Consumer Credit Late Charges & Fees

The Texas Credit Title is a complex set of laws regulating usury, fees and charges, and other matters. This section provides helpful, quick information including a chart of permissible Late Charges & Fees as well as interpretations from the Consumer Credit Commissioner. Please remember that just because a fee is permissible and is NOT interest does not mean that it is NOT a finance charge. In fact, except for late charges, all of the fees listed below would be finance charges for Regulation Z purposes on nonreal estate transactions.

Late Charges & Fees
Late charges and fees continue to be a source of great frustration to Texas bankers. The Texas Legislature routinely changes which fees are permissible on different types of transactions. Below you will find a chart of the most recent changes effective September 1, 2005.

In addition, IBAT obtained clarification of changes from 1999 that are still of critical importance to Texas lenders. Click on the following link for the full text of an informative letter from the Consumer Credit Commissioner: Late Charges & Fees Interpretive Letter.

LATE CHARGES & FEES CHART

Type Of Loan	Permitted Fees Which Are Not Interest	Permitted Fees Which Are Interest	Late Charges
Commercial; including real estate	commitment fee, application fee, third-party fees, "loan fees," documentation fees, returned check fee	origination fee (points)	YES [1]
Real Estate: Residential First Lien	commitment fee, application fee, third-party fees, "loan fees"	origination fee (points) - no usury ceiling on first lien notes	YES [2]
Real Estate: Residential Second Lien - Precomputed & Scheduled Installment Method	third-party fees, returned check fee	administrative fee	YES [1]
Real Estate: Residential Second Lien - Simple Interest - Over 10%	third-party fees, returned check fee	origination fee (points)[3], administrative fee	YES [1]
Real Estate: Residential Second Lien - 10% or less	commitment fee, application fee, third party fees, "loan fees"	origination fee (points)	YES [4]
Consumer: Single-pay (term) over 10%	certain third-party fees	administrative fee	NO
Consumer: Installment - rate of 10% or less (simple interest only)	"loan fees," documentation fees, third-party fees		YES [4]
Consumer: Rate of 10% or less (term)	"loan fees," documentation fees, third party fees		NO
Consumer: Installment - rate over 10%	certain recording fees and collection expenses, returned check fee, reasonable third party fees	administrative fee	YES [1]
Consumer: Open-end credit under Chapter 346	annual fee, overline fee, cash advance fee, returned check fee		YES capped at $15
Manufactured Housing Purchase Money (retail)	transfer fee, acquisition charges (on prepayment), fees or taxes paid to agency		YES [5] capped at $20
Motor Vehicle Dealer Paper	documentation fees, fees and taxes to agency, inspection fee, policy or agent fee		YES [5]

[1] 5% after 10 days

[2] federal preemption

[3] Interpretive letters 81-9, 82-14, 82-15, 82-28

[4] Greater of $7.50 or 5% after 10 days

[5] 5% after 15 days

360 Day Calendar
In 2000, Commissioner Pettijohn responded to a request for clarification from IBAT regarding when and how to use 360 day calculations in commercial loans. To access a copy of that letter, click on the following link: 360 Day Calendar Interpretive Letter.

Administrative Fee
For helpful FAQs on administrative fees, click on the following link: Administrative Fees. Financial institutions need not remit $1 out of each administrative fee collected on a consumer installment loan. Click here for an explanatory letter from the Comptroller of Public Accounts.

Comments & Questions
If you would like to comment on legal topics or if you have questions about this information please call Shannon Phillips at (800) 749-4228 or e-mail sphillips@ibat.org.

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