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A BILL TO BE ENTITLED
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AN ACT
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relating to transactions involving residential mortgage |
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foreclosures; providing a penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 2, Business & Commerce Code, is amended by |
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adding Chapter 21 to read as follows: |
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CHAPTER 21. HOMEOWNER PROTECTION FROM CERTAIN FORECLOSURE-RELATED |
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TRANSACTIONS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 21.001. DEFINITIONS. In this chapter: |
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(1) "Equity purchase contract" means a contract |
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between an equity purchaser and the homeowner of a residence in |
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foreclosure. |
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(2) "Equity purchaser" means a person who, in the |
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course of the person's business, vocation, or occupation, acquires |
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title to a residence in foreclosure. The term does not include a |
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person who acquires the title: |
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(A) for purposes of using the property as the |
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person's residence for at least one year; |
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(B) by a deed in lieu of foreclosure to the holder |
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of a voluntary lien or encumbrance of record; |
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(C) by a deed from the officer charged with |
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selling property under Chapter 34, Tax Code; |
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(D) at a sale of real property authorized by |
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statute; |
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(E) by court order or judgment; or |
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(F) from the person's spouse or a relative of the |
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person related by consanguinity or affinity. |
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(3) "Foreclosure consultant" means a person who |
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performs, or represents that the person can or will perform, for |
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compensation services in connection with the prevention or |
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postponement of foreclosure proceedings against a homeowner's |
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residential property or other services related to the foreclosure |
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of the property. |
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(4) "Residence in foreclosure" means residential real |
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property consisting of not more than four single-family dwelling |
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units, at least one of which is occupied as the homeowner's |
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principal place of residence, and against which a foreclosure |
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action has been commenced. |
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Sec. 21.002. EXCEPTION FROM APPLICABILITY OF CERTAIN |
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SUBCHAPTERS. (a) Except as provided by Subsection (b), |
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Subchapters B and C do not apply to the following persons who |
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perform foreclosure consulting services: |
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(1) an attorney admitted to practice in this state who |
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performs those services in relation to the attorney's |
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attorney-client relationship with a homeowner or the beneficiary of |
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the lien being foreclosed; |
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(2) a person who holds or is owed an obligation secured |
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by a lien on a residence in foreclosure if the person performs those |
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services in connection with the obligation or lien; |
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(3) a person that regulates banks, trust companies, |
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savings and loan associations, credit unions, or insurance |
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companies under the laws of this state or the United States if the |
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person performs those services as part of the person's normal |
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business activities; |
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(4) an affiliate of a person described by Subdivision |
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(3) if the affiliate performs those services as part of the |
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affiliate's normal business activities; |
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(5) a judgment creditor of the homeowner of the |
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residence in foreclosure, if: |
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(A) the legal action giving rise to the judgment |
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was commenced before the notice of default required under Section |
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5.064 or 51.002(d), Property Code; and |
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(B) the judgment is recorded in the real property |
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records of the clerk of the county where the residence in |
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foreclosure is located; |
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(6) a licensed title insurer, title insurance agent, |
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or escrow officer authorized to transact business in this state if |
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the person is performing those services in conjunction with title |
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insurance or settlement services; |
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(7) a licensed real estate broker or real estate |
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salesperson if the person is engaging in an activity for which the |
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person is licensed; |
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(8) a mortgage broker or loan officer licensed under |
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Chapter 156, Finance Code, if the person is engaging in an activity |
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for which the person is licensed; or |
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(9) a nonprofit organization that provides solely |
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counseling or advice to homeowners who have a residence in |
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foreclosure or have defaulted on their home loans, unless the |
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organization is an associate of the foreclosure consultant. |
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(b) Subchapters B and C apply to a person described by |
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Subsection (a) if the person is providing foreclosure consulting |
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services designed or intended to transfer title, directly or |
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indirectly, to a residence in foreclosure to that person or the |
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person's associate. |
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[Sections 21.003-21.050 reserved for expansion] |
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SUBCHAPTER B. CONTRACT FOR FORECLOSURE CONSULTING SERVICES |
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Sec. 21.051. FORM AND TERMS OF CONTRACT. (a) Each |
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contract for the purchase of the services of a foreclosure |
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consultant by a homeowner of a residence in foreclosure must be in |
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writing, dated, and signed by each homeowner and the foreclosure |
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consultant. |
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(b) In addition to the notice required by Section 21.052, |
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the contract must: |
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(1) fully describe the services the foreclosure |
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consultant is to perform for the homeowner; and |
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(2) contain the payment terms, including the total |
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payments to be made to the foreclosure consultant or the |
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foreclosure consultant's associate. |
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Sec. 21.052. REQUIRED DISCLOSURE. The contract must state |
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the following, in at least 14-point boldfaced type, in immediate |
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proximity to the space reserved for the homeowner's signature: |
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NOTICE REQUIRED BY TEXAS LAW |
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_______ (Name) or an associate of _________ (Name) cannot ask you to |
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sign or have you sign any document that transfers any interest in |
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your home or property to __________ (Name) or ___________ (Name's) |
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associate. |
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_______ (Name) or ________ (Name's) associate cannot guarantee you |
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that they will be able to refinance your home or arrange for you to |
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keep your home. |
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This is an important legal contract and could result in the loss of |
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your home. You should consider contacting an attorney or a housing |
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counselor approved by the United States Department of Housing and |
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Urban Development before signing. |
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[Sections 21.053-21.100 reserved for expansion] |
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SUBCHAPTER C. PROHIBITIONS AND RESTRICTIONS REGARDING FORECLOSURE |
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CONSULTING SERVICES |
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Sec. 21.101. NOTICE OF CHARGE OR RECEIPT OF CONSIDERATION. |
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A foreclosure consultant may not receive any consideration from a |
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third party in connection with foreclosure consulting services |
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provided to the homeowner of a residence in foreclosure unless the |
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consideration is fully disclosed in writing to the homeowner. |
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Sec. 21.102. PROHIBITED CONDUCT. A foreclosure consultant |
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may not: |
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(1) charge, collect, or receive interest or |
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compensation for a loan made by the foreclosure consultant to the |
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homeowner of a residence in foreclosure that exceeds eight percent |
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a year; or |
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(2) acquire an interest, directly or indirectly, in |
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the real or personal property of the homeowner of a residence in |
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foreclosure with whom the foreclosure consultant has contracted to |
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perform services. |
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[Sections 21.103-21.150 reserved for expansion] |
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SUBCHAPTER D. EQUITY PURCHASE CONTRACTS |
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Sec. 21.151. FORM AND TERMS OF CONTRACT. (a) Each equity |
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purchase contract must be in writing, dated, and signed by each |
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selling owner of the residence in foreclosure and the equity |
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purchaser before the execution of any instrument quit-claiming, |
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assigning, transferring, conveying, or encumbering an interest in |
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the residence in foreclosure. |
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(b) In addition to the notice required by Section 21.152, |
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the contract must contain: |
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(1) the name, business address, and telephone number |
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of the equity purchaser; |
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(2) the total consideration to be paid by the equity |
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purchaser in connection with or incident to the equity purchaser's |
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acquisition, which in no event may be less than 82 percent of the |
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property's fair market value; |
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(3) the payment terms or the terms of other |
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consideration for services the equity purchaser represents will be |
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performed for the selling homeowner before or after the sale; and |
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(4) the following notice: |
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"NOTICE REQUIRED BY TEXAS LAW |
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Until your right to cancel this contract has ended, ____________ |
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(Name) or anyone working for __________ (Name) CANNOT ask you to |
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sign or have you sign any deed or any other document." |
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Sec. 21.152. NOTICE OF CANCELLATION. (a) The contract |
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must conspicuously state the following as the last provision before |
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the space reserved for the selling homeowner's signature: |
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"You may cancel this contract for the sale of your house without any |
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penalty or obligation at any time before _________________(Date and |
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time of day). See the attached notice of cancellation form for an |
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explanation of this right." |
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(b) The contract must have attached two easily detachable |
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copies of a cancellation notice. The notice must be in the |
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following form: |
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"NOTICE OF CANCELLATION |
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______ (Date contract signed) |
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You may cancel this contract for the sale of your house, without any |
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penalty or obligation, at any time before |
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_________________________ (Date and time of day). To cancel this |
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transaction, personally deliver a signed and dated copy of this |
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Notice of Cancellation by United States mail, postage prepaid, to |
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__________________, (Name of purchaser) at |
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_______________________(Street address of purchaser's place of |
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business) NOT LATER THAN __________________(Date and time of day). |
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I hereby cancel this transaction. |
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_______________________________ (Date) |
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________________________________ (Seller's signature)" |
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[Sections 21.153-21.200 reserved for expansion] |
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SUBCHAPTER E. PROHIBITIONS AND RESTRICTIONS REGARDING EQUITY |
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PURCHASE CONTRACTS |
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Sec. 21.201. ACTIONS BEFORE CANCELLATION PERIOD EXPIRES. |
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An equity purchaser may not do any of the following before the |
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period within which the homeowner may cancel the transaction has |
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elapsed: |
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(1) accept from the homeowner an execution of, or |
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induce the homeowner to execute, an instrument of conveyance of an |
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interest in the residence in foreclosure; |
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(2) transfer or encumber or purport to transfer or |
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encumber an interest in the residence in foreclosure to a third |
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party; or |
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(3) pay any consideration to the homeowner. |
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Sec. 21.202. FALSE OR MISLEADING REPRESENTATION OR |
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STATEMENT. (a) An equity purchaser may not make a false or |
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misleading statement regarding the value of the residence in |
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foreclosure or the amount of proceeds the homeowner will receive |
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after a foreclosure sale. |
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(b) An equity purchaser may not represent, directly or |
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indirectly, that the equity purchaser is assisting the foreclosed |
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homeowner: |
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(1) to "save" the person's home or other words to that |
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effect; or |
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(2) in preventing a completed foreclosure if the |
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result of the transaction is that the foreclosed homeowner will not |
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repurchase the property. |
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[Sections 21.203-21.250 reserved for expansion] |
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SUBCHAPTER F. CIVIL REMEDIES |
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Sec. 21.251. DECEPTIVE TRADE PRACTICE. A violation of this |
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chapter is a false, misleading, or deceptive act or practice |
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actionable under Subchapter E, Chapter 17. |
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SECTION 2. The changes in law made by this Act apply to a |
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contract entered into on or after the effective date of this Act. A |
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contract entered into before the effective date of this Act is |
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governed by the law in effect on the date the contract was entered |
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into, and the former law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2009. |