SRC-AMY H.B. 2396 78(R) BILL ANALYSIS
Senate Research Center H.B. 2396
78R8509 KEG-FBy: Corte (Van de Putte)
Administration
5/8/2003
Engrossed
DIGEST AND PURPOSE
The Veterans Land Board, through its authority in Chapter 161, Natural
Resources Code, provides loans for the purchase of land to eligible
veterans. The Veterans Land Board Land Program has been making land loans
to veterans since 1949 and is the only program of its kind in the nation.
Unlike a traditional land purchase, the veteran decides on a property to
purchase, the VLB then purchases the land for the veteran, and the veteran
repays the VLB. This allows the veteran to purchase the land at a lower
interest rate. Since its inception, the Veterans Land Board has made more
than 100,000 land loans to veterans, and more than 50,000 housing and home
improvement loans worth more than $4,000,000,000.
H.B. 2396 reduces the minimum acreage requirements of VLB land loans from
five acres to one acre. This bill also changes provisions bringing the
board closer to industry standards and streamlines processes, including
increasing the loan amount and making title insurance corrections.
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 Sections 161.212(a), (b), and (c), Natural Resources
Code, as follows:
(a) Requires the Veterans' Land Board (VLB) to have an appraisal, rather
than appraisement, of the property before buying land under the provisions
of this chapter.
(b) Requires a person making an appraisal, rather than an appraiser, on
behalf of VLB to be licensed or certified as an appraiser by the State of
Texas, rather than reasonably qualified.
(c) Requires the appraiser to make a written report to the VLB in a
VLB-required form and manner. Deletes text referring to an affidavit and
its required contents.
SECTION 2. Amends Section 161.214, Natural Resources Code, as follows:
Sec. 161.214. TITLE. (a) Authorizes VLB to require a title insurance
policy or appropriate examination of title of the property, before making
payment for land.
(b) Authorizes VLB to purchase land that has mineral interests outstanding
or is subject to title exceptions acceptable to the VLB. Deletes text
referring to land being subject to outstanding mineral leases and the
requirement that a title be otherwise marketable and good.
SECTION 3. Amends Section 161.227, Natural Resources Code, as follows:
Sec. 161.227. LEASE OF LAND. (a) Includes in the list of leases exempt
from the prohibition that land not be leased for more than 10 years,
leases, whether referred to as such or by certain other titles, for
certain communication towers, which are authorized to be for a term of not
more than 50 years. Makes a nonsubstantive change.
(b) Makes a conforming change.
SECTION 4. Amends Section 161.281(c), Natural Resources Code, to decrease
the acreage below which VLB is prohibited from setting the minimum acreage
required for a veteran to purchase from five acres to one acre.
SECTION 5. Amends Section 161.283(b), Natural Resources Code, to increase
the maximum VLB is allowed to pay for property from $40,000 to $60,000 and
to authorize VLB to pay more if the veteran pays VLB, or VLB's designee,
the additional amount in cash, in accordance with VLB rules.
SECTION 6. Amends Section 161.288, Natural Resources Code, to make a
conforming change.
SECTION 7. Amends Section 161.315, Natural Resources Code, to require the
county clerk to record the notice of forfeiture.
SECTION 8. Amends Section 161.317, Natural Resources Code, as follows:
Sec. 161.317. REINSTATEMENT OF PURCHASE. (a) Replaces gender specific
language with gender neutral language. Authorizes VLB, if a contract is
forfeited more than two times, to require that the purchaser or the
purchaser's vendee pay the account in full, as a condition of
reinstatement.
SECTION. 9. Amends Section 161.320, Natural Resources Code, as follows:
Sec. 161.320. LATE PAYMENTS; DEFAULT INTEREST RATE. (a) Authorizes VLB
to impose charges for late payments.
(b) Authorizes VLB, in addition to charging for late payments under
Subsection (a), to set and impose a default rate of interest on the past
due amounts or the entire unpaid balance. Deletes text referring to
paying delinquent prinicipal and interest at a rate determined by VLB.
SECTION 10. Amends Section 161.323, Natural Resources Code, to authorize
VLB to release an assignor from liability under this section if at least
three years have passed since the approved assignment.
SECTION 11. Amends Section 161.361, Natural Resources Code, as follows:
Sec. 161.361. New heading: DEFINITION. Redefines "person purchasing land
under the program." Deletes definitions for "person in the group" and "the
indebtedness due to the board."
SECTION 12. Amends Sections 161.362(a) and (b), Natural Resources Code,
as follows:
(a) Requires persons purchasing land under the program, rather than each
veteran purchaser, to carry insurance on the improvements on the property
in an amount, rather than under contract of purchase, VLB considers
necessary. Provides that failure to do so will subject the contract to
forfeiture or the mortgage to foreclosure. Deletes a reference to
Subchapter H.
(b) Authorizes VLB to promulgate rules necessary to enforce this
subchapter.
SECTION 13. Amends Section 161.363, Natural Resources Code, as follows:
Sec. 161.363. New heading: INSURANCE CONTRACT. Authorizes VLB to enter
in to a contract, rather than a master contract, or agreement with one or
more insurance companies, rather than life insurance companies, authorized
to do business in this state to provide life, disability, or other
insurance coverage to persons purchasing land under the program, if it is
in the program's best interest. Deletes text referring to cancelling
indebtedness upon death.
SECTION 14. Amends Section 161.366, Natural Resources Code, to provide
that it is not mandatory that a person purchasing land under the program
accept the offer of the insurance coverage, and to prohibit the VLB from
using that refusal to accept the coverage offer as a ground for not
entering into a contract of sale or a mortgage with the person.
SECTION 15. Amends Section 161.368, Natural Resources Code, to authorize
VLB to collect or provide for collection of the insurance premium, rather
than the premium for insurance coverage, in a reasonable manner.
SECTION 16. Amends Section 161.370, Natural Resources Code, to make a
conforming change.
SECTION 17. Amends the heading to Section 161.371, Natural Resources
Code, to read as follows:
Sec. 161.371. TERMINATION OF INDIVIDUAL COVERAGE.
SECTION 18. Amends Section 161.371(a), Natural Resources Code, to
authorize individual insurance coverage, rather than requiring insurance
coverage, to be terminated for any person on terms agreed to by the
insurer and VLB. Deletes a list of reasons for insurance termination.
SECTION 19. Amends Section 161.503(c), Natural Resources Code, to
require VLB to adopt credit, underwriting, and appraisal standards that
protect the best interest of the program and limit the exposure of the
fund to any losses. Deletes text referring to insurance requirements.
SECTION 20. Amends Section 161.509, Natural Resources Code, as follows:
Sec. 161.509. New heading: LATE PAYMENTS; DEFAULT INTEREST RATE. (a)
Authorizes VLB to impose charges for late payments.
(b) Authorizes VLB, in addition to charging for late payments under
Subsection (a), to set and impose a default rate of interest on the past
due amounts or the entire unpaid balance. Deletes text referring to
paying delinquent prinicipal and interest at a rate determined by VLB.
SECTION 21. Repealer: Sections 161.212(d) (Appraisal), 161.362(c)
(Insurance Requirement), 161.364 (Provisions of Insurance), 161.365
(Approval of Contract; Contractual Relationship), 161.367 (Amount of
Coverage), 161.369 (Death of Insured), and 161.371 (b) and (c)
(Termination of Insurance), Natural Resources Code.
SECTION 22. Effective date: September 1, 2003.
Makes application of this Act prospective.