Untitled Texas Attorney General Opinion ( 1975 )

THEA'ITORNEYGENERAT~
OF TEXAS
AUS-~IN. T-s 787ll
May 2, 1975
The Honorable John P. Pareons Opinion No. H- 599
Commissioner
Texas Credit Union Department Re: Maximum rate of interest
1106 Clayton Lane, Suite 206-East which may be charged by
Austin, Texas 78723 state chartered credit
unions on first mortgage
Dear Mr. Parsons: real estate loans
You have requested our opinion regarding the maximum rate of interest
which may be charged by state chartered credit unions on first mortgage
real estate loans.
Article 16, section 11 of the Texas Constitution sets out the basic Texas
usury law. It provides. in pertinent part:
The Legislature shall have authority to classify loans
and lenders, license and regulate lenders, define
interest and fix maximum rates of interest: provided,
however, in the absence of legislation fixing maximum
rates of interest all contracts for a greater rate of
interest than ten per centum (10%) per annum shall be
deemed usurious: provided, further, that in contracts
where no rate,of interest is agreed upon, the rate shall
not exceed six per cent-urn (6%) per annum.
Article 5069-l. 02. V. T. C. S., implements this constitutional provision:
Except as otherwise fixed by law, the maximum rate
of interest shall be ten percent per annum. A greater
rate of interest than ten percent per annum unless
otherwise authorized by law shall be deemed usurious. _
. . .
Both article 5069-L 02 and the constitutional provision declare any annual
percentage rate in excess of ten percent to be usurious, but permit statutory
p. 2662
The Honorable John P. Parsons, page 2 (H- 599)
exceptions. The Credit Union Act provides such an exception for “credit
unions” as defined by article 2461- 1. V. T. C. S. :
No loan shall bear an interest rate in excess of one
percent per month on the unpaid monthly balance.
V. T.C.S., art. 2461-15(e).
By Acts 1973, 63rd Leg., ch. 440. sec. 6, p. 1217. there was deleted
from article 2461-15 of the Texas Credit Union Act a provision which first
appeared in 1969 when the new Texas Credit Union Act, (V. T. C. S., art. 2461-L
et seq. ) replaced the former credit union statute. (V. T. C. S., art. 2462). The
deleted provision read:
(i) No credit union may charge more than ten
percent simple interest on loans secured by‘a
mortgage on real estate.
Prior to the insertion of the above language in the 1969 Credit Union Act,
credit unions had apparently been authorized to charge rm percent per month
on the unpaid balance of first mortgage loans. The Legislature recognized
this in the title of Acts 1969, 61st Leg., R. S., ch. 186, p. 540, which replaced
the old credit union statute with the new Texas Credit Union Act. The title
read:
An Act relating to the organization and regulation
of credit unions; reducing the interest to be charged
on loans secured by real estate: repealing certain
laws; and declaring an emergency. (Emphasis added)
Also see, V. T. C. S., art. 5069-2.05 of the Texas Consumer Code enacted in
1967, and the former V. T.C.S., art. 2462, sec. 5.
We are thus compelled to conclude that the deletion of the reference to real
estate loans by the 1973 amendment restored to credit unions their authority
to charge a higher~rate of interest for real estate loans. The Legislature
must have intended that real estate loans made by credit unions once again
were to be subject to the article 2461-15(e) maximum rate of one percent per
month of the unpaid monthly balance.
p. 2663
. ’
The Honorable John P. Parsons, page 3 (H- 599)
SUMMARY
One percent per month on the unpaid monthly
balance is the maximum rate of interest which
may be charged by state chartered credit unions
on first mortgage real estate loans.
Very truly yours,
Attorney General of Texas
APPROVED:
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Committee
p. 2664