(a) Any amount due a borrower because of a correction of an error or a violation may be credited to an amount due under the promissory note or to the next payment or payments on the existing account of the borrower. If the credit is applied to payments not yet due, the licensee must notify the borrower in writing of the date and amount of the next payment due after this credit has been given.
(b) In lieu of crediting an existing account, a refund may be made directly to the borrower by cash, check, money order, or other negotiable instrument. The licensee must maintain sufficient records that the refund was made.
  (1) Cash refunds. If the refund is made directly to the borrower in cash, the licensee must obtain a signed or authenticated acknowledgment from the borrower. The signed or authenticated acknowledgment must contain the following information:
    (A) the borrower's full name;
    (B) the borrower's account number (the account number upon which the refund was made);
    (C) the amount of the refund; and
    (D) a statement that the borrower received the refund in cash and that the licensee has not instructed or required the borrower to repay the cash refund.
  (2) Refunds made by check, money order, or other negotiable instrument. If the refund is made directly to the borrower by check, money order, or other negotiable instrument, the licensee must, at a minimum, mail the refund to the last known address of the borrower by first-class mail. The licensee must maintain a complete paper or electronic copy of the check, money order, or other negotiable instrument. The licensee must also maintain sufficient information that could be used to determine whether the check, money order, or other negotiable instrument was successfully negotiated.
(c) If the error correction or adjustment to an account is related to an improper charge or proceeds improperly held by the licensee on which interest has been precomputed (regular transaction using the sum of the periodic balances method or scheduled installment earnings method), the licensee may alternatively credit the final maturing installment or installments of the promissory note. In addition to the error correction or adjustment, a licensee must also deduct from the precomputed balance the proportionate amount of interest originally charged on the amount being credited.
(d) If the licensee applies the refund to an existing account of the licensee, the licensee may be required to refund the amount due a borrower plus the amount of accrued interest on the correction or adjustment amount or a proportionate amount of interest originally charged on the amount being credited. If more than half of the precomputed time balance (regular transaction using the sum of the periodic balances method or scheduled installment earnings method) has been paid before applying the credit to the account, the licensee may be required to refund the proportionate amount of interest originally charged on the amount being credited.
(e) If the error correction or adjustment is made to an account where the interest charge is earned using the true daily earnings method, the licensee must refund or credit to the account the amount due to the borrower for the error correction or adjustment in addition to the amount of accrued interest on the correction or adjustment amount.
(f) The commissioner may make adjustments or exceptions to the requirements under this section for unusual situations or when necessary to achieve an appropriate, practical, and workable result.
(g) If the licensee corrects a violation of law in compliance with any instructions on any examination report, that correction will satisfy the requirements of this section with respect to the violation being corrected. Documentation must be maintained regarding all corrections made under this section.

Source Note: The provisions of this §83.833 adopted to be effective November 4, 2010, 35 TexReg 9698; amended to be effective November 8, 2018, 43 TexReg 7338