Texas Finance Code 347.203 – Consumer’s Failure to Obtain Required Insurance
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(a) If at any time the consumer fails to obtain the required insurance, the creditor may:
(1) treat the failure as a default; or
(2) purchase the required insurance and add to the unpaid balance of the credit transaction the premium of the insurance and interest, at the interest rate or time price differential applicable to the transaction on the date the insurance is purchased.
(b) The insurance purchased under Subsection (a) may be in an amount up to but not in excess of the prepayment amount under § 347.155 if the balance were prepaid on the date that the insurance is purchased.
Terms Used In Texas Finance Code 347.203
- Consumer: means a person to whom credit is extended in a credit transaction. See Texas Finance Code 347.002
- Credit transaction: means :
(A) any sale, loan, or other transaction involving a retail purchase of a manufactured home and under which a person in a written agreement, including a credit sales contract or loan instrument, grants to another person a purchase money lien on the manufactured home to secure an extension of credit that is:
(i) subject to a finance charge; or
(ii) payable in more than four installments, not including a down payment; and
(B) a lease or bailment described by § 347. See Texas Finance Code 347.002 - Creditor: means a:
(A) person who extends credit or arranges for the extension of credit in a credit transaction; or
(B) retailer or broker, as defined by § 1201. See Texas Finance Code 347.002 - Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
(c) If insurance is purchased under Subsection (a), the creditor shall notify the consumer that:
(1) the insurance has been purchased under this section; and
(2) the premium for the insurance and interest on the premium have been added to the unpaid balance.
(d) The creditor may determine the period and number of installments in which the consumer is to pay the premium and interest, including payment of the total amount on the date of the last installment, payment in equal increments added to each of the remaining installments, or payment in a lesser number of installments or in unequal increments.