By Danburg, Eckels H.B. No. 2150
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to voluntary, consensual encumbrances on homestead
1-3 property.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 41.001(b), Property Code, is amended to
1-6 read as follows:
1-7 (b) Encumbrances may be properly fixed on homestead property
1-8 for:
1-9 (1) purchase money;
1-10 (2) taxes on the property; <or>
1-11 (3) work and material used in constructing
1-12 improvements on the property if contracted for in writing before
1-13 the material is furnished or the labor is performed and in a manner
1-14 required for the conveyance of a homestead, with joinder of both
1-15 spouses if the homestead claimant is married; or
1-16 (4) a loan or other written agreement extending
1-17 credit, including a contract for an open-end account, that is
1-18 secured in whole or in part by a voluntary lien on or other
1-19 consensual security interest in a homestead created, with the
1-20 consent of all owners and the spouse of each owner, in accordance
1-21 with applicable statutory requirements.
1-22 SECTION 2. Title 79, Revised Statutes (Article 5069-1.01 et
1-23 seq., Vernon's Texas Civil Statutes) is amended by adding Chapter
2-1 17 to read as follows:
2-2 CHAPTER 17. EQUITY LOANS
2-3 Art. 17.01. DEFINITIONS. (1) Equity Loan. A loan or other
2-4 written agreement extending credit, including a contract for an
2-5 open-end account, that is secured in whole or in part by a
2-6 voluntary lien on or other consensual security interest in a
2-7 homestead created, with the consent of all owners and the spouse of
2-8 each owner, in accordance with applicable statutory requirements.
2-9 (2) Reverse Mortgage. A nonrecourse equity loan which
2-10 provides cash advances to a borrower based on the equity in a
2-11 borrower's owner-occupied principal residence homestead property
2-12 and requires no payment of principal or interest until the entire
2-13 loan becomes due and payable.
2-14 (3) Net Equity. Net equity is the fair market value of the
2-15 homestead property less the aggregate total of the outstanding
2-16 balances of all indebtedness secured by valid encumbrances of
2-17 record against the homestead property, on the date an equity loan
2-18 is made. For purposes of this Chapter, the date an equity loan is
2-19 made is the date described in Article 17.01(6) herein.
2-20 For the purpose of establishing the fair market value of the
2-21 homestead property, a lender shall rely upon a current appraisal or
2-22 evaluation, whichever may be appropriate, prepared in accordance
2-23 with any state or federal requirements applicable to the lender.
2-24 If no state or federal appraisal or evaluation requirements apply
2-25 to a particular equity loan, the fair market value of the homestead
3-1 property may be the value estimate set forth in the most recent ad
3-2 valorem tax appraisal district valuation letter for the homestead
3-3 property.
3-4 For the purposes of this Chapter, a lender may rely upon, and
3-5 assume the accuracy of, outstanding indebtedness figures obtained
3-6 by usual and customary means from other lenders or from written
3-7 loan statements supplied by the borrower.
3-8 (4) Advance. Under an equity loan structured as a contract
3-9 for an open account or as a reverse mortgage, an advance shall mean
3-10 a draw or extension of credit as that term is defined in Article
3-11 1.01(f), Title 79, Revised Statutes (Article 5069-1.01(f), Vernon's
3-12 Texas Civil Statutes).
3-13 (5) Blended Equity Loan. An equity loan made for the
3-14 payment or refinancing of all or part of: (a) the purchase money
3-15 of a homestead; (b) taxes on homestead property; or (c) the work
3-16 and material used in constructing improvements on a homestead; and
3-17 another authorized purpose.
3-18 (6) Date an Equity Loan is Made. For purposes of this
3-19 Chapter, the date the equity loan is made is the date that both of
3-20 the following have occurred: (a) the promissory note or notes, or
3-21 contract for an open account, evidencing the equity loan is
3-22 executed; and (b) a deed of trust or other security interest that
3-23 creates a valid lien against the homestead property securing the
3-24 equity loan is executed.
3-25 Art. 17.02. APPLICABILITY OF ACT. (1) Licensed Lenders.
4-1 No person except a bank, savings and loan association, savings
4-2 bank, or credit union, doing business under the laws of this state
4-3 or the United States; a person licensed under Chapter 3, Title 79,
4-4 Revised Statutes; or a lender approved by the U.S. Department of
4-5 Housing and Urban Development may engage in the business of making,
4-6 negotiating, or arranging equity loans. Equity loans may be made
4-7 in addition to any loans otherwise authorized for those lenders.
4-8 (2) Authority. Notwithstanding any other law of this state,
4-9 a lender making, negotiating, or arranging an equity loan under
4-10 this Chapter is required to comply only with the requirements of
4-11 this Chapter, any nonconflicting requirements of any law relied on
4-12 as authority for the rate or amount of interest provided for in the
4-13 loan, and the requirements of applicable federal law.
4-14 (3) Other Loans Included. A loan made for the payment or
4-15 refinancing of all or part of the purchase money of a homestead,
4-16 taxes on homestead property, or the work and material used in
4-17 constructing improvements on a homestead may be made under this
4-18 Chapter, but the loan shall not be considered an equity loan and
4-19 shall not be subject to this Chapter unless the parties elect in
4-20 the loan documents to be governed by this Chapter; provided,
4-21 however that blended equity loans shall be subject to this Chapter.
4-22 (4) Limitation on Encumbrances. A homestead may not be
4-23 encumbered by more than one equity loan. This limitation shall not
4-24 apply to any valid encumbrance on homestead property authorized by
4-25 Section 41.001(b)(1), 41.001(b)(2) or 41.001(b)(3), Property Code,
5-1 Revised Statutes.
5-2 Art. 17.03. LOAN REQUIREMENTS. (1) Advances and Repayment.
5-3 An equity loan may provide for funding to or for the benefit of the
5-4 borrower in one or more advances at a frequency and for a term as
5-5 agreed by the parties. An equity loan may provide for repayment in
5-6 one or more payments on such payment schedule and in such amounts
5-7 as agreed by the parties.
5-8 (2) Loan-to-Value Limitation. The principal amount of an
5-9 equity loan shall not exceed sixty per cent of the net equity of
5-10 the homestead property securing the loan. The maximum permissible
5-11 principal amount of an equity loan structured as a contract for an
5-12 open account shall not exceed sixty per cent of the net equity of
5-13 the homestead property securing the loan. In addition to the net
5-14 equity limitation herein, in no event shall the principal amount of
5-15 an equity loan plus the aggregate total of the outstanding balances
5-16 of all other indebtedness secured by valid encumbrances of record
5-17 against the homestead property exceed ninety per cent of the fair
5-18 market value of the homestead property on the date the equity loan
5-19 is made. The principal amount of a blended equity loan shall not
5-20 exceed ninety percent of the fair market value of the homestead
5-21 property on the date the blended equity loan is made.
5-22 Notwithstanding the foregoing, any advances made by a lender
5-23 to protect a lien, security interest, or other valid encumbrance on
5-24 the homestead property securing the loan including, without
5-25 limitation, the payment of hazard insurance premiums, repairs to
6-1 the homestead property, or payments on any indebtedness secured by
6-2 a prior valid encumbrance on the homestead property, shall be
6-3 secured by the lien, security interest, or other valid encumbrance
6-4 on the homestead property, without regard to the loan-to-value
6-5 limitations in this Chapter.
6-6 (3) Decrease in Value of Homestead. A lender may not
6-7 accelerate the remaining payments of an equity loan or demand
6-8 payment in full of such loan solely because of a decrease in the
6-9 market value of the homestead property securing the equity loan,
6-10 except where such decrease in the market value is caused by
6-11 substantial damage or destruction to the property, a condemnation
6-12 or other taking thereof, the discovery of environmental hazards
6-13 thereon, or the usage of the property in such a manner as to commit
6-14 waste thereon or a nuisance thereby. This section shall not
6-15 prohibit a lender, if the loan documents so provide, from refusing
6-16 to make additional advances under an equity loan other than a
6-17 reverse mortgage, in the event of a decrease in the value of the
6-18 homestead property, regardless of the cause of the decrease.
6-19 (4) Limitation on Additional Collateral. Neither real nor
6-20 personal property, other than manufactured homes, as defined in
6-21 Article 5221f, Title 83, Chapter 1b, Revised Statutes (Article
6-22 5221f et. seq., Vernon's Texas Civil Statutes), may be required as
6-23 additional collateral on an equity loan except for personal
6-24 property affixed, or to be affixed, to the homestead in a manner
6-25 that would classify the property as a fixture. This section does
7-1 not prohibit or limit any statutory or common law lien or right of
7-2 offset. This section does not prevent a lender from requiring
7-3 insurance as additional protection and security for a loan if the
7-4 insurance is authorized by this Chapter. Proceeds of a sale of the
7-5 homestead or its fixtures, or proceeds of insurance covering the
7-6 property, are not considered additional collateral and may be
7-7 included as part of the security for the loan.
7-8 (5) Other Loans. A lender may not accelerate the remaining
7-9 payments of an equity loan or demand payment in full of such loan
7-10 solely because of the borrower's default under any other
7-11 indebtedness, whether owed to the lender or otherwise.
7-12 Notwithstanding the foregoing, a lender may accelerate the
7-13 remaining payments of an equity loan or demand payment in full of
7-14 such loan solely because of the borrower's default under any
7-15 indebtedness secured by a prior valid encumbrance on the homestead
7-16 property. This section shall not prohibit a lender, if the loan
7-17 documents so provide, from refusing to make additional advances
7-18 under an equity loan, other than a reverse mortgage, if the
7-19 borrower has defaulted in the performance or payment of any other
7-20 indebtedness owed to the lender or any other creditor.
7-21 (6) Notice. The lender shall provide to a borrower, at the
7-22 time the borrower executes an application for an equity loan, a
7-23 boldface type notice, in all capital letters, as follows:
7-24 "YOU ARE PLEDGING YOUR HOMESTEAD AS COLLATERAL TO
7-25 SECURE THE PAYMENT OF A LOAN. IN THE EVENT OF
8-1 NONPAYMENT OR FAILURE TO PERFORM THE TERMS OF THE LOAN
8-2 CONTRACT, THE LENDER HAS THE RIGHT TO FORECLOSE ON YOUR
8-3 HOMESTEAD AND SELL IT TO SATISFY PAYMENT OF THE LOAN.
8-4 "YOUR HOMESTEAD MAY NOT BE PLEDGED TO SECURE THE
8-5 PAYMENT OF MORE THAN ONE EQUITY LOAN AT A TIME.
8-6 "THE AMOUNT OF YOUR EQUITY LOAN MAY NOT BE GREATER THAN
8-7 SIXTY PERCENT OF THE NET EQUITY YOU HAVE IN YOUR
8-8 HOMESTEAD. NET EQUITY IS THE DIFFERENCE BETWEEN THE
8-9 VALUE OF YOUR HOMESTEAD AND THE TOTAL OF ALL
8-10 OUTSTANDING DEBTS AGAINST IT. IN ADDITION, ALL THE
8-11 DEBTS AGAINST YOUR HOMESTEAD, INCLUDING THE EQUITY
8-12 LOAN, MAY NOT EXCEED NINETY PERCENT OF THE VALUE OF
8-13 YOUR HOMESTEAD.
8-14 "YOUR LENDER MAY NOT REQUIRE YOU TO PLEDGE ANY PROPERTY
8-15 YOU OWN OTHER THAN A MANUFACTURED HOME AS ADDITIONAL
8-16 COLLATERAL FOR YOUR LOAN.
8-17 "YOU HAVE AT LEAST FIFTEEN DAYS FROM THE DATE YOU
8-18 REQUESTED THE LOAN TO CHANGE YOUR MIND ABOUT THE LOAN
8-19 BEFORE YOU CAN SIGN THE LOAN DOCUMENTS. IN ADDITION,
8-20 YOU HAVE THREE DAYS AFTER YOU SIGN THE LOAN DOCUMENTS
8-21 TO CHANGE YOUR MIND ABOUT THE LOAN. IF YOU DECIDE NOT
8-22 TO TAKE THE LOAN DURING ONE OF THESE TIME PERIODS, YOU
8-23 WILL HAVE NO FURTHER OBLIGATION TO THE LENDER.
8-24 "THE LOAN DOCUMENT CANNOT BE SIGNED AT YOUR HOME. THEY
8-25 MAY ONLY BE SIGNED AT THE LENDER'S OFFICE, AT A TITLE
9-1 COMPANY, OR AT A TEXAS ATTORNEY'S OFFICE.
9-2 "YOUR LENDER IS REQUIRED TO GIVE YOU A WRITTEN
9-3 STATEMENT WITH ITS NAME AND ADDRESS AND YOUR NAME AND
9-4 ADDRESS EITHER BEFORE OR WHEN YOU SIGN THE LOAN
9-5 DOCUMENTS. THE STATEMENT MUST ALSO INCLUDE A
9-6 DESCRIPTION OF ANY INSURANCE YOU PURCHASED, AND HOW
9-7 MUCH YOU PAID, IN CONNECTION WITH THE LOAN.
9-8 "YOUR LENDER IS REQUIRED TO GIVE YOU A RECEIPT IF YOU
9-9 MAKE A PAYMENT ON THE LOAN IN CASH."
9-10 In the event a written loan application is not required by
9-11 the business practices of the lender or by applicable law, the
9-12 lender shall provide the notice required by this section to the
9-13 borrower within three business days of the receipt of: (i) an
9-14 application fee in connection with the proposed equity loan; or
9-15 (ii) a written or verbal request for credit from the borrower.
9-16 (7) Cooling-Off Period. An equity loan may not be made
9-17 prior to the expiration of at least fifteen calendar days from the
9-18 date an application for such loan is executed by the borrower. In
9-19 the event a written loan application is not required by the
9-20 business practices of the lender or by other applicable law, the
9-21 cooling off period shall begin upon the date the earlier of the
9-22 following occurs: (i) the lender's receipt of an application fee
9-23 in connection with the proposed equity loan; or (ii) the receipt of
9-24 a written or verbal request for credit from the borrower. For
9-25 purposes of this Chapter, the date an equity loan is made is that
10-1 date described in Article 17.01(6) herein.
10-2 Noncompliance with this section shall increase the period of
10-3 time within which any borrower or owner may rescind the equity loan
10-4 by the number of days that the cooling off period falls short of
10-5 the required fifteen day period.
10-6 (8) Right of Rescission. Subject to the provisions in this
10-7 section, each owner of the homestead property securing an equity
10-8 loan shall have the right to rescind such loan. Compliance with
10-9 the provisions regarding the giving of notice of any right to
10-10 rescind and the manner of exercising such right in accordance with
10-11 any applicable state or federal law, including but not limited to
10-12 Regulation Z, 12 C.F.R. Section 226.23, et. seq, shall be deemed to
10-13 be compliance with this Chapter.
10-14 The right of rescission required by this section shall apply
10-15 to all equity loans made under this Chapter regardless of the
10-16 purpose of the loan. No owner of the homestead property securing
10-17 an equity loan shall have the right to waive the right of
10-18 rescission required by this section, regardless of whether
10-19 applicable state or federal law provides for a waiver.
10-20 (9) Location of Closing. An equity loan made under this
10-21 Chapter may not be closed at the residence of the borrower, and all
10-22 such loans must be closed at an office of the lender, a title
10-23 company, or an attorney licensed to practice law in this state.
10-24 Art. 17.04. REVERSE MORTGAGES. (1) General Provisions.
10-25 Notwithstanding any other section of this Chapter, a lender making,
11-1 negotiating, or arranging a reverse mortgage under this Chapter is
11-2 required to comply only with the requirements of this section, any
11-3 nonconflicting requirements of this Chapter, and any nonconflicting
11-4 requirements of any other applicable state or federal law.
11-5 (a) Prepayment. Payment in whole or in part, shall be
11-6 permitted without penalty at any time during the term of a reverse
11-7 mortgage.
11-8 (b) Intervening Liens. All advances made under a reverse
11-9 mortgage and all interest on such advances shall have priority over
11-10 any lien filed after the date on which a reverse mortgage is made.
11-11 (c) Rates of Interest. A reverse mortgage may provide for
11-12 an interest rate which is fixed or adjustable, and may also provide
11-13 for interest that is contingent on appreciation in the fair market
11-14 value of the homestead property.
11-15 (d) Periodic Advances. If a reverse mortgage provides for
11-16 periodic advances to a borrower, such advances shall not be reduced
11-17 in amount or number based on any adjustment in the interest rate.
11-18 (e) Lender Default. Lenders failing to make loan advances
11-19 as required in the loan documents, and failing to cure such default
11-20 as required in the loan documents, shall forfeit any right to
11-21 collect all interest.
11-22 (f) Repayment. A reverse mortgage shall become due and
11-23 payable upon the occurrence of any one of the following events:
11-24 (i) the homestead property securing the loan is sold; (ii) all
11-25 borrowers cease occupying the homestead property as a principal
12-1 residence; (iii) any fixed maturity date agreed to by the lender
12-2 and the borrower is reached; or (iv) an event occurs which is
12-3 specified in the loan documents, including the death of all
12-4 borrowers, which jeopardizes the lender's security. The reverse
12-5 mortgage repayment requirement is also expressly subject to the
12-6 following provisions: (i) temporary absences from the homestead
12-7 property not exceeding sixty consecutive calendar days shall not
12-8 cause the reverse mortgage to become due and payable;
12-9 (ii) temporary absences from the homestead property exceeding
12-10 sixty consecutive calendar days but not less than one year shall
12-11 not cause the reverse mortgage to become due and payable so long as
12-12 the borrower has taken prior action which secures the home in a
12-13 manner satisfactory to the lender; (iii) the lender's right to
12-14 collect reverse mortgage payments shall be subject to the
12-15 applicable statute of limitations for a debt in Section 16.004(a),
12-16 Civil Practices and Remedies Code, Revised Statutes; and Section
12-17 3.122, Business and Commerce Code, Revised Statutes.
12-18 Notwithstanding Section 3.122, the statute of limitations shall
12-19 commence on the date the reverse mortgage becomes due and payable;
12-20 and (iv) in the loan documents, the lender must prominently
12-21 disclose any interest or fees to be charged during the period that
12-22 commences on the date that the reverse mortgage becomes due and
12-23 payable, and ends when repayment in full is made.
12-24 (2) Inapplicability of Related Statutes. Reverse mortgage
12-25 loans may be made or acquired without regard to the following
13-1 provisions of any applicable state or federal statute:
13-2 (a) limitations on the purpose and use of future
13-3 advances or any other mortgage proceeds;
13-4 (b) limitations on future advances to a term of years,
13-5 or limitations on the term of open account advances;
13-6 (c) limitations on the term during which future
13-7 advances take priority over intervening advances;
13-8 (d) requirements that a maximum loan amount be stated
13-9 in the reverse mortgage loan documents;
13-10 (e) limitations on loan-to-value ratios;
13-11 (f) prohibitions on balloon payments;
13-12 (g) prohibitions on compounded interest and interest
13-13 on interest;
13-14 (h) prohibitions on contracting for, charging or
13-15 receiving any rate of interest authorized under Article 1.04, Title
13-16 79, Revised Statutes (Article 5069-1.04, Vernon's Texas Civil
13-17 Statutes) or any other state or federal statute authorizing a
13-18 lender to contract for a rate of interest; and
13-19 (i) requirements that a percentage of the reverse
13-20 mortgage proceeds must be advanced prior to the assignment of the
13-21 reverse mortgage.
13-22 (3) Treatment of Reverse Mortgage Loan Proceeds by Public
13-23 Benefit Programs. (a) Reverse mortgage loan payments made to a
13-24 borrower shall be treated as proceeds from a loan and not as income
13-25 for the purpose of determining eligibility and benefits under
14-1 means-tested programs of aid to individuals.
14-2 (b) Undisbursed funds shall be treated as equity in a
14-3 borrower's home and not as proceeds from a loan for the purpose of
14-4 determining eligibility and benefits under means-tested programs of
14-5 aid to individuals.
14-6 (c) This paragraph applies to any law relating to
14-7 payments, allowance, benefits, or services provided on a
14-8 means-tested basis by this State, including but not limited to
14-9 supplemental security income, low-income energy assistance,
14-10 property tax relief, medical assistance, and general assistance.
14-11 (4) Consumer Information and Counseling. No reverse
14-12 mortgage commitment shall be made by a lender unless the loan
14-13 applicant attests, in writing, that the applicant received from the
14-14 lender at time the notice is required by Article 17.03(6) of this
14-15 Chapter a statement prepared by the Consumer Credit Commissioner
14-16 regarding the advisability and availability of independent
14-17 information and counseling services on reverse mortgages. The
14-18 Consumer Credit Commissioner shall be responsible for:
14-19 (a) developing the content and format of the statement;
14-20 (b) providing independent consumer information on reverse
14-21 mortgages and their alternatives; and (c) referring consumers to
14-22 independent counseling services with expertise in reverse
14-23 mortgages.
14-24 Art. 17.05. INTEREST, CHARGES, AND FEES. (1) Rates of
14-25 Interest. A lender may contract for and receive on an equity loan
15-1 any fixed or variable rate of interest that does not exceed any
15-2 rate of interest authorized under Article 1.04, Title 79, Revised
15-3 Statutes (Article 5069-1.04, Vernon's Texas Civil Statutes) or any
15-4 other state or federal statute authorizing the lender to contract
15-5 for a rate of interest. Interest shall be accrued and earned by
15-6 applying the simple annual interest rate(s) under the loan contract
15-7 to the principal balance, including additions to principal
15-8 authorized by the loan contract, from time to time unpaid until the
15-9 date of payment in full.
15-10 (2) Other Insurance Premiums. Premiums for insurance
15-11 written in accordance with Article 17.06 of this Chapter, may be
15-12 added to the loan contract.
15-13 (3) Contractual Fees and Charges. If the contract for an
15-14 equity loan so provides, a lender may collect the following fees
15-15 and charges in connection with an equity loan:
15-16 (a) expenses or costs paid, or that will be paid, to a
15-17 third party for any abstract, title report, attorneys' fees for
15-18 legal opinion or document preparation, title insurance, property
15-19 damage insurance, credit life, accident or health insurance,
15-20 escrows for future payments of taxes and insurance, annuity,
15-21 appraisal or evaluation, survey, and credit reports;
15-22 (b) fees prescribed by law which actually are, or will
15-23 be paid, to public officials for determining the existence of, or
15-24 for perfecting, or releasing or satisfying any lien, security
15-25 interest, or other valid encumbrance related to an equity loan;
16-1 (c) expenses or costs necessary or proper for the
16-2 protection of the lender that are actually incurred in the making
16-3 or servicing of an equity loan;
16-4 (d) bona fide commitment fees for the separate
16-5 consideration of committing to make an equity loan in the future;
16-6 (e) any and all other fees authorized in this Chapter
16-7 or by applicable state or federal law that are not interest under
16-8 any law that defines interest or limits the rate of interest that
16-9 may be charged;
16-10 (f) reasonable fees or charges paid to the trustee in
16-11 connection with a deed of trust or similar instrument executed in
16-12 connection with the equity loan, including fees for enforcing the
16-13 lien, posting for sale, selling, or releasing the property secured
16-14 by the deed of trust;
16-15 (g) reasonable fees paid to an attorney who is not an
16-16 employee of the lender in the collection of a delinquent equity
16-17 loan and any court costs and fees incurred in the collection of, or
16-18 foreclosure of, any lien created by the loan.
16-19 (h) a fee of $25 or less for the return by a
16-20 depository institution of a dishonored check, negotiable order of
16-21 withdrawal, share draft, or deposit draft offered in full or
16-22 partial payment of an equity loan; and
16-23 (i) a late charge or penalty if any scheduled payment
16-24 or any portion thereof continues unpaid for 10 days or more
16-25 following the date the payment is due. Only one penalty authorized
17-1 by this section of this Chapter may be charged for each past due
17-2 scheduled payment. The penalty or late charge may not exceed five
17-3 percent of the unpaid amount of the scheduled payment. The penalty
17-4 or late charge is not interest under any law that defines interest
17-5 or limits the rate of interest that may be charged, and it may be
17-6 charged and collected in addition to the interest authorized by
17-7 law.
17-8 Art. 17.06. INSURANCE. On any equity loan, a lender may
17-9 request or require a borrower to provide insurance:
17-10 (a) in the same amounts and under the same conditions as may
17-11 apply to secondary mortgage loans as provided by Article 5.02 and
17-12 5.03, Title 79, Revised Statutes (Article 5069-5.02 and 5.03,
17-13 Vernon's Texas Civil Statutes);
17-14 (b) in the amount and under the terms and conditions of the
17-15 Home Equity Conversion Mortgage Insurance program (Housing and
17-16 Community Development Act of 1987; Pub. L. 100-242; National
17-17 Housing Act (12 U.S.C. 1715 2-20); 24 C.F.R. Section 206 et. seq.);
17-18 and
17-19 (c) in the same amounts and under the same conditions as
17-20 provided for by any state or federal statute authorizing or
17-21 requiring any type of insurance relating to a loan other extension
17-22 of credit, including such insurance authorized or under Articles
17-23 1-7 and Article 15, Title 79, Revised Statutes (Article 5069-1.01 -
17-24 7.11; Article 5069-15.01 - 15.11, Vernon's Texas Civil Statutes).
17-25 Art. 17.07. LENDER'S DUTY TO BORROWER. (1) Written
18-1 Statement. On any equity loan, the lender shall deliver to the
18-2 borrower, or to one of the borrowers if more than one, a copy of
18-3 the note or contract for an open account and all other documents
18-4 signed by the borrower and a written statement showing the
18-5 following information;
18-6 (a) the names and addresses of the borrower and of the
18-7 lender; and
18-8 (b) the types of insurance, if any, for which a charge
18-9 is included in the loan agreement and the charge to the borrower
18-10 for the insurance.
18-11 (2) Copies. If the note or other loan documents show the
18-12 information required in (1), a copy of the note or other loan
18-13 documents may be delivered rather than a separate statement.
18-14 (3) Receipt. The lender shall give a receipt to a person
18-15 making a cash payment on any loan if requested by borrower.
18-16 (4) Prepayment. No prepayment fee, charge or penalty may be
18-17 collected on any equity loan except as authorized by Article 1.07,
18-18 Title 79, Revised Statutes (Article 5069-1.07, Vernon's Texas Civil
18-19 Statutes.
18-20 (5) Release. On termination and full payment of an equity
18-21 loan, the holder shall, within a reasonable time, cancel and return
18-22 any note to the borrower and shall furnish to the borrower releases
18-23 of any mortgage, deed of trust, security interest, or other
18-24 interest securing the loan.
18-25 Art. 17.08. PROHIBITED PRACTICES. (1) Assignment of Wages.
19-1 A lender may not accept an assignment of wages as security for any
19-2 loan made under this Chapter.
19-3 (2) Confession of Judgment. In connection with an equity
19-4 loan, a lender may not accept any confession of judgment or any
19-5 power of attorney running to the lender or to any third person to
19-6 confess judgment or to appear for a borrower in a judicial
19-7 proceeding.
19-8 (3) Blanks in Instruments. A lender may not accept any
19-9 instrument in which blanks are left to be filled in after an equity
19-10 loan is made.
19-11 SECTION 3. EFFECTIVE DATE. This Act takes effect on April 1
19-12 of the year following the date of the constitutional amendment
19-13 proposed by _____H.J.R. No. _____, Acts of the _____th
19-14 Legislature, _____ Called Session, 199 .
19-15 If that amendment is not approved by the voters, this Act has no
19-16 effect.
19-17 SECTION 4. SEVERABILITY. If any provision of this Act or
19-18 its application to any person or circumstance is held invalid, the
19-19 invalidity does not affect other provisions or applications of this
19-20 Act that can be given effect without the invalid provision or
19-21 application, and to this end the provisions of this Act are
19-22 declared to be severable.
19-23 SECTION 5. The importance of this legislation and the
19-24 crowded condition of the calendars in both houses create an
19-25 emergency and an imperative public necessity that the
20-1 constitutional rule requiring bills to be read on three several
20-2 days in each house be suspended, and this rule is hereby suspended.