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A BILL TO BE ENTITLED
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AN ACT
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relating to home loans that are not federally related mortgage |
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loans; providing civil penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 343, Finance Code, is amended by adding |
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Subchapter D to read as follows: |
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SUBCHAPTER D. NONFEDERALLY RELATED MORTGAGE LOANS |
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Sec. 343.301. DEFINITION. In this subchapter, "mortgage |
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servicer" has the meaning assigned by Section 51.0001, Property |
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Code. |
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Sec. 343.302. APPLICABILITY. This subchapter applies only |
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to a home loan that is not a federally related mortgage loan, as |
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defined by 12 U.S.C. Section 2602. |
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Sec. 343.303. RULES. The finance commission may adopt |
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rules necessary to implement this subchapter. |
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Sec. 343.304. MONTHLY STATEMENTS REQUIRED. (a) A lender |
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shall provide to the borrower a monthly statement that clearly and |
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conspicuously states: |
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(1) the amount received by the lender as payment |
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towards the home loan during the preceding month; |
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(2) how the amount described by Subdivision (1) was |
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applied to the borrower's account, including a statement of the |
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amount that was applied to: |
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(A) the borrower's principal obligation under |
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the loan; |
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(B) the interest charged on the loan; |
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(C) any escrow or suspense account associated |
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with the loan; and |
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(D) any fee or other charge assessed against the |
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borrower during the preceding month; and |
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(3) the outstanding balance of the borrower's |
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principal obligation under the loan. |
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(b) If a lender violates this section, the affected borrower |
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may file suit against the lender: |
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(1) for any appropriate injunctive relief; and |
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(2) to recover: |
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(A) the borrower's actual damages; |
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(B) $100 for each statement the lender fails to |
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provide to the borrower as required by Subsection (a); |
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(C) $50 for each statement provided to the |
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borrower that does not substantially comply with the requirements |
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of Subsection (a); and |
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(D) the borrower's court costs and reasonable |
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attorney's fees. |
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Sec. 343.305. ANNUAL ACCOUNTING STATEMENT. (a) A lender |
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shall provide to the borrower an annual statement in January of each |
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year for the term of the home loan. The statement must clearly and |
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conspicuously state the following information: |
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(1) the amount of each payment that was received by the |
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lender as payment towards the home loan during the preceding |
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calendar year; |
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(2) how each payment described by Subdivision (1) was |
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applied to the borrower's account, including a statement of the |
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amount of each payment that was applied to: |
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(A) the borrower's principal obligation under |
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the loan; |
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(B) the interest charged on the loan; |
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(C) any escrow or suspense account associated |
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with the loan; and |
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(D) any fee or other charge assessed against the |
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borrower during the preceding calendar year; and |
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(3) the outstanding balance of the borrower's |
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principal obligation under the loan. |
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(b) If a lender violates this section, the affected borrower |
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may file suit against the lender: |
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(1) for any appropriate injunctive relief; and |
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(2) to recover: |
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(A) the borrower's actual damages; |
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(B) $500 for each annual statement the lender |
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fails to provide to the borrower as required under Subsection (a); |
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(C) $300 for each annual statement provided to |
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the borrower that does not substantially comply with the |
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requirements of Subsection (a); and |
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(D) the borrower's court costs and reasonable |
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attorney's fees. |
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(c) In addition to the remedies available under Subsection |
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(b), a lender that fails to provide the annual statement required |
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under Subsection (a) with respect to a given calendar year may not |
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demand payment of any amount the lender claims the borrower owes |
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with respect to that calendar year until the lender provides the |
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required statement. |
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Sec. 343.306. PAYOFF STATEMENTS. (a) In this section, |
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"payoff statement" has the meaning assigned by Section 12.017, |
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Property Code. |
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(b) Except as provided by Subsection (c) and subject to |
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Subsection (d), a mortgage servicer may not charge a fee for |
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preparing or transmitting a payoff statement to a borrower or other |
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person requesting a payoff statement on behalf of the borrower. |
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(c) A mortgage servicer may charge a reasonable processing |
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fee to cover the cost of providing a payoff statement by facsimile |
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transmission or by a courier service if before charging the fee, the |
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mortgage servicer discloses to the requestor that payoff statements |
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are available for free if the requestor requests that the statement |
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be provided in a manner that will not result in the charging of a |
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processing fee. |
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(d) After a mortgage servicer has provided four payoff |
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statements during a calendar year to or on behalf of a borrower |
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under Subsection (b) without charge, other than processing fees |
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authorized under Subsection (c), the mortgage servicer may charge a |
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reasonable fee for providing a payoff statement to or on behalf of |
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the borrower during the remainder of the calendar year. |
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(e) A mortgage servicer shall provide a payoff statement not |
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later than the 10th day after the date the lender receives the |
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request for the payoff statement from or on behalf of a borrower, |
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and the statement must be valid for a reasonable time after being |
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provided to the requestor. |
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(f) If a mortgage servicer violates this section, the |
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borrower may file suit against the mortgage servicer: |
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(1) for any appropriate injunctive relief; and |
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(2) to recover: |
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(A) the borrower's actual damages; |
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(B) $100 for each payoff statement the lender |
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fails to provide to or on behalf of the borrower as required by this |
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section; and |
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(C) the borrower's court costs and reasonable |
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attorney's fees. |
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Sec. 343.307. RESTRICTIONS ON USE OF DEEDS IN LIEU OF |
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FORECLOSURE. (a) A lender may not obtain, file, or threaten to |
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file a deed that conveys or purports to convey real property |
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securing a home loan to the lender in satisfaction of a debt and is |
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signed by the borrower at a time when the borrower is not in default |
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on the loan. |
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(b) If a lender violates this section, the affected borrower |
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may file suit against the lender: |
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(1) for any appropriate injunctive relief; and |
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(2) to recover: |
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(A) the borrower's actual damages; |
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(B) a penalty in an amount equal to 10 percent of |
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the original principal amount of the home loan; and |
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(C) the borrower's court costs and reasonable |
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attorney's fees. |
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Sec. 343.308. NOTICE OF ASSIGNMENT, SALE, OR OTHER TRANSFER |
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OF LOAN SERVICING. (a) Except as provided by Subsection (f), a |
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mortgage servicer shall notify the borrower in writing of any |
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assignment, sale, or other transfer of the servicing of a home loan |
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to any other person. |
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(b) The notice required by Subsection (a) must contain: |
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(1) the effective date of the transfer; |
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(2) the name, address, and telephone number of the |
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transferee mortgage servicer; |
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(3) the name and telephone number of an individual |
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employed by, or the office or department of, the transferor |
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mortgage servicer that can be contacted by the borrower to answer |
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inquiries relating to the transfer of servicing; |
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(4) the name and telephone number of an individual |
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employed by, or the office or department of, the transferee |
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mortgage servicer that can be contacted by the borrower to answer |
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inquiries relating to the transfer of servicing; |
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(5) the date on which the transferor mortgage servicer |
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who is servicing the mortgage loan before the assignment, sale, or |
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other transfer will cease to accept payments relating to the loan |
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and the date on which the transferee mortgage servicer will begin to |
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accept the payments; |
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(6) any information concerning any effect the transfer |
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may have on the terms or the continued availability of mortgage life |
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or disability insurance or any other type of optional insurance and |
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what action, if any, the borrower must take to maintain coverage; |
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and |
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(7) a statement that the assignment, sale, or other |
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transfer of the servicing of the loan does not affect any term or |
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condition of the security instruments other than terms directly |
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related to the servicing of the loan. |
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(c) Except as provided by Subsection (e), a transferor |
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mortgage servicer shall provide the notice required under |
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Subsection (a) not later than the 15th day before the effective date |
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of the assignment, sale, or other transfer of the servicing of the |
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home loan. |
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(d) A transferee mortgage servicer to which the servicing of |
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a home loan is assigned, sold, or otherwise transferred shall |
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notify the borrower of the transfer to the same extent as a |
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transferor mortgage servicer is required to notify the borrower of |
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the transfer. Except as provided by Subsection (e), the notice must |
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be provided not later than the 15th day after the effective date of |
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the transfer. |
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(e) A mortgage servicer shall provide the notice required by |
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Subsection (a) or (d) not later than the 30th day after the |
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effective date of the assignment, sale, or other transfer of the |
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servicing of the home loan if the transfer was preceded by: |
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(1) termination of the contract for servicing the loan |
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for cause; or |
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(2) commencement of proceedings for bankruptcy of the |
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servicer or an entity by which the servicer is owned or controlled. |
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(f) A transferor mortgage servicer or transferee mortgage |
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servicer is not required to provide notice of an assignment, sale, |
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or other transfer of the servicing of a home loan as required by |
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this section if the lender provides to the borrower, at settlement |
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with respect to the property for the purchase of which the loan is |
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made, written notice of the assignment, sale, or other transfer of |
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the servicing of the loan and that notice contains the information |
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required by Subsection (b). |
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(g) A mortgage servicer may not impose a late fee on a |
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borrower with respect to, or otherwise treat as late, any payment on |
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a home loan made by the borrower during the period beginning on the |
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effective date of the assignment, sale, or other transfer of the |
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servicing of the loan and ending on the 60th day after that date if |
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the payment is received by the transferor servicer instead of the |
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transferee servicer before the applicable due date. |
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Sec. 343.309. NOTICE OF ASSIGNMENT, SALE, OR OTHER TRANSFER |
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OF HOME LOAN. (a) A lender shall notify the borrower in writing of |
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any assignment, sale, or other transfer of a home loan to any other |
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person not later than the 15th day before the effective date of the |
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transfer. |
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(b) The notice required under Subsection (a) must contain: |
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(1) the effective date of the transfer; |
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(2) the name and telephone number of an individual |
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employed by, or the office or department of, the transferor lender |
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that can be contacted by the borrower to answer inquiries relating |
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to the transfer of the loan; and |
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(3) the name and telephone number of an individual |
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employed by, or the office or department of, the transferee that can |
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be contacted by the borrower to answer inquiries relating to the |
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transfer of the loan. |
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Sec. 343.310. DUTY OF MORTGAGE SERVICER TO RESPOND TO |
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BORROWER REQUEST. (a) If a mortgage servicer receives a qualified |
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written request from the borrower or an agent of the borrower for |
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information relating to the servicing of the loan, the servicer |
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shall, not later than the fifth day after the date the request is |
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received, provide a written response acknowledging receipt of the |
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correspondence or take the requested action. For purposes of this |
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subsection, a qualified written request is a written |
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correspondence, other than notice on a payment coupon or other |
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payment medium supplied by the servicer, that: |
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(1) includes, or otherwise enables the servicer to |
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identify, the name and account of the borrower; and |
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(2) states, to the extent applicable, the reasons the |
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borrower believes that the account is in error or provides |
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sufficient detail to the servicer regarding other information |
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sought by the borrower. |
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(b) Not later than the 30th day after the date the request is |
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received, and, if applicable, before taking action with respect to |
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the request, the mortgage servicer shall: |
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(1) make appropriate corrections to the borrower's |
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account, including the crediting of any late charges or penalties, |
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and shall transmit to the borrower a written notification of the |
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correction, including the name and telephone number of a |
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representative of the servicer who can assist the borrower; |
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(2) after conducting an investigation, provide to the |
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borrower a written explanation or clarification that states: |
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(A) to the extent applicable, the reasons the |
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servicer believes the account is correct as determined by the |
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servicer; and |
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(B) the name and telephone number of an |
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individual employee of, or the office or department of, the |
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servicer who can assist the borrower; or |
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(3) after conducting an investigation, provide to the |
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borrower: |
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(A) a written explanation or clarification that |
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includes information requested by the borrower; |
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(B) a written explanation of why the information |
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requested is unavailable or cannot be obtained by the servicer; and |
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(C) the name and telephone number of an |
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individual employee of, or the office or department of, the |
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servicer who can assist the borrower. |
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(c) During the period beginning on the date a servicer |
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receives from a borrower a qualified written request relating to a |
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dispute regarding the borrower's payments and ending on the 60th |
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day after that date, a servicer may not provide to a consumer |
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reporting agency, as defined by 15 U.S.C. Section 1681a, |
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information regarding any overdue payment owed by the borrower and |
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relating to the period or qualified written request. |
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Sec. 343.311. FORCE-PLACED HAZARD INSURANCE. (a) In this |
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section, "force-placed hazard insurance" means hazard insurance |
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coverage obtained by a mortgage servicer with respect to real |
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property securing a home loan when the borrower fails to maintain or |
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renew hazard insurance on the property as required under the terms |
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of the loan. |
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(b) A mortgage servicer may not obtain force-placed hazard |
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insurance unless the servicer has a reasonable basis to believe |
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that the borrower has failed to comply with the terms of the home |
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loan requiring that the borrower maintain hazard insurance on the |
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property. |
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(c) For purposes of this section, a mortgage servicer does |
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not have a reasonable basis for obtaining force-placed hazard |
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insurance unless: |
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(1) the servicer has mailed, by first-class mail, a |
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written notice to the borrower that contains: |
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(A) a reminder of the borrower's obligation to |
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maintain hazard insurance on the property securing the home loan; |
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(B) a statement that the servicer does not have |
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evidence of the required insurance coverage of the property; |
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(C) a clear and conspicuous statement of the |
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procedures by which the borrower may demonstrate that the borrower |
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already has the required coverage; and |
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(D) a statement that the servicer may obtain the |
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required coverage at the borrower's expense if the borrower does |
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not demonstrate that the borrower has the required coverage in a |
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timely manner; |
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(2) the servicer has mailed, by first-class mail, a |
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second written notice, not later than the 30th day after the date |
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the notice under Subdivision (1) was mailed, that contains all the |
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information described by that subdivision; and |
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(3) the servicer has not received from the borrower |
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any demonstration of the required coverage for the property |
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securing the home loan by the end of the 15-day period beginning on |
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the date the notice under Subdivision (2) was mailed by the |
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servicer. |
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(d) A mortgage servicer must accept from a borrower any |
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reasonable form of written confirmation that the borrower has the |
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required coverage, including: |
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(1) the existing insurance policy number along with |
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the identity of and contact information for the insurance company |
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or agent; or |
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(2) confirmation authorized by finance commission |
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rule. |
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(e) Not later than the 15th day after the date a mortgage |
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servicer receives confirmation that a borrower has the required |
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hazard insurance coverage, the servicer shall: |
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(1) terminate any force-placed hazard insurance; and |
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(2) refund to the borrower: |
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(A) all force-placed hazard insurance premiums |
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paid by the borrower during any period in which the borrower's |
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insurance coverage and the force-placed hazard insurance coverage |
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were both in effect; and |
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(B) any related fees charged to the borrower's |
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account with respect to the force-placed hazard insurance during |
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that period. |
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(f) A charge relating to force-placed hazard insurance |
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imposed on a borrower by or through a mortgage servicer must be bona |
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fide and reasonable. |
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Sec. 343.312. LIABILITY FOR CERTAIN VIOLATIONS UNDER THIS |
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SUBCHAPTER. (a) Except as provided by Subsection (e), a mortgage |
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servicer that violates Section 343.308 or 343.310 is liable to the |
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borrower for damages as provided by this section. |
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(b) If an action is brought under this section by a single |
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borrower, the mortgage servicer is liable for: |
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(1) any actual damages to the borrower as a result of |
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the violation; and |
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(2) any additional damages the court allows, in the |
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case of a pattern or practice of violations of this section, in an |
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amount not to exceed $2,000. |
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(c) If the action is a class action, the mortgage servicer |
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is liable for: |
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(1) any actual damages to each of the borrowers in the |
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class as a result of the violation; and |
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(2) any additional damages the court allows, in the |
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case of a pattern or practice of violations of this section, in an |
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amount not to exceed $1,000 for each member of the class, provided |
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that the total amount of damages under this subdivision in any class |
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action may not exceed the lesser of: |
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(A) $1,000,000; or |
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(B) one percent of the net worth of the mortgage |
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servicer. |
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(d) In addition to the amounts awarded under Subsection (b) |
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or (c), a mortgage servicer who violates this section is liable for |
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court costs and reasonable attorney's fees incurred in connection |
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with the action. |
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(e) A mortgage servicer is not liable under this section for |
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any failure to comply with a requirement of Section 343.308 or |
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343.310 if, not later than the 60th day after the date an error is |
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discovered by the servicer and before the commencement of an action |
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under this section and the receipt of written notice of the error |
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from the borrower, the servicer notifies the borrower of the error |
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and makes any adjustments necessary to the appropriate account to |
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ensure that the borrower will not be required to pay an amount in |
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excess of any amount that the borrower otherwise would have paid. |
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SECTION 2. This Act takes effect January 1, 2012. |