Bill Text: TX SB1995 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Relating to disclosures in connection with certain wrap mortgage loan transactions; providing a criminal penalty.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2017-03-27 - Referred to Business & Commerce [SB1995 Detail]
Download: Texas-2017-SB1995-Introduced.html
85R6268 AJA-F | ||
By: Watson, Rodríguez, Zaffirini | S.B. No. 1995 |
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relating to disclosures in connection with certain wrap mortgage | ||
loan transactions; providing a criminal penalty. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by | ||
adding Chapter 160 to read as follows: | ||
CHAPTER 160. RESIDENTIAL WRAP MORTGAGE LOAN FINANCING | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 160.001. DEFINITIONS. In this chapter: | ||
(1) "Residential mortgage loan" and "residential real | ||
estate" have the meanings assigned by Section 180.002. | ||
(2) "Wrap borrower" means a person obligated to pay a | ||
wrap mortgage loan. | ||
(3) "Wrap lender" means a person who makes a wrap | ||
mortgage loan. | ||
(4) "Wrap mortgage loan" means a residential mortgage | ||
loan: | ||
(A) made to finance the purchase of residential | ||
real estate that will continue to be subject to an unreleased lien | ||
that: | ||
(i) attached to the residential real estate | ||
before the loan was made; and | ||
(ii) secures a debt incurred by a person | ||
other than the wrap borrower that was not paid off at the time the | ||
loan was made; and | ||
(B) obligating the wrap borrower to the wrap | ||
lender for payment of a debt the principal amount of which includes: | ||
(i) the outstanding balance of the debt | ||
described by Paragraph (A)(ii); and | ||
(ii) any remaining amount of the purchase | ||
price financed by the wrap lender. | ||
SUBCHAPTER B. DISCLOSURE REQUIREMENTS | ||
Sec. 160.051. DISCLOSURE STATEMENT. (a) A wrap lender not | ||
otherwise required to provide a written disclosure statement to the | ||
wrap borrower under Section 5.016, Property Code, must, on or | ||
before the seventh day before the wrap mortgage loan agreement is | ||
entered into, provide to the wrap borrower and each holder of a lien | ||
described by Section 160.001(4)(A), a separate written disclosure | ||
statement in at least 12-point type that contains the information | ||
required for a written disclosure statement under Section 5.016, | ||
Property Code. | ||
(b) Regardless of whether the wrap lender provides a written | ||
disclosure statement under Subsection (a) or under Section 5.016, | ||
Property Code, the wrap lender's disclosure statement to the wrap | ||
borrower must include a statement in a form substantially similar | ||
to the following: | ||
NOTICE REGARDING PROPERTY INSURANCE: ANY INSURANCE MAINTAINED BY A | ||
SELLER, LENDER, OR OTHER PERSON WHO IS NOT THE BUYER OF THIS | ||
PROPERTY MAY NOT PROVIDE COVERAGE TO THE BUYER IF THE BUYER SUFFERS | ||
A LOSS OR INCURS LIABILITY IN CONNECTION WITH THE PROPERTY. TO | ||
ENSURE THE BUYER'S INTERESTS ARE PROTECTED, THE BUYER SHOULD | ||
PURCHASE THE BUYER'S OWN PROPERTY INSURANCE. BEFORE PURCHASING | ||
THIS PROPERTY, YOU MAY WISH TO CONSULT AN INSURANCE AGENT REGARDING | ||
THE INSURANCE COVERAGE AVAILABLE TO YOU AS A BUYER OF THE PROPERTY. | ||
Sec. 160.052. RECORD OF DISCLOSURE. A wrap lender must | ||
retain a copy of a disclosure statement provided under Section | ||
160.051 until the first anniversary of the earliest date on which | ||
all liens described by Section 160.001(4)(A) are released. | ||
Sec. 160.053. FOREIGN LANGUAGE REQUIREMENT. Regardless of | ||
whether the wrap lender provides a written disclosure statement | ||
under Section 160.051 or under Section 5.016, Property Code, if the | ||
negotiations that precede the execution of the wrap mortgage loan | ||
agreement are conducted primarily in a language other than English, | ||
the wrap lender shall provide a copy of the required disclosure | ||
statement in that language to the wrap borrower. | ||
Sec. 160.054. FAILURE TO PROVIDE DISCLOSURE: TOLLING OF | ||
LIMITATIONS. If a wrap lender fails to provide the disclosure | ||
statement as required by Section 160.051 or fails to provide the | ||
disclosure statement in the language required by Section 160.053, | ||
the limitations period applicable to any cause of action of the wrap | ||
borrower against the wrap lender arising out of the wrap lender's | ||
violation of a law of this state in connection with the wrap | ||
mortgage loan transaction is tolled until the 120th day after the | ||
date the required disclosure statement is provided. | ||
Sec. 160.055. FAILURE TO PROVIDE NOTICE: OFFENSE. (a) A | ||
wrap lender commits an offense if the wrap lender fails to provide a | ||
written disclosure statement under Section 160.051 or Section | ||
5.016, Property Code, that meets the requirements of this chapter | ||
and Section 5.016, Property Code, as applicable. | ||
(b) An offense under this section is a Class A misdemeanor. | ||
SECTION 2. Chapter 160, Finance Code, as added by this Act, | ||
applies only to a wrap mortgage loan made on or after the effective | ||
date of this Act. | ||
SECTION 3. This Act takes effect September 1, 2017. |