Texas House Bill HB3083

Texas 2009 - 81st Regular

• Out of House Committee: 4/21/09

Caption

Relating to notice of dragnet clauses in deeds of trust.

Impact

Upon enactment, HB3083 will effectively modify Chapter 8 of the Business and Commerce Code by introducing Chapter 262, which specifically addresses the notice requirements related to dragnet clauses. This bill will ensure that individuals entering into obligations related to a deed of trust are adequately informed about their potential liabilities, thus promoting fair lending practices in the state. It underscores the importance of lender transparency, which proponents believe would foster trust in mortgage agreements.

Summary

House Bill 3083 aims to enhance transparency regarding dragnet clauses in deeds of trust by mandating that mortgagees provide written notice to certain third parties. Specifically, if an individual becomes obligated as a debtor or guarantor after a loan has been closed, the mortgagee must inform them about any provisions that could lead to the deed of trust securing debts incurred either before or after the deed's execution. This requirement is intended to protect individuals from unforeseen financial responsibilities associated with existing loans.

Contention

While the bill is poised to improve borrower awareness and potentially reduce disputes related to under-communicated liabilities, there may be concerns from lenders regarding the added administrative burden imposed by these notification requirements. Critics could argue that increasing disclosure requirements may complicate the lending process and slow down transactions. Nonetheless, the overarching goal of protecting consumers through greater transparency is likely to be a focal point of support for this legislative initiative.