Texas House Bill HB3482

Texas 2009 - 81st Regular

Caption

Relating to the notice required by mortgage servicers before foreclosing a contract lien on certain real property; providing civil penalties.

Impact

The legislation introduces significant changes to the property code, specifically in Chapter 51, by adding Section 51.0022. This addition requires mortgage servicers to prepare a written affirmation that details whether the mediation occurred and the outcomes of such mediation efforts. Furthermore, if a debtor elects to mediate, all collection activities must be paused until the mediation concludes or for up to 60 days, whichever occurs first. This gives debtors a clear pathway to potentially resolve their issues without the immediate threat of foreclosure hanging over their heads.

Summary

House Bill 3482 aims to enhance the notice requirements that mortgage servicers must fulfill before initiating foreclosure on certain residential properties. Specifically, the bill mandates that mortgage servicers provide timely notice to debtors, informing them of their right to mediation prior to the acceleration of repayment or posting the property for foreclosure. This notice must be sent not less than 90 days nor more than 60 days before such actions are considered, ensuring that debtors are aware of their rights and potential options to resolve disputes before reaching the foreclosure stage.

Conclusion

Overall, HB3482 seeks to strike a balance between the rights of debtors and the operations of mortgage servicers by emphasizing the importance of clear communication and mediation in the foreclosure process. If enacted, this bill could significantly alter the landscape for mortgage servicing in Texas, facilitating a fairer process for homeowners while imposing stricter guidelines for servicers.

Contention

While the bill is designed to protect homeowners from premature foreclosure actions and to promote mediation as a viable alternative, it may face contention regarding the imposition of civil penalties for non-compliance by mortgage servicers. A fine of up to $2,000 can be levied against servicers who fail to adhere to the notice requirements, which some may argue places an additional burden on these servicers. The industry may argue that while the intention is to support debtors, these requirements may complicate the foreclosure process and lead to unintended consequences for financial institutions and, ultimately, for the housing market.