By: Raymond H.B. No. 3181
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to prohibiting the non-judicial foreclosure of a loan for
  the purchase of certain residential property during a loan
  modification process; providing a penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 343, Finance Code, is amended by adding
  Subchapter D to read as follows:
  SUBCHAPTER D. REQUIREMENTS FOR MORTGAGE SERVICERS OF HOME LOANS
         Sec. 343.301.  DEFINITIONS. In this subchapter:
               (1)  "Foreclosure prevention alternative" means a loan
  modification or other alternative to foreclosure offered by or
  through a mortgage servicer.
               (2)  "Mortgage servicer" has the meaning assigned by
  Section 51.0001, Property Code.
         Sec. 343.302.  DUAL-TRACKING NON-JUDICIAL FORECLOSURE
  PROHIBITED. (a) This section applies only to a home loan that is a
  federally related mortgage loan, as defined by 12 U.S.C. Section
  2602, secured by a deed of trust or other contract lien on real
  property used as the borrower's residence.
         (b)  If a borrower submits a complete application for a loan
  modification offered by or through the borrower's mortgage
  servicer, the mortgage servicer or trustee may not serve a notice of
  default or notice of sale or exercise a power of sale under Section
  51.002, Property Code, while the application is pending and before
  the borrower has been provided with a written determination by the
  mortgage servicer regarding the borrower's eligibility for the
  requested loan modification.
         (c)  If a foreclosure prevention alternative is approved in
  writing before the service of a notice of default under Section
  51.002(d), Property Code, the mortgage servicer or trustee may not
  serve a notice of default if:
               (1)  the borrower is in compliance with the written
  terms of a trial or permanent loan modification, forbearance, or
  repayment plan; or
               (2)  a foreclosure prevention alternative has been
  approved in writing by all parties, including, for example, the
  holder of the note, junior lienholder, and mortgage insurer, as
  applicable, and proof of funds or financing has been provided to the
  mortgage servicer.
         (d)  If a foreclosure prevention alternative is approved in
  writing after the service of a notice of default under Section
  51.002(d), Property Code, a mortgage servicer or trustee may not
  serve a notice of sale or exercise a power of sale under Section
  51.002, Property Code, if:
               (1)  the borrower is in compliance with the written
  terms of a trial or permanent loan modification, forbearance, or
  repayment plan; or
               (2)  a foreclosure prevention alternative has been
  approved in writing by all parties, including, for example, the
  holder of the note, junior lienholder, and mortgage insurer, as
  applicable, and proof of funds or financing has been provided to the
  mortgage servicer.
         (e)  For purposes of this section, an application is
  considered complete when a borrower has supplied the mortgage
  servicer with all documents required by the mortgage servicer for
  the application within a reasonable time specified by the mortgage
  servicer.
         Sec. 343.303.  FORECLOSURE PREVENTION ALTERNATIVE SURVIVES
  TRANSFER. If a borrower has been approved in writing for a loan
  modification or other foreclosure prevention alternative and the
  borrower's loan is transferred or sold, the subsequent mortgage
  servicer shall continue to honor any previously approved loan
  modification or other foreclosure prevention alternative and is
  subject to Section 343.302 to the same extent as the previous
  mortgage servicer.
         Sec. 343.304.  LIABILITY. (a) A person who violates Section
  343.302 or 343.303 is liable to the borrower for:
               (1)  any actual damages to the borrower as a result of
  the violation; or
               (2)  if the court finds that the violation was the
  result of reckless conduct or intentional or wilful misconduct, the
  greater of:
                     (A)  three times the borrower's actual damages; or
                     (B)  $50,000.
         (b)  In addition to the amounts awarded under Subsection (a),
  a person who is liable under this section is liable for court costs
  and reasonable attorney's fees incurred in connection with the
  action.
         SECTION 2.  Subchapter D, Chapter 343, Finance Code, as
  added by this Act, applies only to a sale of residential real
  property for which notice of default under Section 51.002(d),
  Property Code, is provided on or after the effective date of this
  Act. A sale in which notice of default is provided before the
  effective date of this Act is subject to the law in effect
  immediately before that date, and that law is continued in effect
  for that purpose.
         SECTION 3.  This Act takes effect September 1, 2013.