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.