By Burnam H.B. No. 3118
76R7267 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to private mortgage insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1B, Article 21.50, Insurance Code, is
1-5 transferred to Subchapter E, Chapter 21, Insurance Code,
1-6 redesignated as Article 21.50A, and amended to read as follows:
1-7 Art. 21.50A. PRIVATE MORTGAGE INSURANCE
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Borrower" means a mortgagor, as that term is
1-10 defined by 12 U.S.C. Section 4901.
1-11 (2) "Lender" means a mortgagee or a servicer of a
1-12 loan, as those terms are defined by 12 U.S.C. Section 4901.
1-13 (3) "Private mortgage insurance" has the meaning
1-14 assigned by 12 U.S.C. Section 4901.
1-15 (4) "Residential mortgage transaction" has the meaning
1-16 assigned by 12 U.S.C. Section 4901.
1-17 Sec. 2. RIGHTS OF BORROWERS. (a) A borrower who has been
1-18 required to purchase private mortgage insurance in connection with
1-19 a residential mortgage transaction may cancel the coverage on the
1-20 earlier of:
1-21 (1) the cancellation date established under 12 U.S.C.
1-22 Section 4901 et seq., if the borrower complies with that law; or
1-23 (2) the date on which the borrower submits
1-24 satisfactory evidence to the lender that the principal balance of
2-1 the loan is 80 percent or less of the:
2-2 (A) fair market appraised value of the
2-3 residential real property; or
2-4 (B) appraised value of the residential real
2-5 property for ad valorem tax purposes as determined by the
2-6 appropriate chief appraiser.
2-7 (b) Cancellation of private mortgage insurance under
2-8 Subsection (a)(2) of this section is effective on the first day of
2-9 the first month that begins at least five days after the date the
2-10 borrower submits the satisfactory evidence to the lender.
2-11 (c) A borrower who cancels private mortgage insurance is not
2-12 required to pay any amount attributable to a premium for private
2-13 mortgage insurance after the date determined under Subsection (b)
2-14 of this section.
2-15 (d) If a lender receives a refund of an unearned private
2-16 mortgage insurance premium paid by a borrower, the lender shall
2-17 remit the refund to the borrower not later than the 10th business
2-18 day after the date on which the lender receives the refund.
2-19 (e) A lender or private mortgage insurer may not charge the
2-20 borrower any fee in connection with cancellation of private
2-21 mortgage insurance under Subsection (a) of this section.
2-22 Sec. 3 [1B]. NOTICE TO BORROWER. [(a)] A lender that
2-23 requires a borrower to purchase private mortgage [guaranty]
2-24 insurance shall provide annually to the borrower a copy of the
2-25 following written notice printed in at least 10-point bold-faced
2-26 type:
2-27 "NOTICE OF RIGHT TO CANCEL OR TERMINATE PRIVATE MORTGAGE
3-1 INSURANCE IN CONNECTION WITH A RESIDENTIAL MORTGAGE TRANSACTION:
3-2 Federal and state law grants you certain rights with respect to the
3-3 purchase of private mortgage insurance. If you currently pay
3-4 private mortgage insurance premiums in connection with a
3-5 single-family dwelling that is your primary residence, under Texas
3-6 law the lender must [you may have the right to] cancel the
3-7 insurance and you may cease paying premiums if you present a
3-8 current fair market or ad valorem tax appraisal from which it is
3-9 shown that the principal balance of your loan is 80 percent or less
3-10 of the appraised value of your home. In addition, federal law
3-11 also gives you certain rights to cancellation or termination based
3-12 on the principal balance of your loan. A more detailed explanation
3-13 of your rights under the federal law is attached to this notice.
3-14 If you qualify for cancellation or termination of the insurance
3-15 under either law, your [This would permit you to make a lower]
3-16 total monthly mortgage payment would be reduced and you may [to
3-17 possibly] receive a refund of any unearned premiums on the policy.
3-18 [In most cases, you have the right to cancel private mortgage
3-19 insurance if the principal balance of your loan is 80 percent or
3-20 less of the current fair market appraised value of your home.] If
3-21 you want to learn whether you are eligible to cancel this
3-22 insurance, please contact us at (address and telephone number of
3-23 lender) or the Texas Department of Insurance consumer help line at
3-24 (the appropriate toll-free telephone number)."
3-25 [(b) If a lender receives a refund of an unearned mortgage
3-26 guaranty insurance premium paid by a borrower, the lender shall
3-27 remit the refund to the borrower not later than the 10th business
4-1 day after the date on which the lender receives the refund.]
4-2 [(c) If federal law requires a lender to provide a borrower
4-3 with a written notice containing substantially the same information
4-4 required by Subsection (a) of this section, a lender who provides
4-5 the notice required by federal law within the period prescribed by
4-6 federal law satisfies the notice requirement of Subsection (a) of
4-7 this section.]
4-8 [(d) In this section, "lender" has the meaning assigned by
4-9 Section 1(1), Article 21.48A, of this code.]
4-10 SECTION 2. This Act takes effect September 1, 1999.
4-11 SECTION 3. This Act applies only to private mortgage
4-12 insurance purchased in connection with a residential mortgage
4-13 transaction that occurs on or after the effective date of this Act.
4-14 A residential mortgage transaction that occurs before the effective
4-15 date of this Act is governed by the law as it existed immediately
4-16 before that date, and this law is continued in effect for that
4-17 purpose.
4-18 SECTION 4. The importance of this legislation and the
4-19 crowded condition of the calendars in both houses create an
4-20 emergency and an imperative public necessity that the
4-21 constitutional rule requiring bills to be read on three several
4-22 days in each house be suspended, and this rule is hereby suspended.