By Marchant H.B. No. 3567
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
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. Subchapter K is hereby added to Chapter 161,
1-6 Natural Resources Code, to read as follows:
1-7 SUBCHAPTER K. LAND LOANS
1-8 Sec. 161.501. PURPOSE OF SUBCHAPTER. This Subchapter K is
1-9 added to Chapter 161 in order to provide the Board with additional
1-10 powers in connection with the administration and operation of the
1-11 fund found in the previous Subchapters, and it shall be liberally
1-12 construed to effectuate such purpose.
1-13 Sec. 161.502. ADDITIONAL DEFINITIONS. In this chapter, in
1-14 addition to the definitions Section 161.001:
1-15 (a) "Lending institution" means a bank, trust company,
1-16 savings bank, national banking association, savings and loan
1-17 association, building and loan association, mortgage banker,
1-18 mortgage company, credit union, life insurance company, or other
1-19 financial institution that customarily provides service or aids in
1-20 the financing of mortgages on single-family residential housing
1-21 which has been approved for participation in the program by the
1-22 board. The term includes a holding company for any of the
1-23 foregoing.
2-1 (b) "Loan" means a veterans' land loan made or acquired by
2-2 the board under this chapter secured by a mortgage on a veteran's
2-3 land.
2-4 Sec. 161.503. ADDITIONAL MONEY AND INTERESTS INCLUDED IN THE
2-5 VETERANS' LAND FUND. (a) In addition to the items listed in
2-6 Section 161.171, the veterans' land fund shall also include:
2-7 (1) any interest of the board in land loans made from
2-8 money in the fund to veterans pursuant to this subchapter including
2-9 any title insurance thereon or on the land;
2-10 (2) the proceeds derived from the sale or other
2-11 disposition of the board's interest in land mortgage loans;
2-12 (3) the money attributable to any bonds issued and
2-13 sold by the board to provide money for the fund which shall include
2-14 but shall not be limited to the proceeds from the issuance and sale
2-15 of such bonds;
2-16 (4) income, rents, and any other pecuniary benefit
2-17 received by the board as a result of making these loans;
2-18 (5) sums received by way of indemnity or forfeiture
2-19 for the failure of any bidder for the purchase of any such bonds to
2-20 comply with the person's bid and accept and pay for such bonds and
2-21 amounts received by the board under bond enhancement agreements
2-22 with respect to the bonds;
2-23 (6) interest received from investments of any such
2-24 money; and
2-25 (7) any equitable interest in properties encumbered
2-26 under this program and attributable to the fund.
3-1 (b) Except as otherwise provided by law, money in the fund
3-2 shall be deposited in the State Treasury to the credit of the Fund.
3-3 Sec. 161.504. LOANS. (a) The board shall make or acquire
3-4 loans with money from the fund in accordance with this subchapter
3-5 and the rules adopted by the board.
3-6 (b) To qualify for a loan under this subchapter, a person
3-7 must be a veteran at the time the persons applies for the loan. If
3-8 an eligible veteran dies after filing an application, the surviving
3-9 spouse may complete the transaction.
3-10 (c) The final principal payment on any loan under this
3-11 subchapter shall be made not later than 40 years after the date of
3-12 the loan. The board shall determine the maximum principal amount
3-13 of loans to any veteran that may be outstanding at any time.
3-14 (d) The board shall obtain insurance covering at least 50
3-15 percent of all losses anticipated in connection with veteran
3-16 payment defaults on loans secured by first or second mortgages,
3-17 based upon the advice of one or more qualified consultants to the
3-18 board as to potential losses which may be reasonably expected on
3-19 the loans as determined by analysis, including but not limited to
3-20 actual experience in the residential mortgage lending industry on
3-21 similar types of mortgage loans, or, in the alternative, the board
3-22 shall obtain insurance which shall insure repayment of at least 50
3-23 percent of the outstanding principal amount of all loans in the
3-24 event of the nonpayment of the loans by the veterans.
3-25 (e) All fees to be charged to a veteran receiving a loan
3-26 under this subchapter must be approved by the board. The board may
4-1 enter into contracts with lending institutions to assist in
4-2 processing, originating, servicing, or administering loans under
4-3 this chapter. Any fees and expenses incurred in connection with a
4-4 loan, including the cost of insurance, may be charged to the
4-5 veteran and made a part of the veteran's payments.
4-6 (f) The board may by rule determine, from time to time, the
4-7 number of loans that a veteran may receive under this subchapter.
4-8 (g) The board may permit a veteran to combine a loan under
4-9 this subchapter with a home mortgage loan for a home under Chapter
4-10 162, Natural Resources Code, and prescribe the amounts and forms
4-11 thereof, provided that the loan is funded from amounts on deposit
4-12 in the fund and provided that the home mortgage loan may not be
4-13 funded from amounts in the fund.
4-14 Sec. 161.505. INTEREST RATE. A loan under this subchapter
4-15 shall bear a fixed, variable, floating, or other rate or rates of
4-16 interest determined by the board. The board may set the interest
4-17 rate or rates to provide a margin over the rate paid by the board
4-18 on its bonds issued under this subchapter. The difference between
4-19 the cost of the money to the board and the interest rate or rates
4-20 charged to a veteran may be used in whole or in part to defray the
4-21 expense of administering the program. To assure the maximum
4-22 benefit of the program to the veteran, the board shall adopt rules
4-23 relative to the fees, charges, and interest rates charged by the
4-24 lending institutions on the financing of the land with money other
4-25 than from the fund and shall limit to the maximum extent practical
4-26 such fees, charges, and interest rates to those which would be
5-1 collected by the lending institution in the normal course of its
5-2 mortgage lending business.
5-3 Sec. 161.506. SECURITY FOR THE LOAN. No disbursement of
5-4 funds on a loan under this subchapter shall be made unless the loan
5-5 is secured by a mortgage, deed of trust, or other lien on the land.
5-6 A mortgage retained by or a deed of trust to the board or any other
5-7 lien may be a participation in a lien securing any other loan for
5-8 the purchase of the property, including a lien for a home as
5-9 described in Chapter 162, Natural Resources Code. Payments to
5-10 retire the loan shall be made at times determined by the board.
5-11 Sec. 161.507. INITIAL PAYMENT OR EQUITY. The board may
5-12 require an initial payment on a loan or may require an investment
5-13 in the land by the veteran in an amount or amounts set by the
5-14 board's rules under this subchapter.
5-15 Sec. 161.508. TIME LIMIT ON TRANSFER. (a) Land or any
5-16 interest therein, against which there is a mortgage, deed of trust,
5-17 or any other lien securing a loan under this subchapter may not be
5-18 leased, transferred, sold, or conveyed in whole or in part until
5-19 the original veteran purchaser has owned the land for a period of
5-20 three years from the date of the purchase of the land and complied
5-21 with the terms and conditions of this chapter and the rules of the
5-22 board.
5-23 (b) After the three-year period, land may be transferred,
5-24 sold, or conveyed subject to any lien securing a loan under this
5-25 subchapter at any time if all mature interest, principal, and taxes
5-26 have been paid, the terms and conditions of this chapter and rules
6-1 of the board have been met, and the approval of the board has been
6-2 obtained.
6-3 (c) The board may waive the time limitation of Subsection
6-4 (a) of this section upon the death, bankruptcy, financial
6-5 incapacity, or divorce of the veteran or in the event a veteran is
6-6 forced to move due to a change in employment or because his home is
6-7 condemned through no fault of the veteran or at any other time it
6-8 deems a waiver to be in the best interest of the program.
6-9 (d) In the event the requirements of Subsection (a) of this
6-10 section fail to be met and the board does not waive the time
6-11 limitations as provided in Subsection (c) of this section, the
6-12 board may provide in its rules for the escalation of the interest
6-13 rate on the loan to a higher rate of interest or the acceleration
6-14 of all principal and interest on the loan or such other remedy as
6-15 the board may in its discretion deem appropriate.
6-16 Sec. 161.509. FORECLOSURE AND RESALE. The board shall adopt
6-17 rules providing for the procedures and the rules for foreclosure
6-18 and resale of land financed with a loan under this subchapter.
6-19 Sec. 161.510. INTEREST RATE ON DELINQUENT PRINCIPAL AND
6-20 INTEREST. Principal and interest that become delinquent shall bear
6-21 interest at a rate determined by the board.
6-22 SECTION 2. This Act takes effect September 1, 2001.