By Luna                                                S.B. No. 201
       74R746 CLG-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to dedicating interest earned on trust accounts of certain
    1-3  financial institutions to the state housing trust fund.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Title 16, Revised Statutes, is amended by adding
    1-6  Article 370 to read as follows:
    1-7        Art. 370.  INTEREST EARNED ON TRUST ACCOUNTS OF FINANCIAL
    1-8  INSTITUTIONS DEDICATED TO STATE HOUSING TRUST FUND
    1-9        Sec. 1.  DEFINITIONS.  In this article:
   1-10              (1)  "Depository" means a bank, savings and loan
   1-11  association, or savings bank that maintains under this article an
   1-12  interest-bearing trust account for a financial institution for the
   1-13  deposit of escrow funds.
   1-14              (2)  "Financial institution" means:
   1-15                    (A)  a bank, savings and loan association,
   1-16  savings bank, trust company, mortgage banking institution, credit
   1-17  union, or other corporation or association organized under state or
   1-18  federal law that accepts a security interest in a homestead for
   1-19  payment of a loan; or
   1-20                    (B)  a sole proprietor whose business involves
   1-21  accepting a security interest in a homestead for payment of a loan.
   1-22              (3)  "Homestead" means property used as a home that is
   1-23  exempt from forced sale under Section 41.001, Property Code.
   1-24              (4)  "Homeowner" means the owner of a homestead.
    2-1        Sec. 2.  TRUST ACCOUNTS FOR DEPOSIT OF ESCROW FUNDS.  (a)
    2-2  Each financial institution that holds a security interest in a
    2-3  homestead for payment of indebtedness that requires the homeowner
    2-4  to maintain an escrow account with the financial institution for
    2-5  the payment of property taxes or casualty insurance premiums on the
    2-6  homestead shall maintain at a depository a pooled interest-bearing
    2-7  trust account for the deposit of those escrow funds.
    2-8        (b)  A financial institution described by Subsection (a) of
    2-9  this section or an affiliate of the financial institution may not
   2-10  act as a depository for the deposit of escrow funds of the
   2-11  financial institution under this section.
   2-12        Sec. 3.  AMOUNT OF INTEREST ON TRUST ACCOUNTS.  For each
   2-13  trust account deposited in a depository under Section 2 of this
   2-14  article, the depository shall:
   2-15              (1)  pay at least quarterly to the state treasurer
   2-16  interest earned on the account at a rate of interest not less than
   2-17  the depository's highest current passbook savings account rate,
   2-18  less reasonable service charges computed in accordance with the
   2-19  depository's standard accounting practice; and
   2-20              (2)  send a quarterly statement to the state treasurer
   2-21  showing the name of the financial institution for whom the payment
   2-22  is made, the rate of interest applied, the amount of service
   2-23  charges deducted, and the account balance for the period for which
   2-24  the report is made.
   2-25        Sec. 4.  SET-OFF NOT ALLOWED.  A depository is not  allowed a
   2-26  right of set-off under this article against money owed it by a
   2-27  financial institution that maintains a trust account at the
    3-1  depository under this article.
    3-2        Sec. 5.  STATE HOUSING TRUST FUND.  The state treasurer shall
    3-3  credit amounts collected under this article to the state housing
    3-4  trust fund account established by Section 2306.201, Government
    3-5  Code.
    3-6        Sec. 6.  EFFECT OF ARTICLE.  (a)  This article does not
    3-7  require a depository to perform administrative functions or assume
    3-8  responsibilities or obligations in connection with a trust account
    3-9  except as provided by this article.
   3-10        (b)  This article does not prevent  a financial institution
   3-11  from depositing funds of a homeowner, client, or other person in a
   3-12  separate interest-bearing account established on behalf of and for
   3-13  the benefit of the homeowner, client, or person if a written
   3-14  agreement between the financial institution and the party
   3-15  depositing the funds in the financial institution expressly
   3-16  provides for a separate account not subject to this article and for
   3-17  interest earned on the account to be paid as provided by that
   3-18  agreement.
   3-19        SECTION 2.  This Act takes effect September 1, 1995.
   3-20        SECTION 3.  The importance of this legislation and the
   3-21  crowded condition of the calendars in both houses create an
   3-22  emergency and an imperative public necessity that the
   3-23  constitutional rule requiring bills to be read on three several
   3-24  days in each house be suspended, and this rule is hereby suspended.