1-1 AN ACT
1-2 relating to provision by the Veterans Land Board of loans to
1-3 veterans for the purchase of land.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 161.171(a), Natural Resources Code, is
1-6 amended to read as follows:
1-7 (a) The veterans' land fund shall include:
1-8 (1) land purchased by the board from money in the
1-9 fund;
1-10 (2) money attributable to general obligation bonds
1-11 issued and sold by the board, including proceeds from the issuance
1-12 and sale of the bonds;
1-13 (3) money received from the sale or resale of land or
1-14 rights in land purchased with the proceeds from the general
1-15 obligation bonds;
1-16 (4) money received from the sale or resale of land or
1-17 rights in land purchased with other money attributable to the
1-18 general obligation bonds;
1-19 (5) proceeds derived from the sale or other
1-20 disposition of the board's interest in:
1-21 (A) contracts for the sale of land or rights in
1-22 land; or
1-23 (B) a loan made under Subchapter K;
1-24 (6) interest and penalties received from the sale or
2-1 resale of [the] land purchased under this chapter or from rights in
2-2 the land;
2-3 (7) bonuses, income, rents, royalties, and any other
2-4 pecuniary benefit received by the board from:
2-5 (A) [the] land purchased under this chapter; or
2-6 (B) loans made under Subchapter K;
2-7 (8) money received as indemnity or forfeiture for the
2-8 failure of any bidder for purchase of general obligation bonds to
2-9 comply with the person's bid and accept and pay for the bonds or
2-10 for the failure of a bidder for purchase of land comprising a part
2-11 of the fund to comply with the person's bid and accept and pay for
2-12 the land and amounts received by the board under bond enhancement
2-13 agreements with respect to the bonds; [and]
2-14 (9) interest received from investments of this money;
2-15 (10) any interest of the board in a loan made under
2-16 Subchapter K using money in the fund, including any title insurance
2-17 related to the loan or land purchased with the loan; and
2-18 (11) any equitable interest in property encumbered
2-19 under Subchapter K and attributable to the fund.
2-20 SECTION 2. Chapter 161, Natural Resources Code, is amended by
2-21 adding Subchapter K to read as follows:
2-22 SUBCHAPTER K. LAND LOANS
2-23 Sec. 161.501. PURPOSE OF SUBCHAPTER; CONSTRUCTION. The
2-24 purpose of this subchapter is to authorize the board to provide
2-25 loans to veterans for the purchase of land that are secured by a
2-26 mortgage, deed of trust, or other lien on the land. This subchapter
2-27 shall be liberally construed to effect that purpose.
3-1 Sec. 161.502. DEFINITIONS. In this subchapter:
3-2 (1) "Lending institution" means a bank, savings bank,
3-3 savings and loan association, credit union, trust company, mortgage
3-4 banker, mortgage company, life insurance company, or other
3-5 financial institution that customarily provides service or aids in
3-6 the financing of mortgages on single-family residential housing, or
3-7 a holding company for one of those institutions.
3-8 (2) "Loan" means a veterans' land loan made or
3-9 acquired by the board under this subchapter secured by a mortgage,
3-10 deed of trust, or other lien on the land purchased with the
3-11 proceeds of the loan.
3-12 Sec. 161.503. LOANS. (a) In addition to purchasing land
3-13 under Subchapters F and G, the board shall make or acquire loans
3-14 with money from the fund to finance land purchases by eligible
3-15 persons in accordance with this subchapter and rules adopted by the
3-16 board.
3-17 (b) The board may enter into contracts with lending
3-18 institutions to assist in processing, originating, servicing, or
3-19 administering loans under this subchapter.
3-20 (c) The board shall obtain insurance:
3-21 (1) covering at least 50 percent of all losses
3-22 anticipated in connection with payment defaults on loans secured by
3-23 first or second mortgages, based on the advice of one or more
3-24 qualified consultants to the board as to potential losses that may
3-25 be reasonably expected on the loans as determined by analysis that
3-26 includes actual experience in the residential mortgage lending
3-27 industry on similar types of mortgage loans; or
4-1 (2) that insures repayment of at least 50 percent of
4-2 the outstanding principal amount of all loans made under this
4-3 subchapter if the loans are not repaid by the recipients.
4-4 (d) The board shall adopt rules as necessary to implement
4-5 this subchapter.
4-6 Sec. 161.504. ELIGIBILITY FOR LOAN. (a) To qualify for a
4-7 loan under this subchapter, a person must be a veteran at the time
4-8 the person applies for the loan. If an eligible veteran dies after
4-9 filing an application for a loan, the veteran's surviving spouse
4-10 may complete the transaction.
4-11 (b) The board by rule may determine the number of loans that
4-12 a person may receive under this subchapter.
4-13 Sec. 161.505. SECURITY FOR LOAN. A disbursement of money on
4-14 a loan may not be made unless the loan is secured by a mortgage,
4-15 deed of trust, or other lien on the land purchased with the
4-16 proceeds of the loan. A mortgage, deed of trust, or other lien may
4-17 be a participation in a lien securing any other loan for the
4-18 purchase of the property, including a lien securing a home loan
4-19 under Chapter 162.
4-20 Sec. 161.506. INITIAL PAYMENT OR EQUITY. The board may
4-21 require an initial payment on a loan or may require an investment
4-22 in the land by the loan recipient in an amount set by the board by
4-23 rule.
4-24 Sec. 161.507. LOAN PAYMENTS. (a) The final principal payment
4-25 on a loan shall be made not later than the 40th anniversary of the
4-26 date of the loan.
4-27 (b) The board shall determine the maximum principal amount
5-1 of loans to the same eligible person that may be outstanding at any
5-2 time.
5-3 (c) Payments on the loan must be made at times determined by
5-4 the board.
5-5 Sec. 161.508. FEES; INTEREST. (a) All fees to be charged
5-6 to a person who receives a loan must be approved by the board.
5-7 (b) Any fees or expenses incurred in connection with a loan,
5-8 including the cost of insurance, may be charged to the loan
5-9 recipient and included in the principal amount of the loan.
5-10 (c) A loan must bear a fixed, variable, floating, or other
5-11 rate or rates of interest determined by the board. The board may
5-12 set the interest rate or rates to provide a margin over the rate
5-13 paid by the board on bonds issued by the board under this chapter.
5-14 (d) The difference between the cost of the money to the
5-15 board and the interest rate or rates charged to a loan recipient
5-16 may be used in whole or in part to defray the expense of
5-17 administering the program.
5-18 (e) To ensure the maximum benefit of the program to the loan
5-19 recipient, the board shall adopt rules:
5-20 (1) relating to the fees, charges, and interest rates
5-21 that may be charged by a lending institution in connection with
5-22 financing the purchase of land with money that does not come from
5-23 the fund; and
5-24 (2) limiting to the maximum extent practical the fees,
5-25 charges, and interest rates to the fees, charges, and interest
5-26 rates that would be collected by the lending institution in the
5-27 normal course of the institution's mortgage lending business.
6-1 Sec. 161.509. INTEREST RATE ON DELINQUENT PRINCIPAL AND
6-2 INTEREST. Principal and interest that become delinquent bear
6-3 interest at a rate determined by the board.
6-4 Sec. 161.510. COMBINATION WITH HOME LOAN. The board may:
6-5 (1) permit a person to combine a loan made under this
6-6 subchapter with a home loan made under Chapter 162 if the portion
6-7 of the loan made under this subchapter is funded from amounts on
6-8 deposit in the fund and the portion of the loan made under Chapter
6-9 162 is not funded from amounts in the fund; and
6-10 (2) prescribe the amounts of and forms for a combined
6-11 loan under this section.
6-12 Sec. 161.511. TIME LIMIT ON TRANSFER OF LAND. (a) Except as
6-13 provided by Subsection (c), a recipient of a loan may not lease,
6-14 sell, or otherwise transfer in whole or part land or any interest
6-15 in land against which there is a mortgage, deed of trust, or any
6-16 other lien securing the loan:
6-17 (1) before the third anniversary of the date the
6-18 recipient purchases the land; and
6-19 (2) unless the recipient has complied with any other
6-20 terms and conditions provided by this subchapter and the rules of
6-21 the board.
6-22 (b) After the three-year period prescribed by Subsection
6-23 (a), land may be sold or otherwise transferred, subject to any lien
6-24 securing a loan, if:
6-25 (1) all interest, principal, and taxes that are due
6-26 have been paid;
6-27 (2) the terms and conditions of this subchapter and
7-1 rules of the board have been met; and
7-2 (3) the board approves the sale or other transfer.
7-3 (c) The board may waive the three-year period prescribed by
7-4 Subsection (a):
7-5 (1) in a case of death, bankruptcy, financial
7-6 incapacity, or divorce of the loan recipient;
7-7 (2) if a loan recipient is forced to move because of a
7-8 change in employment or because the recipient's home is condemned
7-9 through no fault of the recipient; or
7-10 (3) at any other time the board considers a waiver to
7-11 be in the best interest of the program.
7-12 Sec. 161.512. INCREASE IN INTEREST RATE; ACCELERATED
7-13 REPAYMENT. If a recipient of a loan does not comply with the
7-14 requirements of Section 161.511(a) and the board does not waive the
7-15 three-year period prescribed by that section, the board by rule may
7-16 provide for:
7-17 (1) an increase in the interest rate on the loan;
7-18 (2) the acceleration of repayment of the principal of
7-19 and interest on the loan; or
7-20 (3) any other remedy the board considers appropriate.
7-21 Sec. 161.513. FORECLOSURE AND RESALE. The board shall adopt
7-22 rules providing procedures governing foreclosure of a lien securing
7-23 a loan.
7-24 SECTION 3. This Act takes effect immediately if it receives
7-25 a vote of two-thirds of all the members elected to each house, as
7-26 provided by Section 39, Article III, Texas Constitution. If this
7-27 Act does not receive the vote necessary for immediate effect, this
8-1 Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3567 was passed by the House on April
27, 2001, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 3567 on May 10, 2001, by the
following vote: Yeas 147, Nays 0, 1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3567 was passed by the Senate, with
amendments, on May 7, 2001, by the following vote: Yeas 29, Nays
0, 1 present, not voting.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor