BILL ANALYSIS

Senate Research Center	H.B. 219
	By: Noble et al. (Johnson)
	Business & Commerce
	5/8/2023
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Currently, no requirement exists in Texas statute for a lender to release a lien on a paid-off mortgage. As a result, some homeowners discover while attempting to sell their home that the lien on the property was never released despite the loan having been paid in full. Consequences of this unresolved issue include a stall of the sale of a home or property and delay or cancellation of the closing while the property owner attempts to obtain proof of their pay-off. The lack of requirements regarding release of liens costs Texans time, money, and often the sale of their property. 

H.B. 219 would require mortgage holders to release a lien within 60 days of the loan being paid off in full by the mortgagor. This bill would also require mortgage servicers to release a lien within 30 days of receiving a written request from the mortgagor if the written request was delivered to the mortgage servicer within 20 days of the payoff of the home loan.

While good lenders already practice what this bill would require by law,  it is essential that all Texans are protected from the potential issue of not having a lien release filed when going to close on a home that they own in full.

Key Provisions:

• H.B. 219 amends the Texas Finance Code by adding Section 343.108, which does the following:
• Defines "mortgage servicer," "mortgagee," "mortgagor," and "release of lien."
• Requires that the mortgage servicer or mortgagee delivers to the mortgagor a release of lien for a home loan within 60 days of the mortgagor's payoff of a home loan. This release of lien must be filed with the appropriate county clerk's office for the real property records of the county.
• Requires that the mortgage servicer or mortgagee deliver to the mortgagor a release of lien for a home loan within 30 days of receiving a written request from the mortgagor if the mortgagor delivers a written request for the release of lien within 20 days of the full payoff of the home loan.
• Adds that mortgage servicers are required to comply with this section only if they have the authority to deliver or file a release of lien for the home loan.

Support:

• Texas Land Title Association
• Texas Bankers Association
• Independent Bankers Association of Texas

H.B. 219 amends current law relating to the release of a deed of trust or other contract lien securing a home loan after payoff by mortgagor.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter B, Chapter 343, Finance Code, by adding Section 343.108, as follows:

Sec. 343.108. RELEASE OF LIEN AFTER PAYOFF BY MORTGAGOR. (a) Defines "mortgage servicer," "mortgagee," "mortgagor," and "release of lien."

(b) Requires a mortgage servicer or mortgagee, except as provided by Subsection (c), not later than the 60th day after the date the mortgage servicer or mortgagee, as applicable, receives the correct payoff amount for a home loan from a mortgagor, to:

(1) deliver to the mortgagor a release of lien for the home loan; or

(2) file the release of lien with the appropriate county clerk's office for recording in the real property records of the county.

(c) Requires the mortgagee or mortgage servicer if, on or before the 20th day after the date of the payoff of the home loan, the mortgagor delivers a written request to the mortgagee or mortgage servicer for the release of lien to be delivered to the mortgagor or filed with the county clerk, to deliver or file the release of lien not later than the 30th day after the date the mortgagee or mortgage servicer receives the written request from the mortgagor.

(d) Provides that Chapter 349 (Penalties and Liabilities) does not apply to this section.

(e) Provides that a mortgage servicer is required to comply with this section only if the mortgage servicer has the authority to deliver or file a release of lien for the home loan.

SECTION 2. Provides that the provision of the home loan agreement prevails to the extent of a conflict between Section 343.108, Finance Code, as added by this Act, and a provision of a home loan agreement entered into before the effective date of this Act.

SECTION 3. Effective date: September 1, 2023.