Texas 2009 - 81st Regular

Texas Senate Bill SB1868 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R7675 JE-D
2	2	By: Ellis S.B. No. 1868
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of certain residential mortgage
8	8	foreclosure consulting services; providing a criminal penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Title 2, Business & Commerce Code, is amended by
11	11	adding Chapter 21 to read as follows:
12	12	CHAPTER 21. REGULATION OF CERTAIN RESIDENTIAL FORECLOSURE
13	13	CONSULTING SERVICES
14	14	SUBCHAPTER A. GENERAL PROVISIONS
15	15	Sec. 21.001. DEFINITIONS. In this chapter:
16	16	(1) "Foreclosure consultant" means a person who
17	17	performs, or represents that the person can or will perform, for
18	18	compensation services in connection with the prevention or
19	19	postponement of foreclosure proceedings against a homeowner's
20	20	residential property or other services related to the foreclosure
21	21	of the property.
22	22	(2) "Residence in foreclosure" means residential real
23	23	property consisting of not more than four single-family dwelling
24	24	units, at least one of which is occupied as the homeowner's
25	25	principal place of residence, and against which a foreclosure
26	26	action has been commenced.
27	27	Sec. 21.002. EXCEPTION FROM APPLICABILITY OF CHAPTER. (a)
28	28	Except as provided by Subsection (b), this chapter does not apply to
29	29	the following persons who perform foreclosure consulting services:
30	30	(1) an attorney admitted to practice in this state who
31	31	performs those services in relation to the attorney's
32	32	attorney-client relationship with a homeowner or the beneficiary of
33	33	the lien being foreclosed;
34	34	(2) a person who holds or is owed an obligation secured
35	35	by a lien on a residence in foreclosure if the person performs those
36	36	services in connection with the obligation or lien;
37	37	(3) a person that regulates banks, trust companies,
38	38	savings and loan associations, credit unions, or insurance
39	39	companies under the laws of this state or the United States if the
40	40	person performs those services as part of the person's normal
41	41	business activities;
42	42	(4) an affiliate of a person described by Subdivision
43	43	(3) if the affiliate performs those services as part of the
44	44	affiliate's normal business activities;
45	45	(5) a judgment creditor of the homeowner of the
46	46	residence in foreclosure, if:
47	47	(A) the legal action giving rise to the judgment
48	48	was commenced before the notice of default required under Section
49	49	5.064 or 51.002(d), Property Code; and
50	50	(B) the judgment is recorded in the real property
51	51	records of the clerk of the county where the residence in
52	52	foreclosure is located;
53	53	(6) a licensed title insurer, title insurance agent,
54	54	or escrow officer authorized to transact business in this state if
55	55	the person is performing those services in conjunction with title
56	56	insurance or settlement services;
57	57	(7) a licensed real estate broker or real estate
58	58	salesperson if the person is engaging in an activity for which the
59	59	person is licensed;
60	60	(8) a mortgage broker or loan officer licensed under
61	61	Chapter 156, Finance Code, if the person is engaging in an activity
62	62	for which the person is licensed; or
63	63	(9) a nonprofit organization that provides solely
64	64	counseling or advice to homeowners who have a residence in
65	65	foreclosure or have defaulted on their home loans, unless the
66	66	organization is an associate of the foreclosure consultant.
67	67	(b) This chapter applies to a person described by Subsection
68	68	(a) if the person is providing foreclosure consulting services
69	69	designed or intended to transfer title, directly or indirectly, to
70	70	a residence in foreclosure to that person or the person's
71	71	associate.
72	72	[Sections 21.003-21.050 reserved for expansion]
73	73	SUBCHAPTER B. CONTRACT FOR SERVICES
74	74	Sec. 21.051. FORM AND TERMS OF CONTRACT. Each contract for
75	75	the purchase of the services of a foreclosure consultant by a
76	76	homeowner of a residence in foreclosure must be in writing, dated,
77	77	and signed by each homeowner and the foreclosure consultant.
78	78	Sec. 21.052. REQUIRED DISCLOSURE. Before entering into a
79	79	contract with a homeowner of a residence in foreclosure for the
80	80	purchase of the services of a foreclosure consultant, the
81	81	foreclosure consultant shall provide the homeowner written notice
82	82	stating the following, in at least 14-point boldfaced type:
83	83	NOTICE REQUIRED BY TEXAS LAW
84	84	_______ (Name) or an associate of _________ (Name) cannot ask you to
85	85	sign or have you sign any document that transfers any interest in
86	86	your home or property to __________ (Name) or ___________ (Name's)
87	87	associate.
88	88	_______ (Name) or ________ (Name's) associate cannot guarantee you
89	89	that they will be able to refinance your home or arrange for you to
90	90	keep your home.
91	91	You may, at any time, cancel or rescind this contract, without
92	92	penalty of any kind.
93	93	If you want to cancel this contract, mail or deliver a signed and
94	94	dated copy of this notice of cancellation or rescission, or any
95	95	other written notice, indicating your intent to cancel or rescind
96	96	to _________________ (Name and address of foreclosure consultant)
97	97	at ________________________ (Address of foreclosure consultant,
98	98	including facsimile and electronic mail address).
99	99	As part of any cancellation or rescission, you (the homeowner) must
100	100	repay any money spent on your behalf by _____________________ (Name
101	101	of foreclosure consultant) prior to receipt of this notice and as a
102	102	result of this agreement, within 60 days, along with interest
103	103	calculated at the rate of eight percent per year.
104	104	[Sections 21.053-21.100 reserved for expansion]
105	105	SUBCHAPTER C. PROHIBITIONS, LIMITATIONS, AND DUTIES REGARDING
106	106	SERVICES
107	107	Sec. 21.101. RESTRICTIONS ON CHARGE OR RECEIPT OF
108	108	CONSIDERATION. A foreclosure consultant may not:
109	109	(1) charge, collect, or receive compensation until the
110	110	foreclosure consultant has fully performed each service the
111	111	foreclosure consultant has contracted to perform or has represented
112	112	the foreclosure consultant can or will perform unless the
113	113	foreclosure consultant has obtained a surety bond or established
114	114	and maintained a surety account for each location at which the
115	115	foreclosure consultant conducts business in the manner that
116	116	Subchapter E, Chapter 393, Finance Code, provides for credit
117	117	services organizations; or
118	118	(2) receive any consideration from a third party in
119	119	connection with foreclosure consulting services provided to the
120	120	homeowner of a residence in foreclosure unless the consideration is
121	121	fully disclosed in writing to the homeowner.
122	122	Sec. 21.102. PROHIBITED CONDUCT. A foreclosure consultant
123	123	may not:
124	124	(1) take any power of attorney from a homeowner for any
125	125	purpose other than to inspect documents;
126	126	(2) for purposes of securing payment of compensation,
127	127	acquire an interest, directly or indirectly, in the real or
128	128	personal property of the homeowner of a residence in foreclosure
129	129	with whom the foreclosure consultant has contracted to perform
130	130	services; or
131	131	(3) take an assignment of wages to secure payment of
132	132	compensation.
133	133	Sec. 21.103. RETENTION OF RECORDS. (a) A foreclosure
134	134	consultant shall keep each record and document, including the
135	135	foreclosure consultant contract, related to foreclosure consulting
136	136	services performed on behalf of homeowners.
137	137	(b) A foreclosure consultant shall retain the records
138	138	described by Subsection (a) until at least the third anniversary of
139	139	the day the foreclosure consultant contract entered into by the
140	140	consultant and the homeowner was terminated or concluded.
141	141	[Sections 21.104-21.150 reserved for expansion]
142	142	SUBCHAPTER D. ENFORCEMENT
143	143	Sec. 21.151. CRIMINAL PENALTY. (a) A person commits an
144	144	offense if the person violates this chapter.
145	145	(b) An offense under this chapter is a Class C misdemeanor.
146	146	Sec. 21.152. DECEPTIVE TRADE PRACTICE. A violation of this
147	147	chapter is a false, misleading, or deceptive act or practice
148	148	actionable under Subchapter E, Chapter 17.
149	149	SECTION 2. The changes in law made by this Act apply to a
150	150	contract entered into on or after the effective date of this Act. A
151	151	contract entered into before the effective date of this Act is
152	152	governed by the law in effect on the date the contract was entered
153	153	into, and the former law is continued in effect for that purpose.
154	154	SECTION 3. This Act takes effect September 1, 2009.