By West S.B. No. 401 77R4459 DWS-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to counseling in connection with a high cost home loan. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter E, Chapter 341, Finance Code, is 1-5 amended by adding Sections 341.407 and 341.408 to read as follows: 1-6 Sec. 341.407. COUNSELING IN CONNECTION WITH HIGH COST HOME 1-7 LOAN. (a) In this section, "high cost home loan" means a loan 1-8 that: 1-9 (1) is made to one or more individuals for personal, 1-10 family, or household purposes; 1-11 (2) is secured in whole or part by: 1-12 (A) a manufactured home, as defined by Section 1-13 347.002, used or to be used as the borrower's principal residence; 1-14 or 1-15 (B) real property improved by a dwelling 1-16 designed for occupancy by four or fewer families and used or to be 1-17 used as the borrower's principal residence; 1-18 (3) has a principal amount of less than $240,000; 1-19 (4) is not: 1-20 (A) a reverse mortgage; or 1-21 (B) an open-end account, as defined by Section 1-22 301.002; and 1-23 (5) is a credit transaction described by 12 C.F.R. 1-24 Section 226.32, as amended, except that the term includes: 2-1 (A) a residential mortgage transaction, as 2-2 defined by 12 C.F.R. Section 226.2, as amended, if the transaction 2-3 meets the description of 12 C.F.R. Section 226.32(a)(1), as 2-4 amended; and 2-5 (B) a loan for which: 2-6 (i) the total loan amount is $20,000 or 2-7 more; and 2-8 (ii) the total points and fees payable by 2-9 the consumer at or before loan closing will exceed five percent of 2-10 the total loan amount. 2-11 (b) A lender may not make a high cost home loan to a 2-12 borrower who has not received counseling on the advisability of and 2-13 alternatives to the loan from a counselor certified by the United 2-14 States Department of Housing and Urban Development. 2-15 Sec. 341.408. PENALTIES FOR FAILURE TO PROVIDE COUNSELING. 2-16 (a) A person who violates Section 341.407 is liable to the 2-17 aggrieved borrower for: 2-18 (1) the actual damages caused by the violation; 2-19 (2) punitive damages not to exceed $10,000 in an 2-20 action brought by the aggrieved borrower; and 2-21 (3) court costs. 2-22 (b) In addition to the other liabilities prescribed by this 2-23 section a license issued under this subtitle that is held by a 2-24 person who violates Section 341.407 is subject to revocation or 2-25 suspension. 2-26 SECTION 2. This Act takes effect September 1, 2001, and 2-27 applies only to a loan closed on or after that date.