81R4786 ATP-F

By: Rodriguez H.B. No. 2694

A BILL TO BE ENTITLED

AN ACT

relating to the duties of a residential mortgage servicer to a borrower.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 5, Finance Code, is amended by adding Chapter 397 to read as follows:

CHAPTER 397. RESIDENTIAL MORTGAGE SERVICERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 397.001. DEFINITIONS. In this chapter, "debtor's last known address," "mortgage servicer," and "mortgagee" have the meanings assigned by Section 51.0001, Property Code.

Sec. 397.002. APPLICABILITY. (a) This chapter applies only to a loan secured by a lien on residential real property.

(b) A mortgage servicer must comply with this chapter as to every loan secured by a lien on residential real property, regardless of whether the loan is considered delinquent or in default or the debtor is or has been involved in bankruptcy proceedings, except as otherwise provided by this chapter.

[Sections 397.003-397.050 reserved for expansion]

SUBCHAPTER B. SERVICING FEES

Sec. 397.051. SERVICING FEES GENERALLY. (a) A fee incurred by a mortgage servicer in connection with a residential mortgage loan and assessed on the debtor must be:

(1) assessed not later than the 45th day after the date the fee:

(A) was incurred; or

(B) was charged by an attorney or trustee to the servicer, for attorney or trust fees and costs incurred as a result of a foreclosure action; and

(2) explained clearly and conspicuously in a statement mailed to the debtor at the debtor's last known address not later than the 30th day after the date the servicer assessed the fee, except as prohibited by the United States Bankruptcy Code.

(b) A fee not charged in compliance with Subsection (a) is waived.

Sec. 397.052. CREDIT OF FEES. (a) An amount received by a mortgage servicer at the address where the debtor has been instructed to make payments shall be accepted and credited, or treated as credited, within one business day of the date received if the debtor:

(1) has made the full contractual payment; and

(2) has provided sufficient information to credit the account.

(b) If a mortgage servicer uses the scheduled method of accounting, any regularly scheduled payment made before the scheduled due date must be credited not later than the due date.

(c) If a payment is received and not credited or treated as credited, the debtor must be notified by mail at the debtor's last known address, on or before the 10th business day after the date the payment was received, of:

(1) the disposition of the payment;

(2) the reason the payment was not credited or treated as credited to the account; and

(3) any actions necessary by the debtor to make the loan current.

Sec. 397.053. RELATIONSHIP TO OTHER LAW AND CONTRACTS. (a) A fee charged by a mortgage servicer must be otherwise authorized by applicable law and the contracts between the debtor and the mortgagee.

(b) This subchapter is not intended to authorize the application of payments or a method of charging interest that offers less protection to the debtor than other applicable law and the contracts between the debtor and mortgagee.

[Sections 397.054-397.100 reserved for expansion]

SUBCHAPTER C. OBLIGATION OF SERVICER TO HANDLE ESCROW FUNDS

Sec. 397.101. APPLICATION TO DELINQUENT LOANS. This subchapter applies to a mortgage servicer regardless of whether the loan is delinquent or in default, unless the servicer has a reasonable basis to believe that:

(1) recovery of amounts expended by the servicer on behalf of the borrower will not be possible; or

(2) the loan is more than 90 days in default.

Sec. 397.102. SERVICER'S DUTY TO MAKE PAYMENTS. A mortgage servicer who exercises the authority to collect escrow amounts on a loan held or to be held for the debtor for insurance, taxes, and other charges with respect to the property shall collect and make all payments from the escrow account so as to ensure that late penalties are not assessed against the debtor and other negative consequences to the debtor do not result.

[Sections 397.103-397.150 reserved for expansion]

SUBCHAPTER D. DEBTOR REQUESTS FOR INFORMATION

Sec. 397.151. RECORDKEEPING. A mortgage servicer shall maintain written or electronic records of each written request for information regarding a dispute or error involving the debtor's account until the loan is paid in full, otherwise satisfied, or sold.

Sec. 397.152. REASONABLE EFFORTS REQUIRED. A mortgage servicer shall make reasonable attempts to comply with a debtor's request for information about the account and to respond to any dispute initiated by the debtor about the loan account as provided by this subchapter.

Sec. 397.153. PROVISION OF GENERAL INFORMATION ON REQUEST. (a) A mortgage servicer shall provide the following to a debtor in response to a debtor's written request:

(1) a copy of the original note, or if the original note is unavailable, an affidavit of lost note; and

(2) a statement that:

(A) identifies and itemizes all fees and charges assessed under the loan transaction and provides a full payment history identifying in a clear and conspicuous manner all of the debits, credits, application of and disbursement of all payments received from or for the benefit of the debtor, and other activity on the loan including any escrow or suspense account activity; and

(B) covers the two years preceding the receipt of the request or period for which the servicer has serviced the loan, whichever is shorter.

(b) If the mortgage servicer claims that delinquent or outstanding sums are owed on the loan before the two-year period preceding the receipt of the request under Subsection (a) or before the servicer began servicing the loan, the servicer shall provide an account history beginning with the earliest month for which the servicer claims outstanding sums are owed on the loan and ending on the date of the request for information. For purposes of this subsection, the date of the request for information is presumed to be not later than the 30th day before the date the servicer receives the request.

(c) A mortgage servicer must provide a statement under Subsection (a) on or before the 25th business day after the date the servicer receives a written request from the debtor that:

(1) includes or otherwise enables the servicer to identify the name and account of the debtor; and

(2) includes a statement that the account is or may be in error or otherwise provides sufficient detail to the servicer regarding information sought by the debtor.

Sec. 397.154. PROVISION OF INFORMATION REGARDING DISPUTE OR ERROR. (a) A mortgage servicer shall provide a written statement to a debtor in response to a debtor's written request for information regarding a dispute or error involving the debtor's account that includes the following information, if requested:

(1) whether the account is current and an explanation of any default and the date the account went into default;

(2) the current balance due on the loan, including the principal due, the amount of any funds held in a suspense account, the amount of any escrow balance known to the servicer, and whether there are any escrow deficiencies or shortages known to the servicer;

(3) the identity, address, and other relevant information about the current holder, owner, or assignee of the loan; and

(4) the telephone number and mailing address of a servicer representative with the information and authority to answer questions and resolve disputes.

(b) A mortgage servicer must provide a statement under Subsection (a) on or before the 10th day after the date the servicer receives a written request from the debtor that:

(1) includes or otherwise enables the servicer to identify the name and account of the debtor; and

(2) includes a statement that the account is or may be in error or otherwise provides sufficient detail to the servicer regarding information sought by the debtor.

Sec. 397.155. FEE FOR PROVIDING INFORMATION. (a) A mortgage servicer shall provide information under Section 397.153 or 397.154 free of charge, if the servicer has not provided to the debtor a written statement under the applicable section regarding the same account during the preceding six months.

(b) The mortgage servicer may charge the debtor a reasonable fee for preparing and furnishing a statement if the servicer has provided to the debtor a written statement under the same section regarding the same account during the preceding six months. A fee charged for information under Section 397.153 may not exceed $50 for each written statement. A fee charged for information under Section 397.154 may not exceed $25 for each written statement.

Sec. 397.156. CORRECTION OF ERRORS. A mortgage servicer shall promptly correct errors relating to the allocation of payments, the statement of account, or the payoff balance identified in any notice from the debtor provided in accordance with this subchapter or discovered through other means, including the diligence of the servicer.

[Sections 397.157-397.200 reserved for expansion]

SUBCHAPTER E. REMEDIES

Sec. 397.201. ENFORCEMENT GENERALLY. The Department of Savings and Mortgage Lending, the attorney general, or any party to a loan secured by a lien on residential real property may enforce this chapter.

Sec. 397.202. ACTION BY DEBTOR. (a) In addition to any other legal and equitable remedy available, a debtor injured by a violation of this chapter may bring an action for recovery of actual damages, including reasonable attorney's fees.

(b) Not later than the 30th day before a debtor or a debtor's representative institutes an action for damages against a mortgage servicer under this section, the debtor or debtor's representative shall notify the servicer in writing of any claimed errors or disputes regarding the debtor's loan that forms the basis of the action. The notice must be sent to the address as designated on any of the servicer's bills, statements, invoices, or other written communication, and must enable the servicer to identify the name and loan account of the debtor.

(c) This section does not limit the rights of a debtor to enjoin an action, make a counterclaim or cross-claim, or plead a defense in a civil action.

Sec. 397.203. SERVICER DEFENSE. A mortgage servicer will not be in violation of this chapter if the servicer shows by a preponderance of evidence that:

(1) the violation was not intentional or the result of bad faith; and

(2) not later than the 30th day after the date the servicer discovers or is notified of an error and before the debtor institutes an action against the servicer under this subchapter, the servicer corrects the error and compensates the debtor for any fees or charges incurred by the debtor as a result of the violation.

SECTION 2. This Act takes effect September 1, 2009.