HBA-SEP H.B. 2834 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2834 By: Grusendorf Financial Institutions 3/22/2001 Introduced BACKGROUND AND PURPOSE The current real property foreclosure process reflects business practices that were in place when the local Texas banks or savings and loan associations sold its local customers' residential or commercial loans to the secondary market such as Fannie Mae, Freddie Mac, and Ginnie Mae for residential mortgages and Wall Street for commercial loans. Bringing the present foreclosure statement into compliance with current business practices may provide for a more efficient process of property foreclosure. House Bill 2834 sets forth provisions regarding the duties of a trustee under a mortgage and the possession of property after a nonjudicial foreclosure sale. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2834 amends the Property Code to set forth provisions regarding the duties of a trustee under a mortgage including the appointment of additional or substitute trustees, a trustee's entitled fee, holding of excess proceeds, and the release of liability for a trustee when excess proceeds are given to a district court to determine who receives the proceeds. The bill provides that a trustee is liable for false representations and false promises made in a real estate transaction and requires a trustee holding abandoned excess proceeds on June 30 to file a report on or before the following November 1 and deliver the proceeds to the comptroller of public accounts. The bill also provides that the condition of foreclosed property sold at a public sale is "as is," a person with interest in the foreclosed property may serve a statement relating to the validity of a public sale, the trustee may rescind the foreclosure of the property after receiving the statement, and the cash purchaser of property acquired at a rescinded sale is entitled to the return of the sales price plus interest (Secs. 51.007 and 51.008). Notice of a sale of foreclosed real property must contain the name and street address of each trustee and can be posted on an Internet website prominently described in each notice filed with the office of the county clerk of each county in which the property is located or served on each debtor by the mortgagee (Sec. 51.002). The bill sets forth provisions regarding the requirements of an obligor of a mortgage or an occupant of property that is sold at a public sale and who continues to reside on or control the property to continue to pay an amount equal to the mortgage when filing suit to regain control of the property and sets forth provisions regarding actions to be taken if this requirement is not met and when all legal proceedings become final (51.009). EFFECTIVE DATE September 1, 2001.