By Moncrief, et al.                             S.B. No. 1418

      75R4804 BEM-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to a mortgage guaranty insurance policy.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Article 21.50, Insurance Code, is amended by

 1-5     adding Sections 1B and 1C to read as follows:

 1-6           Sec. 1B.  NOTICE TO BORROWER.  A mortgage guaranty insurer

 1-7     shall provide annually to the borrower a copy of the following

 1-8     written notice printed in at least 10-point bold-faced type:

 1-9           "NOTICE TO BORROWER:  If the principal balance of the loan on

1-10     your property is 80 percent or less of its appraised fair market

1-11     value, you may be entitled to cancel or not renew your mortgage

1-12     guaranty insurance policy and receive a refund of any unearned

1-13     premiums on the policy following the cancellation or nonrenewal.

1-14     Your loan payments may be reduced as a result of a cancellation or

1-15     nonrenewal of your policy.  A request to cancel or nonrenew your

1-16     policy must be made to your lender."

1-17           Sec. 1C.  REFUND.  The borrower shall be treated as the

1-18     purchaser of the policy of mortgage guaranty insurance for the

1-19     purpose of a refund of any unearned premiums on cancellation of the

1-20     policy.

1-21           SECTION 2.  (a)  This Act takes effect September 1, 1997.

1-22           (b)  Section 1C, Article 21.50, Insurance Code, as added by

1-23     this Act, applies to an insurance policy that is delivered, issued

1-24     for delivery, or renewed on or after January 1, 1998.  A policy

 2-1     delivered, issued for delivery, or renewed before January 1, 1998,

 2-2     is governed by the law as it existed immediately before the

 2-3     effective date of this Act, and that law is continued in effect for

 2-4     that purpose.

 2-5           SECTION 3.  The importance of this legislation and the

 2-6     crowded condition of the calendars in both houses create an

 2-7     emergency and an imperative public necessity that the

 2-8     constitutional rule requiring bills to be read on three several

 2-9     days in each house be suspended, and this rule is hereby suspended.