me. There are no oral agreements between you and me relating to this
Loan Agreement. Any change to this Loan Agreement must be in writing.
Both you and I have to sign written agreements."
(23) Note secured by deed of trust. The model clause
stating that the note is secured by a deed of trust reads: "In addition
to this Note, the Deed of Trust protects the Note holder from losses
that might result if I do not keep the promises that I make in this
Note. The Deed of Trust describes how and under what conditions I
may have to make immediate payment of all that I owe under this Note."
(24) Application of law. The model clause specifying
that federal law and Texas law apply to the contract reads: "Federal
law and Texas law apply to this Loan Agreement."
Cont'd... |
