BILL ANALYSIS
By: Paxton
Committee Report (Substituted)
BACKGROUND AND PURPOSE
In 2003, the Texas Legislature amended Chapter 51, Property Code, which governs the process of foreclosing real property, to allow mortgage servicers to administer the foreclosure process.
A mortgage servicer is the last person to whom a mortgagor has been instructed by the current mortgagee to send payments for the debt secured by a security instrument. A mortgagee may be the mortgage servicer.
Currently, a sale of real property under a power of sale conferred by a deed of trust or other contract lien must be a public sale at an auction at the county courthouse. A mandatory notice of the date, time, and place of the foreclosure sale is to be served on the borrower by the mortgage servicer only.
The purpose of this bill is to eliminate the perceived requirement that only a mortgage servicer can serve on the borrower the mandatory notice of the date, time, and place of a foreclosure sale. In reality, a notice of foreclosure sale can also be served by a mortgagee or an attorney.
C.S.H.B. 1235 makes changes to the notice requirements for a sale of real property under a contract lien.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 1235 amends Section 51, Property Code, as follows:
The substitute eliminates the provision that only a mortgage servicer may serve written notice of a foreclosure sale on a borrower.
The substitute requires a mortgage servicer to disclose to the borrower that it is administering the foreclosure process under a written agreement with the mortgagee. The disclosure shall include the name of the mortgagee and the address of the mortgagee, or the address of the mortgage servicer, if there is an agreement granting a mortgage servicer the authority to service the mortgage.
The substitute makes the changes in law made by this Act apply to a notice required under this Section and the administration of a sale of real property on or after the effective date of this Act, except as provided by a security instrument or other contract executed before the effective date.
The substitute provides that if a security agreement or other contract in effect before the effective date of this Act conflicts with this Act, as to the notice required to sell real property or administration of a sale of real property under a contract lien, the law in effect at the time the security agreement or other contract was executed, and the former law is continued in effect for that purpose.
EFFECTIVE DATE
September 1, 2005
COMPARISON OF ORIGINAL TO SUBSTITUTE
C.S.H.B. 1235 modifies the original by removing the provision which required that only the name and address of the mortgage servicer be disclosed in a notice of foreclosure sale to the borrower.
The substitute modifies the original by adding language that requires the address of the mortgagee or the address of the mortgage servicer, if there is an agreement granting a mortgage servicer the authority to service the mortgage.