S.B. No. 767
 
 
 
 
AN ACT
  relating to the regulation of certain residential mortgage
  foreclosure consulting services; providing a criminal penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 2, Business & Commerce Code, is amended by
  adding Chapter 21 to read as follows:
  CHAPTER 21.  REGULATION OF CERTAIN RESIDENTIAL FORECLOSURE
  CONSULTING SERVICES
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 21.001.  DEFINITIONS. (a)  In this chapter:
               (1)  "Foreclosure consultant" means a person who makes
  a solicitation, representation, or offer to a homeowner to perform
  for compensation, or who for compensation performs, a service that
  the person represents will do any of the following:
                     (A)  prevent or postpone a foreclosure sale;
                     (B)  obtain a forbearance from:
                           (i)  a mortgagee;
                           (ii)  a beneficiary of a deed of trust; or
                           (iii)  another person who holds a lien
  secured by the residence in foreclosure;
                     (C)  assist the homeowner:
                           (i)  to cure the default giving rise to the
  foreclosure action; or
                           (ii)  to exercise the right of reinstatement
  of the homeowner's obligation secured by the residence in
  foreclosure;
                     (D)  obtain an extension of the period within
  which the homeowner may reinstate the homeowner's obligation
  secured by the residence in foreclosure;
                     (E)  obtain a waiver of an acceleration clause
  contained in a promissory note or contract secured by a deed of
  trust or mortgage on a residence in foreclosure or contained in the
  deed of trust or mortgage;
                     (F)  assist the homeowner to obtain a loan or
  advance of funds to prevent foreclosure;
                     (G)  avoid or ameliorate the impairment of the
  homeowner's credit resulting from the recording of a notice of
  default or the conduct of a foreclosure sale;
                     (H)  save the homeowner's residence from
  foreclosure; or
                     (I)  assist the homeowner in obtaining excess
  proceeds from a foreclosure sale of the homeowner's residence.
               (2)  "Homeowner" means a person that holds record title
  to a residence in foreclosure at the time the foreclosure action has
  been commenced.
               (3)  "Mortgage servicer" has the meaning assigned by
  Section 51.0001, Property Code.
               (4)  "Residence in foreclosure" means residential real
  property consisting of not more than four single-family dwelling
  units, at least one of which is occupied as the property owner's
  principal place of residence, and against which a foreclosure
  action has been commenced.
         (b)  For purposes of Subsections (a)(2) and (4), a
  foreclosure action has been commenced if:
               (1)  notice of sale has been filed under Section
  51.002(b), Property Code; or
               (2)  a judicial foreclosure action has been commenced.
         Sec. 21.002.  EXCEPTION FROM APPLICABILITY OF CHAPTER.
  (a)  Except as provided by Subsection (b), this chapter does not
  apply to the following persons that perform foreclosure consulting
  services:
               (1)  an attorney admitted to practice in this state who
  performs those services in relation to the attorney's
  attorney-client relationship with a homeowner or the beneficiary of
  the lien being foreclosed;
               (2)  a person that holds or is owed an obligation
  secured by a lien on a residence in foreclosure if the person
  performs those services in connection with the obligation or lien;
               (3)  a mortgage servicer of an obligation secured by a
  lien on a residence in foreclosure if the servicer performs those
  services in connection with the obligation or lien;
               (4)  a person that regulates banks, trust companies,
  savings and loan associations, credit unions, or insurance
  companies under the laws of this state or the United States if the
  person performs those services as part of the person's normal
  business activities;
               (5)  an affiliate of a person described by Subdivision
  (4) if the affiliate performs those services as part of the
  affiliate's normal business activities;
               (6)  a judgment creditor of the homeowner of the
  residence in foreclosure, if:
                     (A)  the legal action giving rise to the judgment
  was commenced before the notice of default required under Section
  5.064, 5.066, or 51.002(d), Property Code; and
                     (B)  the judgment is recorded in the real property
  records of the clerk of the county where the residence in
  foreclosure is located;
               (7)  a licensed title insurer, title insurance agent,
  or escrow officer authorized to transact business in this state if
  the person is performing those services in conjunction with title
  insurance or settlement services;
               (8)  a licensed real estate broker or real estate
  salesperson if the person is engaging in an activity for which the
  person is licensed;
               (9)  a person licensed or registered under Chapter 156,
  Finance Code, if the person is engaging in an activity for which the
  person is licensed or registered under that chapter;
               (10)  a person licensed or registered under Chapter
  157, Finance Code, if the person is engaging in an activity for
  which the person is licensed or registered under that chapter;
               (11)  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
  organization is an associate of the foreclosure consultant;
               (12)  a depository institution, as defined by Section
  31.002, Finance Code, subject to regulation or supervision by a
  state or federal regulatory agency; or
               (13)  an affiliate or subsidiary of a depository
  institution described by Subdivision (12).
         (b)  This chapter applies to a person described by Subsection
  (a) if the person is providing foreclosure consulting services to a
  homeowner designed or intended to transfer title, directly or
  indirectly, to a residence in foreclosure to that person or the
  person's associate, unless the person is a mortgagee or mortgage
  servicer that negotiates with or accepts from the mortgagor a deed
  in lieu of foreclosure for the benefit of the mortgagee.
         Sec. 21.003.  CONFLICT WITH OTHER LAW. To the extent of a
  conflict between this chapter and Chapter 393, Finance Code, this
  chapter controls.
  [Sections 21.004-21.050 reserved for expansion]
  SUBCHAPTER B.  CONTRACT FOR SERVICES
         Sec. 21.051.  FORM AND TERMS OF CONTRACT.  Each contract for
  the purchase of the services of a foreclosure consultant by a
  homeowner of a residence in foreclosure must be in writing, dated,
  and signed by each homeowner and the foreclosure consultant.
         Sec. 21.052.  REQUIRED DISCLOSURE. Before entering into a
  contract with a homeowner of a residence in foreclosure for the
  purchase of the services of a foreclosure consultant, the
  foreclosure consultant shall provide the homeowner written notice
  stating the following, in at least 14-point boldfaced type:
  NOTICE REQUIRED BY TEXAS LAW
  _______ (Name) or an associate of _________ (Name) cannot ask you to
  sign or have you sign any document that transfers any interest in
  your home or property to __________ (Name) or ___________ (Name's)
  associate.
  _______ (Name) or ________ (Name's) associate cannot guarantee you
  that they will be able to refinance your home or arrange for you to
  keep your home.
  You may, at any time, cancel or rescind this contract, without
  penalty of any kind.
  If you want to cancel this contract, mail or deliver a signed and
  dated copy of this notice of cancellation or rescission, or any
  other written notice, indicating your intent to cancel or rescind
  to _________________ (Name and address of foreclosure consultant)
  at ________________________ (Address of foreclosure consultant,
  including facsimile and electronic mail address).
  As part of any cancellation or rescission, you (the homeowner) must
  repay any money spent on your behalf by _____________________ (Name
  of foreclosure consultant) prior to receipt of this notice and as a
  result of this agreement, within 60 days, along with interest
  calculated at the rate of eight percent per year.
  [Sections 21.053-21.100 reserved for expansion]
  SUBCHAPTER C.  LIMITATIONS, PROHIBITIONS, AND DUTIES REGARDING
  SERVICES
         Sec. 21.101.  RESTRICTIONS ON CHARGE OR RECEIPT OF
  CONSIDERATION. A foreclosure consultant may not:
               (1)  charge or receive compensation until the
  foreclosure consultant has fully performed each service the
  foreclosure consultant has contracted to perform or has represented
  the foreclosure consultant can or will perform unless the
  foreclosure consultant has obtained a surety bond or established
  and maintained a surety account for each location at which the
  foreclosure consultant conducts business in the manner that
  Subchapter E, Chapter 393, Finance Code, provides for credit
  services organizations; 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.
         Sec. 21.102.  PROHIBITED CONDUCT. A foreclosure consultant
  may not:
               (1)  take any power of attorney from a homeowner for any
  purpose other than to inspect documents;
               (2)  for purposes of securing payment of compensation,
  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
               (3)  take an assignment of wages to secure payment of
  compensation.
         Sec. 21.103.  RETENTION OF RECORDS. (a)  A foreclosure
  consultant shall keep each record and document, including the
  foreclosure consultant contract, related to foreclosure consulting
  services performed on behalf of a homeowner.
         (b)  A foreclosure consultant shall retain the records
  described by Subsection (a) until at least the third anniversary of
  the day the foreclosure consultant contract entered into by the
  consultant and the homeowner was terminated or concluded.
  [Sections 21.104-21.150 reserved for expansion]
  SUBCHAPTER D.  ENFORCEMENT
         Sec. 21.151.  CRIMINAL PENALTY. (a)  A person commits an
  offense if the person violates this chapter.
         (b)  An offense under this chapter is a Class C misdemeanor.
         SECTION 2.  The changes in law made by this Act apply only to
  a contract entered into on or after the effective date of this Act.
  A 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 3.  This Act takes effect September 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 767 passed the Senate on
  April 28, 2011, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 27, 2011, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 767 passed the House, with
  amendment, on May 23, 2011, by the following vote: Yeas 142,
  Nays 0, one present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor