SRC-MWN S.B. 401 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 401
77R4459 DWS-FBy: West, Royce
Business & Commerce
4/18/2001
As Filed


DIGEST AND PURPOSE 

As proposed, S.B. 401 requires borrowers receiving high cost home loans to
receive home loan counseling from a United States Department of Housing and
Urban Development (HUD) certified counselor as a condition of getting a
loan. 

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 341E, Finance Code, by adding Sections 341.407
and 341.408, as follows: 

Sec. 341.407. COUNSELING IN CONNECTION WITH HIGH COST HOME LOAN. Defines
"high cost home loan." Prohibits a lender from making a high cost home loan
to a borrower who has not received counseling on the advisability of and
alternatives to the loan from a counselor certified by the United States
Department of Housing and Urban Development. 

Sec. 341.408. PENALTIES FOR FAILURE TO PROVIDE COUNSELING. Provides that a
person who violates Section 341.407 is liable to the aggrieved borrower for
the actual damages caused by the violation; punitive damages not to exceed
$10,000 in an action brought by the aggrieved borrower; and court costs.
Provides that a license issued under this subtitle that is held by a person
who violates Section 341.407, in addition to other liabilities prescribed
by this section, is subject to revocation or suspension. 

SECTION 2. Effective date: September 1, 2001
                      Makes application of this Act prospective.