SRC-SLL H.B. 1755 75(R)BILL ANALYSIS


Senate Research CenterH.B. 1755
By: Burnam (Moncrief)
Economic Development
5-16-97
Committee Report (Amended)


DIGEST 

Private mortgage insurance is usually required by mortgage lenders on any
home loan in which the borrower is unable to make a 20 percent down
payment.  The purpose of the insurance is to protect the lender against
any deficiency should there be a foreclosure.  Once the borrower's equity
in the home reaches 20 percent or more, most borrowers are able to cancel
the insurance.  Because lenders are not required to notify a homeowner
when the insurance becomes unnecessary, many homeowners continue to pay
for the coverage for the life of the mortgage.  This insurance can cost
homeowners between $20 and $100 a month.  This bill will provide
regulations regarding a mortgage guaranty insurance policy. 

PURPOSE

As proposed, H.B. 1755 provides regulations regarding a mortgage guaranty
insurance policy. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 21.50, Insurance Code, by adding Section 1B, as
follows: 

Sec.  1B.  NOTICE TO BORROWER.  Requires a lender that requires a borrower
to purchase mortgage guaranty insurance to provide annually to the
borrower a copy of a written notice printed in at least 10-point
bold-faced type containing certain information. Requires the lender, if a
lender receives a refund of an unearned mortgage guaranty insurance
premium paid by a borrower, to remit the refund to the borrower within a
certain time period. Provides that, if a federal law requires a lender to
provide a borrower with a written notice containing substantially the same
information required by Subsection (a) of this section, a lender who
provides the notice required by federal law within the period prescribed
by federal law satisfies the notice requirement of Subsection (a) of this
section.  Defines "lender." 

SECTION 2. Effective date: January 1, 1998.

SECTION 3. Emergency clause.




SUMMARY OF COMMITTEE CHANGES

Amendment 1.

(1) On page 2, line 2, between "c" and "In", inset the following:

"If federal law requires a lender to provide a borrower with a written
notice containing substantially the same information required by
Subsection (a) of this section, a lender who  provides the notice required
by federal law within the period prescribed by federal law satisfies the
notice requirement of Subsection (a) of this section. 

(d)"