82R1028 KFF-D
By: Oliveira H.B. No. 3760
A BILL TO BE ENTITLED
AN ACT
relating to home loans that are not federally related mortgage
loans; providing civil penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 343, Finance Code, is amended by adding
Subchapter D to read as follows:
SUBCHAPTER D. NONFEDERALLY RELATED MORTGAGE LOANS
Sec. 343.301. DEFINITION. In this subchapter, "mortgage
servicer" has the meaning assigned by Section 51.0001, Property
Code.
Sec. 343.302. APPLICABILITY. This subchapter applies only
to a home loan that is not a federally related mortgage loan, as
defined by 12 U.S.C. Section 2602.
Sec. 343.303. RULES. The finance commission may adopt
rules necessary to implement this subchapter.
Sec. 343.304. MONTHLY STATEMENTS REQUIRED. (a) A lender
shall provide to the borrower a monthly statement that clearly and
conspicuously states:
(1) the amount received by the lender as payment
towards the home loan during the preceding month;
(2) how the amount described by Subdivision (1) was
applied to the borrower's account, including a statement of the
amount that was applied to:
(A) the borrower's principal obligation under
the loan;
(B) the interest charged on the loan;
(C) any escrow or suspense account associated
with the loan; and
(D) any fee or other charge assessed against the
borrower during the preceding month; and
(3) the outstanding balance of the borrower's
principal obligation under the loan.
(b) If a lender violates this section, the affected borrower
may file suit against the lender:
(1) for any appropriate injunctive relief; and
(2) to recover:
(A) the borrower's actual damages;
(B) $100 for each statement the lender fails to
provide to the borrower as required by Subsection (a);
(C) $50 for each statement provided to the
borrower that does not substantially comply with the requirements
of Subsection (a); and
(D) the borrower's court costs and reasonable
attorney's fees.
Sec. 343.305. ANNUAL ACCOUNTING STATEMENT. (a) A lender
shall provide to the borrower an annual statement in January of each
year for the term of the home loan. The statement must clearly and
conspicuously state the following information:
(1) the amount of each payment that was received by the
lender as payment towards the home loan during the preceding
calendar year;
(2) how each payment described by Subdivision (1) was
applied to the borrower's account, including a statement of the
amount of each payment that was applied to:
(A) the borrower's principal obligation under
the loan;
(B) the interest charged on the loan;
(C) any escrow or suspense account associated
with the loan; and
(D) any fee or other charge assessed against the
borrower during the preceding calendar year; and
(3) the outstanding balance of the borrower's
principal obligation under the loan.
(b) If a lender violates this section, the affected borrower
may file suit against the lender:
(1) for any appropriate injunctive relief; and
(2) to recover:
(A) the borrower's actual damages;
(B) $500 for each annual statement the lender
fails to provide to the borrower as required under Subsection (a);
(C) $300 for each annual statement provided to
the borrower that does not substantially comply with the
requirements of Subsection (a); and
(D) the borrower's court costs and reasonable
attorney's fees.
(c) In addition to the remedies available under Subsection
(b), a lender that fails to provide the annual statement required
under Subsection (a) with respect to a given calendar year may not
demand payment of any amount the lender claims the borrower owes
with respect to that calendar year until the lender provides the
required statement.
Sec. 343.306. PAYOFF STATEMENTS. (a) In this section,
"payoff statement" has the meaning assigned by Section 12.017,
Property Code.
(b) Except as provided by Subsection (c) and subject to
Subsection (d), a mortgage servicer may not charge a fee for
preparing or transmitting a payoff statement to a borrower or other
person requesting a payoff statement on behalf of the borrower.
(c) A mortgage servicer may charge a reasonable processing
fee to cover the cost of providing a payoff statement by facsimile
transmission or by a courier service if before charging the fee, the
mortgage servicer discloses to the requestor that payoff statements
are available for free if the requestor requests that the statement
be provided in a manner that will not result in the charging of a
processing fee.
(d) After a mortgage servicer has provided four payoff
statements during a calendar year to or on behalf of a borrower
under Subsection (b) without charge, other than processing fees
authorized under Subsection (c), the mortgage servicer may charge a
reasonable fee for providing a payoff statement to or on behalf of
the borrower during the remainder of the calendar year.
(e) A mortgage servicer shall provide a payoff statement not
later than the 10th day after the date the lender receives the
request for the payoff statement from or on behalf of a borrower,
and the statement must be valid for a reasonable time after being
provided to the requestor.
(f) If a mortgage servicer violates this section, the
borrower may file suit against the mortgage servicer:
(1) for any appropriate injunctive relief; and
(2) to recover:
(A) the borrower's actual damages;
(B) $100 for each payoff statement the lender
fails to provide to or on behalf of the borrower as required by this
section; and
(C) the borrower's court costs and reasonable
attorney's fees.
Sec. 343.307. RESTRICTIONS ON USE OF DEEDS IN LIEU OF
FORECLOSURE. (a) A lender may not obtain, file, or threaten to
file a deed that conveys or purports to convey real property
securing a home loan to the lender in satisfaction of a debt and is
signed by the borrower at a time when the borrower is not in default
on the loan.
(b) If a lender violates this section, the affected borrower
may file suit against the lender:
(1) for any appropriate injunctive relief; and
(2) to recover:
(A) the borrower's actual damages;
(B) a penalty in an amount equal to 10 percent of
the original principal amount of the home loan; and
(C) the borrower's court costs and reasonable
attorney's fees.
Sec. 343.308. NOTICE OF ASSIGNMENT, SALE, OR OTHER TRANSFER
OF LOAN SERVICING. (a) Except as provided by Subsection (f), a
mortgage servicer shall notify the borrower in writing of any
assignment, sale, or other transfer of the servicing of a home loan
to any other person.
(b) The notice required by Subsection (a) must contain:
(1) the effective date of the transfer;
(2) the name, address, and telephone number of the
transferee mortgage servicer;
(3) the name and telephone number of an individual
employed by, or the office or department of, the transferor
mortgage servicer that can be contacted by the borrower to answer
inquiries relating to the transfer of servicing;
(4) the name and telephone number of an individual
employed by, or the office or department of, the transferee
mortgage servicer that can be contacted by the borrower to answer
inquiries relating to the transfer of servicing;
(5) the date on which the transferor mortgage servicer
who is servicing the mortgage loan before the assignment, sale, or
other transfer will cease to accept payments relating to the loan
and the date on which the transferee mortgage servicer will begin to
accept the payments;
(6) any information concerning any effect the transfer
may have on the terms or the continued availability of mortgage life
or disability insurance or any other type of optional insurance and
what action, if any, the borrower must take to maintain coverage;
and
(7) a statement that the assignment, sale, or other
transfer of the servicing of the loan does not affect any term or
condition of the security instruments other than terms directly
related to the servicing of the loan.
(c) Except as provided by Subsection (e), a transferor
mortgage servicer shall provide the notice required under
Subsection (a) not later than the 15th day before the effective date
of the assignment, sale, or other transfer of the servicing of the
home loan.
(d) A transferee mortgage servicer to which the servicing of
a home loan is assigned, sold, or otherwise transferred shall
notify the borrower of the transfer to the same extent as a
transferor mortgage servicer is required to notify the borrower of
the transfer. Except as provided by Subsection (e), the notice must
be provided not later than the 15th day after the effective date of
the transfer.
(e) A mortgage servicer shall provide the notice required by
Subsection (a) or (d) not later than the 30th day after the
effective date of the assignment, sale, or other transfer of the
servicing of the home loan if the transfer was preceded by:
(1) termination of the contract for servicing the loan
for cause; or
(2) commencement of proceedings for bankruptcy of the
servicer or an entity by which the servicer is owned or controlled.
(f) A transferor mortgage servicer or transferee mortgage
servicer is not required to provide notice of an assignment, sale,
or other transfer of the servicing of a home loan as required by
this section if the lender provides to the borrower, at settlement
with respect to the property for the purchase of which the loan is
made, written notice of the assignment, sale, or other transfer of
the servicing of the loan and that notice contains the information
required by Subsection (b).
(g) A mortgage servicer may not impose a late fee on a
borrower with respect to, or otherwise treat as late, any payment on
a home loan made by the borrower during the period beginning on the
effective date of the assignment, sale, or other transfer of the
servicing of the loan and ending on the 60th day after that date if
the payment is received by the transferor servicer instead of the
transferee servicer before the applicable due date.
Sec. 343.309. NOTICE OF ASSIGNMENT, SALE, OR OTHER TRANSFER
OF HOME LOAN. (a) A lender shall notify the borrower in writing of
any assignment, sale, or other transfer of a home loan to any other
person not later than the 15th day before the effective date of the
transfer.
(b) The notice required under Subsection (a) must contain:
(1) the effective date of the transfer;
(2) the name and telephone number of an individual
employed by, or the office or department of, the transferor lender
that can be contacted by the borrower to answer inquiries relating
to the transfer of the loan; and
(3) the name and telephone number of an individual
employed by, or the office or department of, the transferee that can
be contacted by the borrower to answer inquiries relating to the
transfer of the loan.
Sec. 343.310. DUTY OF MORTGAGE SERVICER TO RESPOND TO
BORROWER REQUEST. (a) If a mortgage servicer receives a qualified
written request from the borrower or an agent of the borrower for
information relating to the servicing of the loan, the servicer
shall, not later than the fifth day after the date the request is
received, provide a written response acknowledging receipt of the
correspondence or take the requested action. For purposes of this
subsection, a qualified written request is a written
correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer, that:
(1) includes, or otherwise enables the servicer to
identify, the name and account of the borrower; and
(2) states, to the extent applicable, the reasons the
borrower believes that the account is in error or provides
sufficient detail to the servicer regarding other information
sought by the borrower.
(b) Not later than the 30th day after the date the request is
received, and, if applicable, before taking action with respect to
the request, the mortgage servicer shall:
(1) make appropriate corrections to the borrower's
account, including the crediting of any late charges or penalties,
and shall transmit to the borrower a written notification of the
correction, including the name and telephone number of a
representative of the servicer who can assist the borrower;
(2) after conducting an investigation, provide to the
borrower a written explanation or clarification that states:
(A) to the extent applicable, the reasons the
servicer believes the account is correct as determined by the
servicer; and
(B) the name and telephone number of an
individual employee of, or the office or department of, the
servicer who can assist the borrower; or
(3) after conducting an investigation, provide to the
borrower:
(A) a written explanation or clarification that
includes information requested by the borrower;
(B) a written explanation of why the information
requested is unavailable or cannot be obtained by the servicer; and
(C) the name and telephone number of an
individual employee of, or the office or department of, the
servicer who can assist the borrower.
(c) During the period beginning on the date a servicer
receives from a borrower a qualified written request relating to a
dispute regarding the borrower's payments and ending on the 60th
day after that date, a servicer may not provide to a consumer
reporting agency, as defined by 15 U.S.C. Section 1681a,
information regarding any overdue payment owed by the borrower and
relating to the period or qualified written request.
Sec. 343.311. FORCE-PLACED HAZARD INSURANCE. (a) In this
section, "force-placed hazard insurance" means hazard insurance
coverage obtained by a mortgage servicer with respect to real
property securing a home loan when the borrower fails to maintain or
renew hazard insurance on the property as required under the terms
of the loan.
(b) A mortgage servicer may not obtain force-placed hazard
insurance unless the servicer has a reasonable basis to believe
that the borrower has failed to comply with the terms of the home
loan requiring that the borrower maintain hazard insurance on the
property.
(c) For purposes of this section, a mortgage servicer does
not have a reasonable basis for obtaining force-placed hazard
insurance unless:
(1) the servicer has mailed, by first-class mail, a
written notice to the borrower that contains:
(A) a reminder of the borrower's obligation to
maintain hazard insurance on the property securing the home loan;
(B) a statement that the servicer does not have
evidence of the required insurance coverage of the property;
(C) a clear and conspicuous statement of the
procedures by which the borrower may demonstrate that the borrower
already has the required coverage; and
(D) a statement that the servicer may obtain the
required coverage at the borrower's expense if the borrower does
not demonstrate that the borrower has the required coverage in a
timely manner;
(2) the servicer has mailed, by first-class mail, a
second written notice, not later than the 30th day after the date
the notice under Subdivision (1) was mailed, that contains all the
information described by that subdivision; and
(3) the servicer has not received from the borrower
any demonstration of the required coverage for the property
securing the home loan by the end of the 15-day period beginning on
the date the notice under Subdivision (2) was mailed by the
servicer.
(d) A mortgage servicer must accept from a borrower any
reasonable form of written confirmation that the borrower has the
required coverage, including:
(1) the existing insurance policy number along with
the identity of and contact information for the insurance company
or agent; or
(2) confirmation authorized by finance commission
rule.
(e) Not later than the 15th day after the date a mortgage
servicer receives confirmation that a borrower has the required
hazard insurance coverage, the servicer shall:
(1) terminate any force-placed hazard insurance; and
(2) refund to the borrower:
(A) all force-placed hazard insurance premiums
paid by the borrower during any period in which the borrower's
insurance coverage and the force-placed hazard insurance coverage
were both in effect; and
(B) any related fees charged to the borrower's
account with respect to the force-placed hazard insurance during
that period.
(f) A charge relating to force-placed hazard insurance
imposed on a borrower by or through a mortgage servicer must be bona
fide and reasonable.
Sec. 343.312. LIABILITY FOR CERTAIN VIOLATIONS UNDER THIS
SUBCHAPTER. (a) Except as provided by Subsection (e), a mortgage
servicer that violates Section 343.308 or 343.310 is liable to the
borrower for damages as provided by this section.
(b) If an action is brought under this section by a single
borrower, the mortgage servicer is liable for:
(1) any actual damages to the borrower as a result of
the violation; and
(2) any additional damages the court allows, in the
case of a pattern or practice of violations of this section, in an
amount not to exceed $2,000.
(c) If the action is a class action, the mortgage servicer
is liable for:
(1) any actual damages to each of the borrowers in the
class as a result of the violation; and
(2) any additional damages the court allows, in the
case of a pattern or practice of violations of this section, in an
amount not to exceed $1,000 for each member of the class, provided
that the total amount of damages under this subdivision in any class
action may not exceed the lesser of:
(A) $1,000,000; or
(B) one percent of the net worth of the mortgage
servicer.
(d) In addition to the amounts awarded under Subsection (b)
or (c), a mortgage servicer who violates this section is liable for
court costs and reasonable attorney's fees incurred in connection
with the action.
(e) A mortgage servicer is not liable under this section for
any failure to comply with a requirement of Section 343.308 or
343.310 if, not later than the 60th day after the date an error is
discovered by the servicer and before the commencement of an action
under this section and the receipt of written notice of the error
from the borrower, the servicer notifies the borrower of the error
and makes any adjustments necessary to the appropriate account to
ensure that the borrower will not be required to pay an amount in
excess of any amount that the borrower otherwise would have paid.
SECTION 2. This Act takes effect January 1, 2012.