SECTION 83.701. Maximum Interest Charge

(a) Precomputed secondary mortgage loans. In a precomputed secondary mortgage loan, an authorized lender may contract for, charge, or receive an amount of interest that does not exceed the applicable simple interest rate authorized by Texas Finance Code, Chapter 303, Subchapter A. Prepaid interest is not permitted unless expressly authorized by statute (e.g., an administrative fee).

(b) Interest-bearing loans. In an interest-bearing secondary mortgage loan, an authorized lender may contract for, charge, or receive any rate of interest that does not exceed the applicable amount authorized by Texas Finance Code, Chapter 303, Subchapter A, as calculated under the true daily earnings method or the scheduled installment earnings method. Prepaid interest in the form of points, such as origination or discount points, may be contracted for, charged, or received by an originating lender, so long as the total amount of interest contracted for, charged, or received, when spread over the full term of the loan as permitted by Texas Finance Code, §302.101 does not exceed the applicable interest limit in Texas Finance Code, Chapter 303, Subchapter A.

(c) Method of calculation. An authorized lender making loans under Texas Finance Code, §342.301(c) may calculate the rate and amount of interest by any method of calculation, as long as the amount of interest charged does not exceed the maximum rate or amount of interest provided by Texas Finance Code, §342.301, calculated using the specified earnings methods contained in Texas Finance Code, §342.301.

Source Note: The provisions of this §83.701 adopted to be effective November 9, 2006, 31 TexReg 8994; amended to be effective November 4, 2010, 35 TexReg 9698; amended to be effective July 10, 2014, 39 TexReg 5142