1. (a) Definition. A "deferment charge" means the payment of an additional charge to defer the payment date of a scheduled payment or partial payment on a contract. A deferment charge prescribed by this section may occur in a retail installment transaction that employs the precomputed add-on method for regular payment contracts using the sum of the periodic balances, the scheduled installment earnings method, or the true daily earnings method. This section applies only to an amendment relating to the deferment of all or a part of one or more installments, and does not apply to amendments relating to renewing, restating, or rescheduling the unpaid balance under a retail installment sales contract. The term "deferment charge" does not include the continuing accrual of finance charge at the contract rate already agreed upon in a retail installment sales contract employing the true daily earnings method. The parties to a retail installment sales contract may agree to modify the terms of the transaction as long as the amendment conforms to the requirements of Texas Finance Code, Chapter 348, Subchapter B.

2. (b) Bilateral or mutual deferment.

   1. (1) General requirements. A retail buyer and a holder may mutually agree to defer all or a part of one of more scheduled installments. Bilateral or mutual deferments must be agreed upon in writing as required by Texas Finance Code, §348.116. The retail buyer's written agreement to the bilateral or mutual deferment may be confirmed by an email signature, an electronic signature, a facsimile signature, a written notation made by the retail buyer on a signed check, or some other writing signed by the retail buyer.

   2. (2) Disaster exception. A holder is not required to obtain the retail buyer's signature if the following conditions are met:

      1. (A) The retail buyer resides in an area designated as a state of disaster under Texas Government Code, §418.014; and

      2. (B) The deferment occurs before the state of disaster has been terminated:

         1. (i) by executive order; or
         2. (ii) by expiration as described in Texas Government Code, §418.014(c).
3. (c) Deferment notice. Each deferment must be noted on the account record at the time the deferment is made. A written notice containing the conditions of the deferment must be furnished to the retail buyer as required by Texas Finance Code, §348.116. A deferment notice must include the name of the holder, the name of the retail buyer, the account number of the retail buyer, the date of the deferment, the installment or installments being deferred, the deferment period, the total amount of any deferment charge and any authorized additional deferment cost, and the date and amount of the next installment due.
4. (d) Limitation of number of installments being deferred per amendment. A holder may only defer the equivalent of three monthly installments per amendment. This limitation applies to the number of whole or partial installments that can be deferred, not the length of time an installment can be deferred.

5. (e) Computation of deferment charge. A holder of a retail installment sales contract under Texas Finance Code, Chapter 348 may calculate the deferment charge by any method of calculation as long as the deferment charge does not exceed the maximum amount permitted by Texas Finance Code, §348.114 and this section.

   1. (1) Regular payment contract using sum of the periodic balances method.

      1. (A) Base deferment charge. For a regular payment contracts employing the add-on method and the refunding method of the sum of the periodic balances, a holder may assess, charge, and collect a base deferment charge computed by:

         1. (i) Multiplying the amount of the installment or installments being deferred by the maximum effective rate authorized for the contract;
         2. (ii) dividing the results of clause (i) of this subparagraph by 12; and
         3. (iii) multiplying the results of clause (ii) of this subparagraph by the number of months the installment or installments are being deferred.

      2. (B) Additional deferment costs. In addition to the base deferment charge authorized by this section, the holder of a retail installment sales contract may collect from the retail buyer the amount of the additional cost to the holder for:

         1. (i) premiums for continuing in force any insurance coverages provided by the retail installment contract; and
         2. (ii) any additional necessary official fees.
      3. (C) Minimum deferment charge. The minimum deferment charge authorized under this section is $1.00.

   2. (2) Scheduled installment earnings method or true daily earnings method.

      1. (A) Base deferment charge. For a regular or an irregular payment contract employing the scheduled installment earnings method or true daily earnings method, a holder may assess, charge, and collect a base deferment charge computed by:

         1. (i) Multiplying the amount of the installment or installments being deferred by the maximum daily rate authorized for the contract; and
         2. (ii) multiplying the results of clause (i) of this subparagraph by the actual number of days the installment or installments are being deferred.

      2. (B) Additional deferment costs. In addition to the base deferment charge authorized by this section, the holder of a retail installment sales contract may collect from the retail buyer the amount of the additional cost to the holder for:

         1. (i) premiums for continuing in force any insurance coverages provided by the retail installment contract; and
         2. (ii) any additional necessary official fees.
      3. (C) Minimum deferment charge. The minimum deferment charge authorized under this section is $1.00.

6. (f) Negative accrual of time price differential. In a retail installment sales contract employing the true daily earnings method, the payments scheduled for the period following the deferral (including the deferred payments) must be sufficient to:

   1. (1) pay the time price differential remaining on the deferred payment or payments and the amount currently accruing after the period of deferral; or
   2. (2) be applied in another manner that is more favorable to the retail buyer than the method provided in paragraph (1) of this subsection.
7. (g) Accounting of payment. If a payment is submitted from which a deferment charge is taken, any excess of the amount paid over the amount necessary to bring the account current must be applied to the remaining balance of the retail installment sales contract. However, in a precomputed retail installment sales contract employing the scheduled installment earnings method, any difference that exceeds $3.00 must be returned to the retail buyer if the retail buyer requests the refund within 30 days of the payment.
8. (h) Noncompliance. Deferment fees not assessed or collected in accordance with the requirements of this section are subject to refund to the retail buyer. In the event deferment fees are refunded to the retail buyer, no rescheduling of the retail installment sales contract is permitted.

Source Note:The provisions of this §84.203 adopted to be effective November 6, 2008, 33 TexReg 8913.