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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of insurance proceeds paid to an insured and a |
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lender for residential property damage. |
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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 343.107 to read as follows: |
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Sec. 343.107. NOTICE REQUIRED BY LENDER BEFORE APPLICATION |
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OF CERTAIN INSURANCE PROCEEDS. A lender may not apply the proceeds |
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of an insurance claim described by Section 557.002(a), Insurance |
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Code, to reduce the balance of the home loan secured by the insured |
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property at any time before the 90th day after the date the lender |
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sends the notice required by Section 557.002(a)(1), Insurance Code. |
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SECTION 2. Section 557.002(a), Insurance Code, is amended |
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to read as follows: |
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(a) If a claim under an insurance policy for damage to |
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residential real property is paid to the insured and a lender, [and
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the lender holds all or part of the proceeds from the insurance
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claim payment pending completion of all or part of the repairs to
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the property,] the lender shall notify the insured of: |
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(1) the insured's options with respect to having the |
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lender place the proceeds of the claim in escrow for repair or |
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rebuilding of the property or apply the proceeds to reduce the |
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balance of the loan secured by the property; and |
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(2) each requirement with which the insured must |
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comply for the lender to release [the] insurance proceeds held by |
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the lender. |
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SECTION 3. Section 343.107, Finance Code, as added by this |
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Act, applies only to a home loan entered into on or after the |
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effective date of this Act. A home loan entered into before the |
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effective date of this Act is governed by the law in effect on the |
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date the home loan was entered into, and the former law is continued |
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in effect for that purpose. |
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SECTION 4. Section 557.002(a), Insurance Code, as amended |
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by this Act, applies only to notice concerning insurance proceeds |
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paid to a lender on or after the effective date of this Act. Notice |
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concerning insurance proceeds paid to a lender before the effective |
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date of this Act is governed by the law as it existed immediately |
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before the effective date of this Act, and that law is continued in |
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effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2017. |