| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
| |
|
|
relating to requiring counseling before closing certain high-risk |
|
|
loans. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subchapter B, Chapter 343, Finance Code, is |
|
|
amended by adding Section 343.105 to read as follows: |
|
|
Sec. 343.105. COUNSELING REQUIRED BEFORE CLOSING HIGH-RISK |
|
|
LOAN. (a) In this section, "high-risk loan" means a loan secured |
|
|
by a first lien or security interest against one-to-four-family |
|
|
residential real estate that: |
|
|
(1) has a variable interest rate; |
|
|
(2) has a prepayment penalty; |
|
|
(3) permits the payment of interest only; |
|
|
(4) permits periodic payments that are less than the |
|
|
amount of accrued interest on the scheduled payment date; or |
|
|
(5) provides for a scheduled payment that is more than |
|
|
twice as large as the average of earlier scheduled monthly |
|
|
payments. |
|
|
(b) A lender may not make a high-risk loan for less than |
|
|
$125,000 unless the loan applicant presents to the lender a |
|
|
certificate of completion of counseling signed by the counselor and |
|
|
the loan applicant that: |
|
|
(1) establishes that, not later than the 10th day |
|
|
before the date of closing, the loan applicant received counseling |
|
|
in person or by phone from a housing counseling agency approved by |
|
|
the United States Department of Housing and Urban Development or |
|
|
from an attorney licensed to practice law in this state regarding |
|
|
the advisability of a high-risk loan and the availability of |
|
|
financial alternatives; and |
|
|
(2) includes a signed statement by the counselor that |
|
|
the counselor has training or experience in home loans. |
|
|
(c) The lender shall provide to the loan applicant and |
|
|
counselor, before the applicant receives counseling as required by |
|
|
Subsection (b), a written notice on a form prescribed by the finance |
|
|
commission under Subsection (e) that states: |
|
|
(1) the proposed terms of the loan; |
|
|
(2) that the proposed loan is a high-risk loan; and |
|
|
(3) that financial alternatives are available. |
|
|
(d) The lender shall maintain in the lender's records any |
|
|
certificate of completion of counseling provided to the lender |
|
|
under Subsection (b). |
|
|
(e) The finance commission shall prescribe the form and |
|
|
content of the: |
|
|
(1) certificate of completion of counseling required |
|
|
by Subsection (b); and |
|
|
(2) notice required by Subsection (c). |
|
|
(f) This section does not apply to an interim construction |
|
|
loan with a maturity of less than 18 months. |
|
|
SECTION 2. The change in law made by this Act applies only |
|
|
to a loan closed on or after the effective date of this Act. A loan |
|
|
closed before the effective date of this Act is covered by the law |
|
|
in effect on the date the loan was closed, and the former law is |
|
|
continued in effect for that purpose. |
|
|
SECTION 3. This Act takes effect September 1, 2007. |
|
|
|
|
|
* * * * * |