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.