Texas 2009 - 81st Regular

Texas Senate Bill SB354 Compare Versions

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

Old	New	Differences
1	1	By: Estes S.B. No. 354
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to transactions involving residential mortgage
7	7	foreclosures; providing a penalty.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Title 2, Business & Commerce Code, is amended by
10	10	adding Chapter 21 to read as follows:
11	11	CHAPTER 21. HOMEOWNER PROTECTION FROM CERTAIN FORECLOSURE-RELATED
12	12	TRANSACTIONS
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 21.001. DEFINITIONS. In this chapter:
15	15	(1) "Equity purchase contract" means a contract
16	16	between an equity purchaser and the homeowner of a residence in
17	17	foreclosure.
18	18	(2) "Equity purchaser" means a person who, in the
19	19	course of the person's business, vocation, or occupation, acquires
20	20	title to a residence in foreclosure. The term does not include a
21	21	person who acquires the title:
22	22	(A) for purposes of using the property as the
23	23	person's residence for at least one year;
24	24	(B) by a deed in lieu of foreclosure to the holder
25	25	of a voluntary lien or encumbrance of record;
26	26	(C) by a deed from the officer charged with
27	27	selling property under Chapter 34, Tax Code;
28	28	(D) at a sale of real property authorized by
29	29	statute;
30	30	(E) by court order or judgment; or
31	31	(F) from the person's spouse or a relative of the
32	32	person related by consanguinity or affinity.
33	33	(3) "Foreclosure consultant" means a person who
34	34	performs, or represents that the person can or will perform, for
35	35	compensation services in connection with the prevention or
36	36	postponement of foreclosure proceedings against a homeowner's
37	37	residential property or other services related to the foreclosure
38	38	of the property.
39	39	(4) "Residence in foreclosure" means residential real
40	40	property consisting of not more than four single-family dwelling
41	41	units, at least one of which is occupied as the homeowner's
42	42	principal place of residence, and against which a foreclosure
43	43	action has been commenced.
44	44	Sec. 21.002. EXCEPTION FROM APPLICABILITY OF CERTAIN
45	45	SUBCHAPTERS. (a) Except as provided by Subsection (b),
46	46	Subchapters B and C do not apply to the following persons who
47	47	perform foreclosure consulting services:
48	48	(1) an attorney admitted to practice in this state who
49	49	performs those services in relation to the attorney's
50	50	attorney-client relationship with a homeowner or the beneficiary of
51	51	the lien being foreclosed;
52	52	(2) a person who holds or is owed an obligation secured
53	53	by a lien on a residence in foreclosure if the person performs those
54	54	services in connection with the obligation or lien;
55	55	(3) a person that regulates banks, trust companies,
56	56	savings and loan associations, credit unions, or insurance
57	57	companies under the laws of this state or the United States if the
58	58	person performs those services as part of the person's normal
59	59	business activities;
60	60	(4) an affiliate of a person described by Subdivision
61	61	(3) if the affiliate performs those services as part of the
62	62	affiliate's normal business activities;
63	63	(5) a judgment creditor of the homeowner of the
64	64	residence in foreclosure, if:
65	65	(A) the legal action giving rise to the judgment
66	66	was commenced before the notice of default required under Section
67	67	5.064 or 51.002(d), Property Code; and
68	68	(B) the judgment is recorded in the real property
69	69	records of the clerk of the county where the residence in
70	70	foreclosure is located;
71	71	(6) a licensed title insurer, title insurance agent,
72	72	or escrow officer authorized to transact business in this state if
73	73	the person is performing those services in conjunction with title
74	74	insurance or settlement services;
75	75	(7) a licensed real estate broker or real estate
76	76	salesperson if the person is engaging in an activity for which the
77	77	person is licensed;
78	78	(8) a mortgage broker or loan officer licensed under
79	79	Chapter 156, Finance Code, if the person is engaging in an activity
80	80	for which the person is licensed; or
81	81	(9) a nonprofit organization that provides solely
82	82	counseling or advice to homeowners who have a residence in
83	83	foreclosure or have defaulted on their home loans, unless the
84	84	organization is an associate of the foreclosure consultant.
85	85	(b) Subchapters B and C apply to a person described by
86	86	Subsection (a) if the person is providing foreclosure consulting
87	87	services designed or intended to transfer title, directly or
88	88	indirectly, to a residence in foreclosure to that person or the
89	89	person's associate.
90	90	[Sections 21.003-21.050 reserved for expansion]
91	91	SUBCHAPTER B. CONTRACT FOR FORECLOSURE CONSULTING SERVICES
92	92	Sec. 21.051. FORM AND TERMS OF CONTRACT. (a) Each
93	93	contract for the purchase of the services of a foreclosure
94	94	consultant by a homeowner of a residence in foreclosure must be in
95	95	writing, dated, and signed by each homeowner and the foreclosure
96	96	consultant.
97	97	(b) In addition to the notice required by Section 21.052,
98	98	the contract must:
99	99	(1) fully describe the services the foreclosure
100	100	consultant is to perform for the homeowner; and
101	101	(2) contain the payment terms, including the total
102	102	payments to be made to the foreclosure consultant or the
103	103	foreclosure consultant's associate.
104	104	Sec. 21.052. REQUIRED DISCLOSURE. The contract must state
105	105	the following, in at least 14-point boldfaced type, in immediate
106	106	proximity to the space reserved for the homeowner's signature:
107	107	NOTICE REQUIRED BY TEXAS LAW
108	108	_______ (Name) or an associate of _________ (Name) cannot ask you to
109	109	sign or have you sign any document that transfers any interest in
110	110	your home or property to __________ (Name) or ___________ (Name's)
111	111	associate.
112	112	_______ (Name) or ________ (Name's) associate cannot guarantee you
113	113	that they will be able to refinance your home or arrange for you to
114	114	keep your home.
115	115	This is an important legal contract and could result in the loss of
116	116	your home. You should consider contacting an attorney or a housing
117	117	counselor approved by the United States Department of Housing and
118	118	Urban Development before signing.
119	119	[Sections 21.053-21.100 reserved for expansion]
120	120	SUBCHAPTER C. PROHIBITIONS AND RESTRICTIONS REGARDING FORECLOSURE
121	121	CONSULTING SERVICES
122	122	Sec. 21.101. NOTICE OF CHARGE OR RECEIPT OF CONSIDERATION.
123	123	A foreclosure consultant may not receive any consideration from a
124	124	third party in connection with foreclosure consulting services
125	125	provided to the homeowner of a residence in foreclosure unless the
126	126	consideration is fully disclosed in writing to the homeowner.
127	127	Sec. 21.102. PROHIBITED CONDUCT. A foreclosure consultant
128	128	may not:
129	129	(1) charge, collect, or receive interest or
130	130	compensation for a loan made by the foreclosure consultant to the
131	131	homeowner of a residence in foreclosure that exceeds eight percent
132	132	a year; or
133	133	(2) acquire an interest, directly or indirectly, in
134	134	the real or personal property of the homeowner of a residence in
135	135	foreclosure with whom the foreclosure consultant has contracted to
136	136	perform services.
137	137	[Sections 21.103-21.150 reserved for expansion]
138	138	SUBCHAPTER D. EQUITY PURCHASE CONTRACTS
139	139	Sec. 21.151. FORM AND TERMS OF CONTRACT. (a) Each equity
140	140	purchase contract must be in writing, dated, and signed by each
141	141	selling owner of the residence in foreclosure and the equity
142	142	purchaser before the execution of any instrument quit-claiming,
143	143	assigning, transferring, conveying, or encumbering an interest in
144	144	the residence in foreclosure.
145	145	(b) In addition to the notice required by Section 21.152,
146	146	the contract must contain:
147	147	(1) the name, business address, and telephone number
148	148	of the equity purchaser;
149	149	(2) the total consideration to be paid by the equity
150	150	purchaser in connection with or incident to the equity purchaser's
151	151	acquisition, which in no event may be less than 82 percent of the
152	152	property's fair market value;
153	153	(3) the payment terms or the terms of other
154	154	consideration for services the equity purchaser represents will be
155	155	performed for the selling homeowner before or after the sale; and
156	156	(4) the following notice:
157	157	"NOTICE REQUIRED BY TEXAS LAW
158	158	Until your right to cancel this contract has ended, ____________
159	159	(Name) or anyone working for __________ (Name) CANNOT ask you to
160	160	sign or have you sign any deed or any other document."
161	161	Sec. 21.152. NOTICE OF CANCELLATION. (a) The contract
162	162	must conspicuously state the following as the last provision before
163	163	the space reserved for the selling homeowner's signature:
164	164	"You may cancel this contract for the sale of your house without any
165	165	penalty or obligation at any time before _________________(Date and
166	166	time of day). See the attached notice of cancellation form for an
167	167	explanation of this right."
168	168	(b) The contract must have attached two easily detachable
169	169	copies of a cancellation notice. The notice must be in the
170	170	following form:
171	171	"NOTICE OF CANCELLATION
172	172	______ (Date contract signed)
173	173	You may cancel this contract for the sale of your house, without any
174	174	penalty or obligation, at any time before
175	175	_________________________ (Date and time of day). To cancel this
176	176	transaction, personally deliver a signed and dated copy of this
177	177	Notice of Cancellation by United States mail, postage prepaid, to
178	178	__________________, (Name of purchaser) at
179	179	_______________________(Street address of purchaser's place of
180	180	business) NOT LATER THAN __________________(Date and time of day).
181	181	I hereby cancel this transaction.
182	182	_______________________________ (Date)
183	183	________________________________ (Seller's signature)"
184	184	[Sections 21.153-21.200 reserved for expansion]
185	185	SUBCHAPTER E. PROHIBITIONS AND RESTRICTIONS REGARDING EQUITY
186	186	PURCHASE CONTRACTS
187	187	Sec. 21.201. ACTIONS BEFORE CANCELLATION PERIOD EXPIRES.
188	188	An equity purchaser may not do any of the following before the
189	189	period within which the homeowner may cancel the transaction has
190	190	elapsed:
191	191	(1) accept from the homeowner an execution of, or
192	192	induce the homeowner to execute, an instrument of conveyance of an
193	193	interest in the residence in foreclosure;
194	194	(2) transfer or encumber or purport to transfer or
195	195	encumber an interest in the residence in foreclosure to a third
196	196	party; or
197	197	(3) pay any consideration to the homeowner.
198	198	Sec. 21.202. FALSE OR MISLEADING REPRESENTATION OR
199	199	STATEMENT. (a) An equity purchaser may not make a false or
200	200	misleading statement regarding the value of the residence in
201	201	foreclosure or the amount of proceeds the homeowner will receive
202	202	after a foreclosure sale.
203	203	(b) An equity purchaser may not represent, directly or
204	204	indirectly, that the equity purchaser is assisting the foreclosed
205	205	homeowner:
206	206	(1) to "save" the person's home or other words to that
207	207	effect; or
208	208	(2) in preventing a completed foreclosure if the
209	209	result of the transaction is that the foreclosed homeowner will not
210	210	repurchase the property.
211	211	[Sections 21.203-21.250 reserved for expansion]
212	212	SUBCHAPTER F. CIVIL REMEDIES
213	213	Sec. 21.251. DECEPTIVE TRADE PRACTICE. A violation of this
214	214	chapter is a false, misleading, or deceptive act or practice
215	215	actionable under Subchapter E, Chapter 17.
216	216	SECTION 2. The changes in law made by this Act apply to a
217	217	contract entered into on or after the effective date of this Act. A
218	218	contract entered into before the effective date of this Act is
219	219	governed by the law in effect on the date the contract was entered
220	220	into, and the former law is continued in effect for that purpose.
221	221	SECTION 3. This Act takes effect September 1, 2009.