LOAN EXPENSES AND FEES.

(a) A bank may require a borrower to pay all reasonable expenses and fees incurred in connection with the making, closing, disbursing, extending, readjusting, or renewing of a loan, regardless of whether those expenses or fees are paid to third parties. A fee charged by the bank under this section may not exceed the cost the bank reasonably expects to incur in connection with the transaction to which the fee relates. Payment for those expenses may be:

(1) collected by the bank from the borrower and:

(A) retained by the bank; or

(B) paid to a person rendering services for which a charge has been made; or

(2) paid directly by the borrower to a third party to whom they are payable.

(b) This section does not authorize the bank to charge its borrower for payment of fees and expenses to an officer or director of the bank for services rendered in the person's capacity as an officer or director.

(c) A bank may charge a penalty for prepayment or late payment. Only one penalty may be charged by the bank on each past due payment. Unless otherwise agreed in writing, prepayment of principal must be applied on the final installment of the note or other obligation until that installment is fully paid, and further prepayments must be applied on installments in the inverse order of their maturity.

(d) Fees and expenses charged and collected as provided by this section are not considered a part of the interest or compensation charged by the bank for the use, forbearance, or detention of money.

(e) To the extent of any conflict between this section and a provision of Subtitle B, Title 4, the provision of Subtitle B, Title 4, prevails.