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A BILL TO BE ENTITLED
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AN ACT
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relating to refinancing low-rate home loans involving natural |
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disaster recovery funds. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 343, Finance Code, is |
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amended by adding Section 343.1011 to read as follows: |
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Sec. 343.1011. REFINANCING OF LOAN MADE WITH DISASTER |
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RECOVERY FUNDS. (a) For purposes of this section, a low-rate home |
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loan, including an open-end account and notwithstanding Section |
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343.002, is a home loan that at its inception carries an interest |
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rate two percentage points or more below the yield on treasury |
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securities having comparable periods of maturity to the loan |
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maturity, except that if the loan's interest rate is subject to |
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change, the maximum rate that may be charged at any time during the |
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loan shall be used instead of the rate at the loan's inception to |
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determine whether the loan is a low-rate home loan. |
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(b) A lender may not refinance, replace, or consolidate a |
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low-rate home loan directly made by a government or nonprofit |
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lender wholly or partly using or funded by community development |
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block grant disaster recovery funds before the seventh anniversary |
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of the date of the loan unless the new or consolidated loan has a |
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lower interest rate and requires payment of a lesser amount of |
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points and fees than the original loan or is a restructure to avoid |
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foreclosure. |
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(c) In addition to other remedies provided by law, a lien |
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does not attach to real property that is based on a loan made in |
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violation of this section. |
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SECTION 2. The changes in law made by this Act apply only to |
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a loan closed on or after the effective date of this Act. A loan |
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closed before the effective date of this Act is governed by the law |
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in effect when the loan was closed, and the former law is continued |
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in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2011. |