BILL ANALYSIS


                                                     C.S.S.B. 804
                                                       By: Harris
                                                    Jurisprudence
                                                          4-27-95
                                   Committee Report (Substituted)
BACKGROUND

Presently, out-of-state lenders run huge computerized second lien
lending operations without having significant contacts in Texas. 
Texas consumers have no legal contact to explain their loan
documentation or assist with problems and may even be given
incorrect information by the out-of-state lenders to induce
consumers to sign documentation.  Many of these home equity and
home improvement operations  do not use a title insurance company,
but instead have the consumers sign the documentation in front of
a notary and return it directly to the lender, who then files it. 
Thereafter, a consumer's only means of access is to call an out-of-state lender's voice mail.  It is already the law in Texas that an
attorney should prepare legal instruments affecting title to real
property when a charge is made directly or indirectly.  Out-of-state lenders are not regulated by Texas law;  attorneys are
regulated by a Texas agency which can supervise their actions and
monitor potential abuse.

PURPOSE

As proposed, S.B. 804 provides for the preparation of certain
secondary mortgage loan documents by an attorney.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 5069-5.01 et seq., V.T.C.S., by adding
Article 5.04A, as follows:

     Art. 5.04A.  DOCUMENT PREPARATION BY AN ATTORNEY.  (a) 
     Authorizes a document that is prepared in connection with a
     secondary mortgage loan and that affects title to real
     property to be prepared only by an attorney who is licensed in
     the State of Texas.
     
     (b)  Requires a deed of trust or other security instrument
       prepared in connection with a secondary mortgage loan to
       contain a notice of the attorney or law firm that prepared
       the document.  Sets forth required language for the notice.
       
       (c)  Requires a deed of trust or other security instrument
       that does not contain the notice required by this article to
       be deemed to be in violation of the provisions of Article
       5069.5.01 et seq., V.T.C.S., and subject to the consequences
       of such violation.
       
       SECTION 2.   Makes application of this Act prospective.

SECTION 3. Effective date:  September 1, 1995.

SECTION 4. Emergency clause.