77R10428 SGA-F
By Marchant H.B. No. 3567
Substitute the following for H.B. No. 3567:
By Averitt C.S.H.B. No. 3567
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to permitting land mortgage loans from the veterans' land
1-3 fund.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 161.001, Natural Resources Code, is
1-6 amended to read as follows:
1-7 Sec. 161.001. DEFINITIONS. (a) In this chapter:
1-8 (1) "Board" means the Veterans' Land Board.
1-9 (2) "Commissioner" means the Commissioner of the
1-10 General Land Office.
1-11 (3) "Land office" means the General Land Office.
1-12 (4) "Lending institution" means a bank, trust company,
1-13 savings bank, national banking association, savings and loan
1-14 association, building and loan association, mortgage banker,
1-15 mortgage company, credit union, life insurance company, or other
1-16 financial institution that customarily provides service or aids in
1-17 the financing of mortgages on land, if that financial institution
1-18 has been approved for participation in the program by the board.
1-19 The term includes a holding company for any of the financial
1-20 institutions described by this subdivision.
1-21 (5) "Program" means the Veterans' Land Program.
1-22 (6) [(5)] "Fund" means the veterans' land fund.
1-23 (7) [(6)] "Bonds" means general obligation bonds
1-24 issued by the board for the purpose of funding the program.
2-1 (8) [(7)] "Veteran" means a person who:
2-2 (A)(i) served not less than 90 continuous days,
2-3 unless sooner discharged by reason of a service-connected
2-4 disability, on active duty in the Army, Navy, Air Force, Coast
2-5 Guard, United States Public Health Service (as constituted under 42
2-6 U.S.C. Section 201 et seq.), or Marine Corps of the United States
2-7 after September 16, 1940, and who on the date of filing an
2-8 application under the program has not been dishonorably discharged
2-9 from the branch of the service in which the person served;
2-10 (ii) has at least 20 years of active or
2-11 reserve military service as computed when determining the person's
2-12 eligibility to receive retired pay under applicable federal law;
2-13 or
2-14 (iii) has enlisted or received an
2-15 appointment in the Texas National Guard, who has completed all
2-16 initial active duty training required as a condition of the
2-17 enlistment or appointment, and who on the date of filing the
2-18 person's application has not been dishonorably discharged from the
2-19 Texas National Guard;
2-20 (B) at the time of the person's enlistment,
2-21 induction, commissioning, appointment, or drafting was a bona fide
2-22 resident of this state or has resided in this state at least five
2-23 years immediately before the date of filing an application under
2-24 this chapter; and
2-25 (C) at the time of the person's application
2-26 under this chapter is a bona fide resident of this state. The term
2-27 includes the unmarried surviving spouse of a veteran who died or
3-1 who is identified as missing in action if the deceased or missing
3-2 veteran meets the requirements of this section, with the exception
3-3 that the deceased or missing veteran need not have served 90
3-4 continuous days under Paragraph (A)(i) of this subdivision, and if
3-5 the deceased or missing veteran was a bona fide resident of this
3-6 state at the time of enlistment, induction, commissioning,
3-7 appointment, or drafting.
3-8 (b) Notwithstanding Subdivision (8) [(7)] of Subsection (a)
3-9 of this section, the board may by rule change the definition of
3-10 "veteran" as necessary or appropriate to protect the best interests
3-11 of the program.
3-12 SECTION 2. Chapter 161, Natural Resources Code, is amended by
3-13 adding Subchapter K to read as follows:
3-14 SUBCHAPTER K. LAND MORTGAGE LOANS
3-15 Sec. 161.501. DEFINITION. In this subchapter, "loan" means
3-16 a veterans' land loan made or acquired by the board under this
3-17 subchapter and secured by a mortgage on a veteran's land.
3-18 Sec. 161.502. PURPOSE. This subchapter provides an
3-19 alternative method for a veteran to purchase land from the board
3-20 under the Veterans' Land Program using a purchase money mortgage
3-21 instead of a contract for deed.
3-22 Sec. 161.503. ADDITIONAL MONEY AND INTERESTS INCLUDED IN
3-23 VETERANS' LAND FUND. In addition to the items listed in Section
3-24 161.171, the veterans' land fund also includes:
3-25 (1) any interest of the board in land mortgage loans
3-26 issued under this subchapter, including any insurance on the loans
3-27 or on the land;
4-1 (2) the proceeds derived from the sale or other
4-2 disposition of the board's interest in land mortgage loans;
4-3 (3) income, rents, and any other pecuniary benefit
4-4 received by the board as a result of making land mortgage loans;
4-5 (4) interest received from investments of money
4-6 described by this section; and
4-7 (5) any equitable interest in properties encumbered
4-8 under the program and attributable to the fund.
4-9 Sec. 161.504. LAND MORTGAGE LOANS. (a) The board shall make
4-10 or acquire land mortgage loans with money from the fund in
4-11 accordance with this subchapter and the rules adopted by the board.
4-12 (b) To qualify for a loan under this subchapter, a person
4-13 must be a veteran at the time the person applies for the loan. If
4-14 an eligible veteran dies after filing an application, the surviving
4-15 spouse may complete the transaction.
4-16 (c) The final principal payment on any loan under this
4-17 subchapter shall be made not later than the 40th anniversary of the
4-18 date the loan was made. The board shall determine the maximum
4-19 principal amount of loans to any veteran that may be outstanding at
4-20 any time.
4-21 (d) To minimize losses on the nonpayment of loans by
4-22 veterans, the board shall obtain insurance covering:
4-23 (1) at least 50 percent of all losses anticipated in
4-24 connection with veteran payment defaults on loans secured by first
4-25 or second mortgages, based on the advice of one or more qualified
4-26 consultants to the board as to the potential losses that may be
4-27 reasonably expected on the loans as determined by analysis,
5-1 including actual experience in the land mortgage lending industry
5-2 on similar types of mortgage loans; or
5-3 (2) at least 50 percent of the outstanding principal
5-4 amount of all loans.
5-5 (e) All fees to be charged to a veteran receiving a loan
5-6 under this subchapter must be approved by the board. The board may
5-7 enter into contracts with lending institutions to assist in
5-8 processing, originating, servicing, or administering loans under
5-9 this subchapter. Any fees and expenses incurred in connection with
5-10 a loan, including the cost of insurance, may be charged to the
5-11 veteran and made a part of the veteran's payments.
5-12 (f) The board by rule may determine the number of loans that
5-13 a veteran may receive under this subchapter.
5-14 (g) The board may permit a veteran to combine a loan under
5-15 this subchapter with a home mortgage loan under Chapter 162 and may
5-16 prescribe the amounts and forms of those loans, provided that:
5-17 (1) the land mortgage loan is funded from amounts on
5-18 deposit in the fund; and
5-19 (2) the home mortgage loan is not funded from those
5-20 amounts.
5-21 Sec. 161.505. INTEREST RATE. A loan under this subchapter
5-22 shall bear a fixed, variable, floating, or other rate or rates of
5-23 interest determined by the board. The board may set the interest
5-24 rate or rates to provide a margin over the rate paid by the board
5-25 on the bonds issued under this chapter. The difference between the
5-26 cost of the money to the board and the interest rate or rates
5-27 charged to a veteran may be used in whole or in part to defray the
6-1 expense of administering the program. To ensure the maximum
6-2 benefit of the program to the veteran, the board shall adopt rules
6-3 relative to the fees, charges, and interest rates charged by the
6-4 lending institutions on the financing of the land with money other
6-5 than from the fund and shall limit to the maximum extent
6-6 practicable the fees, charges, and interest rates to those
6-7 collected by the lending institution in the normal course of the
6-8 institution's land mortgage lending business.
6-9 Sec. 161.506. SECURITY FOR LOAN. Money may not be disbursed
6-10 in connection with a loan under this subchapter unless the loan is
6-11 secured by a mortgage, deed of trust, or other lien on the land. A
6-12 mortgage retained by or a deed of trust to the board or any other
6-13 lien may be a participation in a lien securing any other loan for
6-14 the purchase of the property, including a lien on a home as
6-15 described by Chapter 162. Payments to retire the loan shall be
6-16 made at times determined by the board.
6-17 Sec. 161.507. INITIAL PAYMENT OR EQUITY. The board may
6-18 require an initial payment on a loan under this subchapter or may
6-19 require an investment in the land by the veteran in an amount or
6-20 amounts set by the rules of the board.
6-21 Sec. 161.508. TIME LIMITATION ON TRANSFER. (a) A veteran
6-22 may not lease, transfer, sell, or convey in whole or in part any
6-23 interest in land against which there is a mortgage, deed of trust,
6-24 or any other lien securing a loan under this subchapter unless the
6-25 veteran has:
6-26 (1) owned the land for a three-year period beginning
6-27 on the date of the purchase of the land; and
7-1 (2) complied with the requirements of this subchapter
7-2 and the rules of the board.
7-3 (b) After the conclusion of the three-year period, the land
7-4 may be transferred, sold, or conveyed subject to any lien securing
7-5 a loan under this subchapter at any time if all mature interest,
7-6 principal, and taxes have been paid, the requirements of this
7-7 subchapter and the rules of the board have been met, and the
7-8 approval of the board has been obtained.
7-9 (c) The board may waive the time limitation of Subsection
7-10 (a):
7-11 (1) on the death, bankruptcy, financial incapacity, or
7-12 divorce of the veteran;
7-13 (2) if a veteran is forced to move because of a change
7-14 in the veteran's employment or because the veteran's home on the
7-15 land is condemned for a reason not attributable to the veteran; or
7-16 (3) at any other time the board considers a waiver to
7-17 be in the best interest of the program.
7-18 (d) If the requirements of Subsection (a) are not met and
7-19 the board does not waive the time limitation as provided by
7-20 Subsection (c), the board by rule may provide for the escalation of
7-21 the interest rate on the loan to a higher rate of interest, the
7-22 acceleration of all principal and interest on the loan, or any
7-23 other remedy the board considers appropriate.
7-24 Sec. 161.509. FORECLOSURE AND RESALE. The board shall adopt
7-25 rules and procedures for the foreclosure and resale of land
7-26 financed with a loan under this subchapter.
7-27 Sec. 161.510. INTEREST RATE ON DELINQUENT PRINCIPAL AND
8-1 INTEREST. Principal and interest that become delinquent shall bear
8-2 interest at a rate fixed by the board.
8-3 SECTION 3. This Act takes effect September 1, 2001.