BILL ANALYSIS

C.S.H.B. 3593

By: Smith, Wayne

Business & Industry

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Home foreclosures in Texas have significantly risen in the last few years. Under current Texas law, the primary lienholder is not obligated to provide notification to other lienholders when a property is subject to foreclosure. Increased notification to lienholders that have an interest in the property might allow the borrower to avoid home foreclosure.

C.S.H.B. 3593 requires a notice of sale of certain property and a notice of default under a deed of trust or other contract lien on certain real property, or a copy of such a notice, to be sent by verified mail to specified lienholders.

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. 3593 amends the Property Code to specify that the requirement that written notice of the sale of real property under a contract lien be served within a prescribed period before the sale on each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt applies to such service by verified mail, rather than by certified mail. The bill defines "verified mail" to mean any method of mailing that provides evidence of mailing.  

C.S.H.B. 3593 specifies that the requirement that the mortgage servicer of the debt serve a debtor in default of a deed of trust or other contract lien on real property used as the debtor's residence with written notice stating that the debtor is in default under the deed of trust or other contract lien and giving the debtor at least 20 days to cure the default before notice of sale can be given applies to such service by verified mail, rather than certified mail. The bill requires the mortgage servicer to serve, by verified mail, a copy of the notice sent to the debtor on any other mortgagee not represented by the mortgage servicer.

C.S.H.B. 3593, in provisions relating to the sale of real property of a contract lien, includes a common carrier among the mail carriers the deposit of service of notice with which, among other conditions, establishes that service is complete and specifies that service of notice to a mortgagee is complete, in part, based on the service of notice being addressed to the mortgagee's last known address as reflected in the real property records in the county in which the property is located.

C.S.H.B. 3593 makes conforming and nonsubstantive changes.

EFFECTIVE DATE

September 1, 2011.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3593 contains provisions not included in the original defining "verified mail" and specifying that the requirement that written notice of the sale of real property under a contract lien be served within a prescribed period before the sale on certain debtors applies to such service by verified mail, rather than by certified mail. The substitute omits from the requirements for notice of the sale within the prescribed period that notice be given to each holder of a lien on the property subject to foreclosure, as reflected in the real property records of the county in which the property is located.

C.S.H.B. 3593 contains provisions not included in the original specifying that the requirement that the mortgage servicer of the debt serve a debtor in default of a deed of trust or other contract lien on real property used as the debtor's residence with written notice applies to such service by verified mail, rather than certified mail.  

C.S.H.B. 3593 differs from the original by including a common carrier among the mail carriers the deposit of service of notice with which, among other conditions, establishes that service is complete and specifying that service of notice to a mortgagee is complete, in part, based on the service of notice being addressed to the mortgagee's last known address as reflected in the real property records in the county in which the property is located, whereas the original substantially retains the statutory provision establishing that service of such notice by certified mail is complete when the notice is deposited in the United States mail, postage prepaid, and specifies that the provision pertains to each person who is a holder of a lien on the property subject to foreclosure, as reflected in the real property records of the county in which the property is located, and to notice addressed to such person at the person's last known address.