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A BILL TO BE ENTITLED
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AN ACT
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relating to the foreclosure process; creating an offense; providing |
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penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 5, Property Code, is amended by adding |
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Subtitle A-1 to read as follows: |
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SUBTITLE A-1. CONSUMER PROTECTIONS |
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CHAPTER 50. FORECLOSURE PROTECTION ACT |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 50.001. SHORT TITLE. This chapter may be cited as the |
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"Foreclosure Protection Act." |
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Sec. 50.002. DEFINITIONS. (a) 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 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; |
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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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(G) while performing services as a part of a |
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person's normal business activities under the laws of this state or |
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the United States that regulate banks, trust companies, savings and |
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loan associations, credit unions, or insurance companies; |
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(H) while performing services as an affiliate of |
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a person described by Paragraph (G), or as an employee or agent of a |
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person described by Paragraph (G), if the affiliate or employee or |
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agent performs those services as part of that person's normal |
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business activities; or |
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(I) as a result of a short sale transaction that |
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complies with Section 50.107 and in which a short sale addendum |
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form, as adopted by the Texas Real Estate Commission, is part of the |
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contract used to acquire the residence in foreclosure. |
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(3) "Foreclosure consultant" means a person who, in |
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the course of the person's business, vocation, or occupation, |
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solicits, represents, or offers to a homeowner to perform, for |
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compensation from the homeowner or from the proceeds of a loan or |
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advance of funds, a service that the person represents will: |
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(A) prevent or postpone a foreclosure sale; |
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(B) obtain a forbearance from: |
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(i) a mortgagee; |
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(ii) a beneficiary of a deed of trust; or |
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(iii) another person who holds a lien |
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secured by the residence in foreclosure; |
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(C) assist the homeowner: |
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(i) to cure the default giving rise to the |
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foreclosure action; or |
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(ii) to exercise the right of reinstatement |
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of the homeowner's obligation secured by the residence in |
|
foreclosure; |
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(D) obtain an extension of the period within |
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which the homeowner may reinstate the homeowner's obligation |
|
secured by the residence in foreclosure; |
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(E) obtain a waiver of an acceleration clause |
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contained in a promissory note or contract secured by a deed of |
|
trust or mortgage on a residence in foreclosure or contained in the |
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deed of trust or mortgage; |
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(F) assist the homeowner to obtain a loan or |
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advance of funds to prevent foreclosure; |
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(G) avoid or ameliorate the impairment of the |
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homeowner's credit resulting from the recording of a notice of |
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default or the conduct of a foreclosure sale; |
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(H) save the homeowner's residence from |
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foreclosure; or |
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(I) assist the homeowner in obtaining excess |
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proceeds from a foreclosure sale of the homeowner's residence. |
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(4) "Foreclosure consulting contract" means a |
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contract between a foreclosure consultant and the homeowner of a |
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residence. |
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(5) "Homeowner" means a person who holds record title |
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to a residence and occupies the residence as the person's principal |
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residence. |
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(6) "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 property owner's |
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principal place of residence, and against which a foreclosure |
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action has been commenced or as to which an equity purchaser has |
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actual or constructive knowledge that the loan is at least 30 days |
|
delinquent or in default. |
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(7) "Short sale" means a transaction in which the |
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residence in foreclosure is sold when a holder of an obligation |
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secured by a lien of record agrees to release the lien for an amount |
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that is less than the outstanding amount due and owing under the |
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obligation. |
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(b) For purposes of Subsection (a)(6), a foreclosure action |
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has been commenced if: |
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(1) notice of sale has been filed under Section |
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51.002(b); or |
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(2) a judicial foreclosure action has been commenced. |
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Sec. 50.003. EXCEPTION FROM APPLICABILITY OF CHAPTER. (a) |
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Except as provided by Subsection (b), this chapter does not apply to |
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the following persons that perform foreclosure consulting |
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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 that holds or is owed an obligation |
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secured by a lien on a residence in foreclosure if the person |
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performs those services in connection with the obligation or lien; |
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(3) a mortgage servicer, as defined by Section |
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51.0001, of an obligation secured by a lien on a residence in |
|
foreclosure if the servicer performs those services in connection |
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with the obligation or lien; |
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(4) a person that regulates banks, trust companies, |
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savings and loan associations, credit unions, or insurance |
|
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 |
|
business activities; |
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(5) an affiliate of a person described by Subdivision |
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(4) or an employee or agent of a person described by Subdivision (4) |
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if the affiliate, employee, or agent performs those services as |
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part of that person's normal business activities; |
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(6) 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, 5.066, or 51.002(d); and |
|
(B) the judgment is recorded in the real property |
|
records of the clerk of the county where the residence in |
|
foreclosure is located; |
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(7) a licensed title insurer, title insurance agent, |
|
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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(8) 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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(9) a mortgage broker or loan officer licensed under |
|
Chapter 156, Finance Code, if the person is engaging in an activity |
|
for which the person is licensed; or |
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(10) a nonprofit organization that provides solely |
|
counseling or advice to homeowners who have a residence in |
|
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) This chapter applies to a person described by Subsection |
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(a) if the person is providing foreclosure consulting services |
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designed or intended to transfer title, directly or indirectly, to |
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a residence in foreclosure to that person or that person's |
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associate. |
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Sec. 50.004. WAIVER OF CERTAIN RIGHTS VOID. A provision in |
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a foreclosure consulting contract or equity purchase contract is |
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void if the provision attempts or purports to: |
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(1) waive a right specified in this chapter or the |
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right to a jury trial; |
|
(2) consent to jurisdiction for litigation or choice |
|
of law in a state other than this state; |
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(3) consent to venue in a county other than the county |
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in which the residence is located; or |
|
(4) impose a cost or fee greater than the actual cost |
|
or fee. |
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Sec. 50.005. CONFLICT WITH OTHER LAW. To the extent of a |
|
conflict between this chapter and Chapter 393, Finance Code, this |
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chapter controls. |
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[Sections 50.006-50.050 reserved for expansion] |
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SUBCHAPTER B. FORECLOSURE CONSULTANTS |
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Sec. 50.051. FORM AND TERMS OF CONTRACT. A contract for |
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services of a foreclosure consultant entered into by a homeowner of |
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a residence in foreclosure must: |
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(1) be printed in at least 12-point type; |
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(2) include the name of the foreclosure consultant and |
|
the address to which a notice of cancellation may be mailed; |
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(3) include a full disclosure of: |
|
(A) the nature of the consulting services to be |
|
provided; and |
|
(B) the total amount and terms of any |
|
compensation to be received by the foreclosure consultant; |
|
(4) be provided to each homeowner for review at least |
|
24 hours before the homeowner signs the contract; and |
|
(5) be dated, signed, and acknowledged by each |
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homeowner and the foreclosure consultant. |
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Sec. 50.052. REQUIRED DISCLOSURE. (a) Before entering |
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into a contract with a homeowner of a residence in foreclosure for |
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the purchase of the services of a foreclosure consultant, the |
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foreclosure consultant shall provide the homeowner written notice |
|
stating the following, in at least 14-point boldfaced type: |
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NOTICE REQUIRED BY TEXAS LAW |
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_______ (name of foreclosure consultant) or an associate of |
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_________ (name of foreclosure consultant) cannot ask you to sign |
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or have you sign any document that transfers an interest in your |
|
home or property to __________ (name of foreclosure consultant) or |
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___________ (name of foreclosure consultant's) associate. |
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_______ (name of foreclosure consultant) or ________ (name of |
|
foreclosure consultant's) associate cannot guarantee you that they |
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will be able to refinance your home or arrange for you to keep your |
|
home. |
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You may, at any time, cancel this contract without penalty of any |
|
kind. |
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If you want to cancel this contract, mail a signed and dated copy of |
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this notice of cancellation, or another written notice indicating |
|
your intent to cancel the foreclosure consulting contract, to |
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_________________ (name and address of foreclosure consultant) at |
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________________________ (address of foreclosure consultant, |
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including facsimile and e-mail address). |
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As part of the cancellation of the contract, you (the homeowner) |
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must not later than the 60th day after the date of this notice: |
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(1) repay any money spent on your behalf by |
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_____________________ (name of foreclosure consultant) before the |
|
consultant receives this notice; and |
|
(2) pay, as a result of this contract, interest on that |
|
amount calculated at the prime rate published by the federal |
|
reserve, plus two percent, with the total interest rate not to |
|
exceed eight percent a year. |
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This is an important legal contract and could result in the loss of |
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your home. Contact an attorney or a housing counselor approved by |
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the federal department of housing and urban development before |
|
signing. |
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(b) The contract must have attached two easily detachable |
|
copies of a notice of cancellation. The notice must state the |
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following in at least 14-point type: |
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NOTICE OF CANCELLATION |
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_____________ (date of contract) |
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To: _____________ (name of foreclosure consultant) |
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_____________ (address of foreclosure consultant, including |
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facsimile and e-mail) |
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I hereby cancel this contract. |
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_____________ (date) |
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_____________ (homeowner's signature) |
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(c) The foreclosure consultant shall provide to the |
|
homeowner a signed, dated, and acknowledged copy of the foreclosure |
|
consulting contract, with the notice of cancellation attached, on |
|
execution of the contract. |
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Sec. 50.053. RIGHT OF CANCELLATION. (a) In addition to any |
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right of rescission available under state or federal law, the |
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homeowner has the right to cancel a foreclosure consulting contract |
|
under this chapter at any time. |
|
(b) Notice of cancellation of the foreclosure consulting |
|
contract is effective on the date the homeowner sends the notice by |
|
United States mail, properly addressed with postage prepaid, to the |
|
foreclosure consultant at the address specified in the contract or |
|
through any facsimile or e-mail address identified in the contract |
|
or other materials provided to the homeowner by the foreclosure |
|
consultant. |
|
(c) Notice of cancellation may be in a form other than the |
|
form provided in the contract and is effective, however expressed, |
|
if the notice indicates the homeowner's intention to cancel the |
|
foreclosure consulting contract. |
|
(d) A homeowner who exercises the right to cancel a |
|
foreclosure consulting contract shall, not later than the 60th day |
|
after the date of the notice of cancellation: |
|
(1) repay any money that the foreclosure consultant |
|
paid or advanced in good faith before the consultant received the |
|
notice of cancellation; and |
|
(2) pay interest on that amount calculated at the |
|
prime rate published by the federal reserve plus two percent, with |
|
the total interest rate not to exceed eight percent a year, from the |
|
date of the expenditure until the date repaid by the homeowner. |
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(e) The right to cancel may not be conditioned on the |
|
repayment of any money. |
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Sec. 50.054. LANGUAGE. (a) A foreclosure consultant shall |
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provide the homeowner a copy of all documents required by this |
|
chapter in typed or written form: |
|
(1) in English; and |
|
(2) on request of the homeowner, translated into |
|
another language identified by the homeowner and certified by the |
|
translator as a true and correct translation of the English |
|
version. |
|
(b) The translated, certified document has equal status and |
|
credibility as the English version. |
|
Sec. 50.055. PROHIBITED CONDUCT. A foreclosure consultant |
|
may not: |
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(1) charge, collect, or receive interest or |
|
compensation for a loan made by the foreclosure consultant to the |
|
homeowner of a residence in foreclosure that exceeds eight percent |
|
a year; |
|
(2) take an assignment of wages to secure payment of |
|
compensation; |
|
(3) acquire an interest, directly or indirectly, in |
|
the real or personal property of the homeowner of a residence in |
|
foreclosure with whom the foreclosure consultant has contracted to |
|
perform services; or |
|
(4) take an action under a power of attorney from a |
|
homeowner for any purpose other than to inspect documents related |
|
to the foreclosure. |
|
Sec. 50.056. RESTRICTIONS ON CHARGE OR RECEIPT OF |
|
CONSIDERATION. A foreclosure consultant may not: |
|
(1) charge, collect, or receive compensation until the |
|
date that the foreclosure consultant has fully performed each |
|
service that the foreclosure consultant has contracted to perform |
|
or has represented that the foreclosure consultant can or will |
|
perform; or |
|
(2) receive any consideration from a third party in |
|
connection with foreclosure consulting services provided to the |
|
homeowner of a residence in foreclosure unless the consideration is |
|
fully disclosed in writing to the homeowner. |
|
[Sections 50.057-50.100 reserved for expansion] |
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SUBCHAPTER C. EQUITY PURCHASE CONTRACTS |
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Sec. 50.101. FORM AND TERMS OF CONTRACT. (a) Each equity |
|
purchase contract must be printed in at least 12-point type, dated, |
|
and signed by each selling owner of the residence in foreclosure and |
|
the equity purchaser before the execution of an instrument |
|
quit-claiming, assigning, transferring, conveying, or encumbering |
|
an interest in the residence in foreclosure. |
|
(b) In addition to the notice required by Section 50.103, |
|
the contract must contain: |
|
(1) the name, business address, and telephone number |
|
of the equity purchaser; |
|
(2) the street address and legal description of the |
|
residence in foreclosure; |
|
(3) a clear and conspicuous disclosure of any |
|
financial or legal obligations of the homeowner that will be |
|
assumed by the equity purchaser; |
|
(4) the total consideration to be paid by the equity |
|
purchaser in connection with or incident to the equity purchaser's |
|
acquisition of the residence in foreclosure; |
|
(5) the payment terms or the terms of other |
|
consideration, including any services the equity purchaser |
|
represents will be performed for the homeowner before or after the |
|
sale; |
|
(6) the date and time the possession of the residence |
|
in foreclosure is to be transferred to the equity purchaser; |
|
(7) the terms of any lease agreement; |
|
(8) the specifications of any option or right to |
|
repurchase the residence in foreclosure, including the specific |
|
amount of any escrow deposit, down payment, purchase price, closing |
|
cost, commission, or other fee or cost; |
|
(9) a notice of cancellation as provided in Section |
|
50.103; and |
|
(10) the following notice printed in at least 14-point |
|
boldfaced type immediately above the statement required by Section |
|
50.103: |
|
NOTICE REQUIRED BY TEXAS LAW |
|
Until your right to cancel this contract has ended, ____________ |
|
(name of equity purchaser) or anyone working for __________ (name |
|
of equity purchaser) CANNOT ask you to sign or have you sign any |
|
deed or any other document. |
|
(c) If the equity purchaser will not be assuming any |
|
financial or legal obligations of the homeowner, the equity |
|
purchaser shall provide to the homeowner a separate written |
|
disclosure, in at least 14-point boldfaced type, that contains |
|
substantially the following language: |
|
WARNING: PURCHASER, _______________, WILL NOT ASSUME OR PAY ANY |
|
PRESENT MORTGAGE, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES |
|
AGAINST THE PROPERTY. THE SELLER, _______________, UNDERSTANDS |
|
THAT THE SELLER WILL REMAIN RESPONSIBLE FOR ALL PAYMENTS DUE ON ALL |
|
MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AND FOR |
|
ANY DEFICIENCY JUDGMENT ENTERED AFTER THE FORECLOSURE SALE. |
|
I HAVE HAD THIS ENTIRE WARNING READ OUT LOUD TO ME AND |
|
UNDERSTAND THAT THE PURCHASER, _______________, WILL NOT ASSUME ANY |
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PRESENT MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES |
|
AGAINST THE PROPERTY DESCRIBED AS _______________________. |
|
DATE ________________ |
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SELLER'S SIGNATURE _______________________________. |
|
(d) The contract survives delivery of any instrument of |
|
conveyance of the residence in foreclosure, but does not have any |
|
effect on a person other than a party to the contract or affect |
|
title to the residence in foreclosure. |
|
Sec. 50.102. RIGHT OF CANCELLATION. (a) In addition to any |
|
right of rescission available under state or federal law, the |
|
homeowner has the right to cancel a contract with an equity |
|
purchaser before midnight of the third business day following the |
|
day on which the homeowner signs a contract that complies with this |
|
subchapter or before noon on the day before the foreclosure sale of |
|
the residence in foreclosure, whichever occurs first. |
|
(b) Notice of cancellation of the equity purchase contract |
|
is effective on the date the homeowner personally delivers the |
|
notice to the address specified in the contract or sends the notice |
|
by the United States mail, properly addressed, with postage |
|
prepaid. |
|
(c) Notice of cancellation may be in a form other than the |
|
form provided in the contract and is effective, however expressed, |
|
if the notice indicates the homeowner's intention to cancel the |
|
contract. |
|
(d) In the absence of any written notice of cancellation |
|
from the homeowner, the homeowner's execution of a deed or other |
|
instrument of conveyance of an interest in the residence in |
|
foreclosure to the equity purchaser after the expiration of the |
|
cancellation period creates a rebuttable presumption that the |
|
homeowner did not cancel the contract with the equity purchaser. |
|
Sec. 50.103. NOTICE OF CANCELLATION. (a) The contract must |
|
conspicuously state in at least 12-point boldfaced type the |
|
following as the last provision before the space reserved for the |
|
selling homeowner's signature: |
|
You may cancel this contract for the sale of your house without any |
|
penalty or obligation at any time before _________________ (date |
|
and time). See the attached notice of cancellation form for an |
|
explanation of this right. |
|
(b) The contract must have attached two easily detachable |
|
copies of a cancellation notice. The notice must state the |
|
following in at least 14-point boldfaced type: |
|
NOTICE OF CANCELLATION |
|
______ (date contract signed) |
|
You may cancel this contract for the sale of your house, without any |
|
penalty or obligation, at any time before |
|
_________________________ (date and time). To cancel this |
|
transaction, personally deliver a signed and dated copy of this |
|
Notice of Cancellation by United States mail, postage prepaid, to |
|
__________________, (name of purchaser) at _______________________ |
|
(street address of purchaser's place of business) NOT LATER THAN |
|
__________________ (date and time). I hereby cancel this |
|
transaction. |
|
________________________________ (date) |
|
________________________________ (seller's signature) |
|
(c) The equity purchaser shall provide the homeowner with a |
|
signed and dated copy of the contract, with the notice of |
|
cancellation, as provided by Subsection (b), attached on execution |
|
of the contract. |
|
(d) Not later than the 10th day after the date the equity |
|
purchaser receives a notice of cancellation as provided by Section |
|
50.102 and this section, the equity purchaser shall unconditionally |
|
return the original equity purchase contract and any other |
|
documents signed by the homeowner. |
|
Sec. 50.104. ACTIONS BEFORE CANCELLATION PERIOD EXPIRES. |
|
An equity purchaser may not do any of the following before the |
|
period within which the homeowner may cancel the transaction has |
|
elapsed: |
|
(1) accept from the homeowner an execution of, or |
|
induce the homeowner to execute, an instrument of conveyance of an |
|
interest in the residence in foreclosure; |
|
(2) record any document, including the contract or any |
|
lease, lien, or instrument of conveyance, that is signed by the |
|
homeowner; |
|
(3) transfer or encumber or purport to transfer or |
|
encumber an interest in the residence in foreclosure to a third |
|
party; or |
|
(4) pay any consideration to the homeowner. |
|
Sec. 50.105. LANGUAGE. (a) Except as provided by |
|
Subsection (b), an equity purchaser shall provide to a homeowner a |
|
contract, rental agreement, lease, option or right to repurchase, |
|
or notice, conveyance, lien, encumbrance, consent, or other |
|
document or instrument signed by the homeowner printed in English. |
|
(b) If the equity purchaser has actual or constructive |
|
knowledge that the homeowner's principal language is a language |
|
other than English, the equity purchaser shall provide the |
|
homeowner with a notice, printed in the homeowner's principal |
|
language, substantially similar to the following: |
|
This transaction involves important and complex legal |
|
consequences, including your right to cancel this transaction |
|
within three business days following the date you sign this |
|
contract. You should consult with an attorney or seek assistance |
|
from a housing counselor by calling the Texas foreclosure hotline |
|
at _______________ (current, correct telephone number). |
|
(c) If a notice in the homeowner's principal language is |
|
required to be provided under Subsection (b), the equity purchaser |
|
shall provide the notice to the homeowner as a separate document |
|
accompanying the contract required by Section 50.101. |
|
Sec. 50.106. OPTIONS THROUGH RECONVEYANCES. (a) A |
|
reconveyance contract in which a homeowner purports to grant a |
|
residence in foreclosure to an equity purchaser by an instrument |
|
that appears to be an absolute conveyance and reserves to the |
|
homeowner or in which the equity purchaser grants the homeowner an |
|
option to repurchase is permitted only if all of the following |
|
conditions are met: |
|
(1) the reconveyance contract complies with Section |
|
50.101; |
|
(2) the reconveyance contract provides the homeowner |
|
with a nonwaivable 30-day right to cure any default under the |
|
reconveyance contract and specifies that the homeowner may exercise |
|
this right on not less than three separate occasions during the term |
|
of the reconveyance contract; |
|
(3) the equity purchaser fully assumes or discharges |
|
the lien in foreclosure and any prior liens that the foreclosure did |
|
not extinguish without violation of the terms and conditions of the |
|
liens being assumed or discharged; |
|
(4) the equity purchaser verifies and demonstrates |
|
that the homeowner has or will have a reasonable ability to make |
|
lease payments for the residence in foreclosure and to repurchase |
|
the residence in foreclosure not later than the expiration of the |
|
term of the option to repurchase under the reconveyance contract; |
|
and |
|
(5) the price the homeowner must pay to exercise the |
|
option to repurchase the residence in foreclosure is not |
|
unconscionable. |
|
(b) For purposes of Subsection (d), there is a rebuttable |
|
presumption that the homeowner has a reasonable ability to make |
|
lease payments and to repurchase the residence in foreclosure if |
|
the homeowner's payments for primary housing expenses and regular |
|
principal and interest payments on other personal debt do not |
|
exceed 60 percent of the homeowner's monthly gross income. |
|
(c) The acquisition price paid by the equity purchaser may |
|
include any actual costs incurred by the equity purchaser in |
|
acquiring the residence in foreclosure. |
|
(d) For purposes of Subsection (a)(5), there is a rebuttable |
|
presumption that a reconveyance contract in which the repurchase |
|
price is greater than 25 percent of the price at which the equity |
|
purchaser acquired the residence in foreclosure is unconscionable. |
|
Sec. 50.107. SHORT SALES. (a) In this section, "subsequent |
|
purchaser" means a person who: |
|
(1) enters into a contract with an equity purchaser |
|
before the closing of a short sale transaction to acquire the |
|
residence in foreclosure; and |
|
(2) acquires the residence in foreclosure not later |
|
than the 14th day after the date of the closing of the short sale |
|
transaction. |
|
(b) With respect to a short sale transaction in which an |
|
equity purchaser intends to resell the residence in foreclosure to |
|
a subsequent purchaser, the equity purchaser shall: |
|
(1) not later than the date of closing of the short |
|
sale, provide full disclosure to the homeowner and to the holder of |
|
the lien or encumbrance on the residence in foreclosure, or the |
|
holder's representative, of the terms of the agreement between the |
|
equity purchaser and a subsequent purchaser, including the purchase |
|
price to be paid by the subsequent purchaser; |
|
(2) fully disclose to the subsequent purchaser and to |
|
the subsequent purchaser's lender, or the lender's representative, |
|
not later than the effective date of the contract between the |
|
subsequent purchaser and the equity purchaser, the terms of the |
|
agreement between the equity purchaser and the homeowner, including |
|
the purchase price paid by the equity purchaser for the residence in |
|
foreclosure; |
|
(3) comply with all applicable rules adopted by the |
|
Texas Real Estate Commission with regard to short sales; and |
|
(4) comply with Section 2501.006, Insurance Code. |
|
[Sections 50.108-50.150 reserved for expansion] |
|
SUBCHAPTER D. ENFORCEMENT |
|
Sec. 50.151. CRIMINAL PENALTY. (a) A person commits an |
|
offense if the person violates this chapter. |
|
(b) An offense under this chapter is a Class A misdemeanor. |
|
Sec. 50.152. DECEPTIVE TRADE PRACTICE. A violation of this |
|
chapter is a false, misleading, or deceptive act or practice |
|
actionable under Subchapter E, Chapter 17, Business & Commerce |
|
Code. |
|
SECTION 2. Section 17.46(b), Business & Commerce Code, is |
|
amended to read as follows: |
|
(b) Except as provided in Subsection (d) [of this section], |
|
the term "false, misleading, or deceptive acts or practices" |
|
includes, but is not limited to, the following acts: |
|
(1) passing off goods or services as those of another; |
|
(2) causing confusion or misunderstanding as to the |
|
source, sponsorship, approval, or certification of goods or |
|
services; |
|
(3) causing confusion or misunderstanding as to |
|
affiliation, connection, or association with, or certification by, |
|
another; |
|
(4) using deceptive representations or designations |
|
of geographic origin in connection with goods or services; |
|
(5) representing that goods or services have |
|
sponsorship, approval, characteristics, ingredients, uses, |
|
benefits, or quantities which they do not have or that a person has |
|
a sponsorship, approval, status, affiliation, or connection which |
|
he does not; |
|
(6) representing that goods are original or new if |
|
they are deteriorated, reconditioned, reclaimed, used, or |
|
secondhand; |
|
(7) representing that goods or services are of a |
|
particular standard, quality, or grade, or that goods are of a |
|
particular style or model, if they are of another; |
|
(8) disparaging the goods, services, or business of |
|
another by false or misleading representation of facts; |
|
(9) advertising goods or services with intent not to |
|
sell them as advertised; |
|
(10) advertising goods or services with intent not to |
|
supply a reasonable expectable public demand, unless the |
|
advertisements disclosed a limitation of quantity; |
|
(11) making false or misleading statements of fact |
|
concerning the reasons for, existence of, or amount of price |
|
reductions; |
|
(12) representing that an agreement confers or |
|
involves rights, remedies, or obligations which it does not have or |
|
involve, or which are prohibited by law; |
|
(13) knowingly making false or misleading statements |
|
of fact concerning the need for parts, replacement, or repair |
|
service; |
|
(14) misrepresenting the authority of a salesman, |
|
representative or agent to negotiate the final terms of a consumer |
|
transaction; |
|
(15) basing a charge for the repair of any item in |
|
whole or in part on a guaranty or warranty instead of on the value of |
|
the actual repairs made or work to be performed on the item without |
|
stating separately the charges for the work and the charge for the |
|
warranty or guaranty, if any; |
|
(16) disconnecting, turning back, or resetting the |
|
odometer of any motor vehicle so as to reduce the number of miles |
|
indicated on the odometer gauge; |
|
(17) advertising of any sale by fraudulently |
|
representing that a person is going out of business; |
|
(18) advertising, selling, or distributing a card |
|
which purports to be a prescription drug identification card issued |
|
under Section 4151.152, Insurance Code, in accordance with rules |
|
adopted by the commissioner of insurance, which offers a discount |
|
on the purchase of health care goods or services from a third party |
|
provider, and which is not evidence of insurance coverage, unless: |
|
(A) the discount is authorized under an agreement |
|
between the seller of the card and the provider of those goods and |
|
services or the discount or card is offered to members of the |
|
seller; |
|
(B) the seller does not represent that the card |
|
provides insurance coverage of any kind; and |
|
(C) the discount is not false, misleading, or |
|
deceptive; |
|
(19) using or employing a chain referral sales plan in |
|
connection with the sale or offer to sell of goods, merchandise, or |
|
anything of value, which uses the sales technique, plan, |
|
arrangement, or agreement in which the buyer or prospective buyer |
|
is offered the opportunity to purchase merchandise or goods and in |
|
connection with the purchase receives the seller's promise or |
|
representation that the buyer shall have the right to receive |
|
compensation or consideration in any form for furnishing to the |
|
seller the names of other prospective buyers if receipt of the |
|
compensation or consideration is contingent upon the occurrence of |
|
an event subsequent to the time the buyer purchases the merchandise |
|
or goods; |
|
(20) representing that a guarantee or warranty confers |
|
or involves rights or remedies which it does not have or involve, |
|
provided, however, that nothing in this subchapter shall be |
|
construed to expand the implied warranty of merchantability as |
|
defined in Sections 2.314 through 2.318 and Sections 2A.212 through |
|
2A.216 to involve obligations in excess of those which are |
|
appropriate to the goods; |
|
(21) promoting a pyramid promotional scheme, as |
|
defined by Section 17.461; |
|
(22) representing that work or services have been |
|
performed on, or parts replaced in, goods when the work or services |
|
were not performed or the parts replaced; |
|
(23) filing suit founded upon a written contractual |
|
obligation of and signed by the defendant to pay money arising out |
|
of or based on a consumer transaction for goods, services, loans, or |
|
extensions of credit intended primarily for personal, family, |
|
household, or agricultural use in any county other than in the |
|
county in which the defendant resides at the time of the |
|
commencement of the action or in the county in which the defendant |
|
in fact signed the contract; provided, however, that a violation of |
|
this subsection shall not occur where it is shown by the person |
|
filing such suit he neither knew or had reason to know that the |
|
county in which such suit was filed was neither the county in which |
|
the defendant resides at the commencement of the suit nor the county |
|
in which the defendant in fact signed the contract; |
|
(24) failing to disclose information concerning goods |
|
or services which was known at the time of the transaction if such |
|
failure to disclose such information was intended to induce the |
|
consumer into a transaction into which the consumer would not have |
|
entered had the information been disclosed; |
|
(25) using the term "corporation," "incorporated," or |
|
an abbreviation of either of those terms in the name of a business |
|
entity that is not incorporated under the laws of this state or |
|
another jurisdiction; |
|
(26) selling, offering to sell, or illegally promoting |
|
an annuity contract under Chapter 22 (S.B. 17), Acts of the 57th |
|
Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's |
|
Texas Civil Statutes), with the intent that the annuity contract |
|
will be the subject of a salary reduction agreement, as defined by |
|
that Act, if the annuity contract is not an eligible qualified |
|
investment under that Act or is not registered with the Teacher |
|
Retirement System of Texas as required by Section 8A of that Act; |
|
[or] |
|
(27) taking advantage of a disaster declared by the |
|
governor under Chapter 418, Government Code, by: |
|
(A) selling or leasing fuel, food, medicine, or |
|
another necessity at an exorbitant or excessive price; or |
|
(B) demanding an exorbitant or excessive price in |
|
connection with the sale or lease of fuel, food, medicine, or |
|
another necessity; |
|
(28) making false or misleading statements of fact in |
|
inducing or attempting to induce a homeowner to enter into a |
|
foreclosure consulting contract that does not comply with Chapter |
|
50, Property Code; or |
|
(29) making false or misleading statements of material |
|
fact concerning the sale of a residence in foreclosure to the equity |
|
purchaser under Chapter 50, Property Code, including a statement |
|
regarding: |
|
(A) the value of a residence in foreclosure; |
|
(B) the amount of proceeds a homeowner will |
|
receive after a foreclosure sale; |
|
(C) a contract term; |
|
(D) a homeowner's rights or obligations incident |
|
to or arising out of a sale transaction; or |
|
(E) the nature of a document that an equity |
|
purchaser induces a homeowner to sign. |
|
SECTION 3. The changes in law made by this Act apply to a |
|
foreclosure consulting or equity purchase contract entered into on |
|
or after the effective date of this Act. A foreclosure consulting |
|
or equity purchase contract entered into before the effective date |
|
of this Act is governed by the law in effect on the date the contract |
|
was entered into, and the former law is continued in effect for that |
|
purpose. |
|
SECTION 4. This Act takes effect September 1, 2011. |