BILL ANALYSIS



C.S.H.B. 2487
By: Gutierrez
03-23-95
Committee Report (Substituted)


BACKGROUND

Federal law, particularly as expanded by the Riegle Community
Development and Regulatory Improvement Act of 1994, requires
lenders to obtain or have the borrower obtain flood insurance where
such is available.  The federal act significantly strengthened this
requirement out of a concern that the taxpayers rather than the
homeowners were picking up the cost of too many federal disasters. 
Without this bill, secondary mortgage loans made under Chapter 5 of
the Texas Credit Code have no authorization for the lender to
charge directly or indirectly the required determination fee for
the flood insurance.

PURPOSE

Rather than refer to the federal flood insurance program alone,
this bill provides a pass-through for fees relating to federally
mandated programs where such collection or participation is
required by an agency created by federal law to capture any
additional fees or charges which Congress may add in the future. 
This is important in the interest of legislative efficiency so that
Chapter 5 will not need to be amended repeatedly as federal law
makes changes.  Perhaps more significantly, there is typically a
lag time between a federal mandate and a session of the Texas
Legislature.  This creates a significant cost problem for lenders
during the interim.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Article 5.02, Title 79, Revised Statutes, (1) through
(8) deal with repayment of loans, interest rates, and all
authorized charges such as fees, compensation, bonuses, commission,
brokerage, discounts, and expenses, contracted for or not, received
by the lender, or any other person, in connection with the
investigating, arranging, negotiation, procuring, guaranteeing,
making, servicing, collecting, or enforcing of a loan.

Subsection (7) lists in (a) through (g) fees that may be collected
by a secondary mortgage loan lender.  This bill adds (h) to
establish that a secondary mortgage loan lender may collect on or
before the closing of a loan, or include in the principal of the
secondary mortgage loan reasonable fees which are incurred in
connection with the real property offered as security for the loan
in order to comply with federally mandated programs where such
collection or participation is required by an agency created by
federal law.

SECTION 2. Effective date clause.

SECTION 3. Emergency clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute is a council draft of the original bill.  There are
no substantive differences between the two versions.

SUMMARY OF COMMITTEE ACTION

The committee convened in a public hearing on March 27, 1995 to
consider HB 2487.

The committee considered a complete committee substitute for the
bill which was adopted without objection.

The following person testified neutrally on the bill:
Lesli Pettijohn.

The following people testified in favor of the bill:
Eric Sandberg; and 
Karen Neeley.

The motion to report HB 2487 favorably as substituted, with the
recommendation that it do pass and be printed and be sent to the
Committee on Local and Consent Calendars, prevailed by a record
vote of:  6 Ayes, 0 Nays, 0 PNV, 3 Absent.