By Hirschi                                      H.B. No. 1963

      75R4354 PAM-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to dedicating interest earned on trust accounts of title

 1-3     insurance companies to the housing trust fund.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Chapter 9, Insurance Code, is amended by adding

 1-6     Article 9.45A to read as follows:

 1-7           Art. 9.45A.  INTEREST EARNED ON TRUST ACCOUNTS DEDICATED TO

 1-8     HOUSING TRUST FUND.  (a)  Each title insurance company, title

 1-9     insurance agent, direct operation, or escrow officer controlling

1-10     escrow funds shall maintain a pooled interest-bearing trust account

1-11     for the deposit of escrow funds.

1-12           (b)  Except as provided by Subsection (e) of this article,

1-13     the deposit agreement for each trust account must provide that the

1-14     financial institution:

1-15                 (1)  pay at least quarterly to the comptroller interest

1-16     earned on the account at a rate of interest not less than the

1-17     financial institution's highest current passbook savings account

1-18     rate, less reasonable service charges computed in accordance with

1-19     the financial institution's standard accounting practice;

1-20                 (2)  send a quarterly statement to the comptroller

1-21     showing the name of the title insurance company, title insurance

1-22     agent, direct operation, or escrow officer for whom the payment is

1-23     made, the rate of interest applied, the amount of service charges

1-24     deducted, and the account balance for the period for which the

 2-1     report is made; and

 2-2                 (3)  is not allowed a right of set-off against money

 2-3     owed it by the title insurance company, title insurance agent,

 2-4     direct operation, or escrow officer.

 2-5           (c)  The comptroller shall credit amounts collected under

 2-6     this article to the housing trust fund established by Section

 2-7     2306.201, Government Code.

 2-8           (d)  This article does not require a financial institution to

 2-9     perform administrative functions or assume responsibilities or

2-10     obligations in connection with a trust account except as provided

2-11     by this article.

2-12           (e)  This article does not prevent a title insurance company,

2-13     title insurance agent, direct operation, or escrow officer from

2-14     depositing funds of a principal, client, or other person in a

2-15     separate interest-bearing account established on behalf of and for

2-16     the benefit of the principal, client, or person if a written

2-17     agreement between the title insurance company, title insurance

2-18     agent, direct operation, or escrow officer and the party depositing

2-19     the funds expressly provides for a separate account not subject to

2-20     this article and for interest earned on the account to be paid as

2-21     provided by that agreement.

2-22           (f)  This article does not require a title insurance company,

2-23     title insurance agent, direct operation, or escrow officer to

2-24     disclose to a client information relating to a pooled

2-25     interest-bearing trust account established under this article.

2-26           SECTION 2.  This Act takes effect September 1, 1997.

2-27           SECTION 3.  The importance of this legislation and the

 3-1     crowded condition of the calendars in both houses create an

 3-2     emergency and an imperative public necessity that the

 3-3     constitutional rule requiring bills to be read on three several

 3-4     days in each house be suspended, and this rule is hereby suspended.