By: Deshotel H.B. No. 4397

A BILL TO BE ENTITLED

AN ACT

relating to payoff statements provided in connection with certain home 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 343.106 to read as follows:

Sec. 343.106. PAYOFF STATEMENTS. (a) In this section, "mortgagee," "mortgage servicer," and "mortgagor" have the meanings assigned by Section 51.0001, Property Code.

(b) The finance commission shall adopt rules governing requests by title insurance companies for payoff information from mortgage servicers related to home loans and the provision of that information, including rules prescribing a standard payoff statement form that must be used by mortgage servicers to provide those payoff statements.

(c) In adopting rules under Subsection (b), the finance commission shall require a mortgage servicer who receives a request for a payoff statement with respect to a home loan from a title insurance company to deliver the requested payoff statement within a time prescribed by finance commission rule, which must allow the mortgage servicer at least three business days after the date the request is received to deliver the payoff statement.

(d) The standard payoff statement form prescribed by the finance commission under Subsection (b) must require that a completed form:

(1) state the proposed closing date for the sale and purchase of the real property securing the home loan or for any other transaction that would involve the payoff of the home loan or other debt secured by the property, as specified by the title insurance company's request; and

(2) provide a payoff amount that is valid through that date.

(e) Except as provided by Subsection (f) or (g), if the mortgage servicer provides a completed payoff statement form that meets the requirements of this section and rules adopted under this section in response to a request for a payoff statement, the mortgage servicer or mortgagee may not demand that a mortgagor pay an amount in excess of the payoff amount specified in the payoff statement.

(f) If a mortgage servicer or mortgagee discovers that an error has been made in a payoff statement, the mortgage servicer or mortgagee may correct and deliver the statement on or before the second business day before the specified closing date. The corrected payoff statement must be delivered to the requestor by:

(1) certified mail with return receipt requested; and

(2) electronic means, if the requestor provides the mortgage servicer with a means to deliver the corrected statement electronically.

(g) If a mortgage servicer makes an error in a payoff amount contained in a payoff statement that results in the mortgage servicer requesting an amount that is less than the correct payoff amount, the mortgage servicer or mortgagee fails to correct the payoff statement in accordance with Subsection (f), and the mortgage servicer receives payment in the amount specified in the payoff statement, the difference in the amount included in the payoff statement and the correct payoff amount becomes an unsecured liability of the former mortgagor owed to the mortgagee.

(h) If the mortgage servicer receives payment in the amount specified in the payoff statement, including any corrected statement provided in accordance with Subsection (f):

(1) the home loan and other obligations covered by the payoff statement, if any, are considered paid in full; and

(2) the mortgagee shall execute and deliver to the mortgagor, within a reasonable time after payment, a release of the lien on the real property securing the home loan and any other obligations, or a copy of an endorsement and assignment of the lien to a lender that is refinancing the home loan.

SECTION 2. (a) As soon as practicable after the effective date of this Act, the Finance Commission of Texas shall adopt the form required by Section 343.106, Finance Code, as added by this Act.

(b) Notwithstanding Section 343.106, Finance Code, as added by this Act, a mortgage servicer is not required to comply with that section until the Finance Commission of Texas adopts the form required by that section.

SECTION 3. This Act takes effect September 1, 2009.