Texas Senate Bill SB1391

Texas 2011 - 82nd Regular

• Introduced: 3/9/11

Caption

Relating to refinancing low-rate home loans involving natural disaster recovery funds.

Impact

The implications of this bill are significant for homeowners who have benefitted from low-rate loans funded by disaster recovery initiatives. SB1391 seeks to ensure that these borrowers retain their advantageous loan conditions by prohibiting refinancing before a seven-year period unless the terms are more favorable than the original loan. By doing so, it fosters stability in the housing market, particularly in areas recovering from disasters, and prevents the potential burdens of increased servicing costs for homeowners.

Summary

SB1391 addresses the refinancing of low-rate home loans specifically involving natural disaster recovery funds. The bill establishes guidelines that prevent lenders from refinancing such loans for a set period unless certain conditions are met. It specifies that a loan qualifies as a low-rate home loan if its interest rate is at least two percentage points below the corresponding treasury yields. This is aimed at protecting borrowers who obtained favorable terms through government or nonprofit lenders using disaster relief funds.

Sentiment

The sentiment surrounding SB1391 appears to be supportive among advocates for disaster recovery, who argue that it guards consumers against predatory lending practices that could emerge in a post-disaster environment. However, it may face scrutiny from financial institutions concerned about restrictions on lending practices and their impact on market dynamics. Overall, it reflects a protective stance towards vulnerable populations affected by natural disasters.

Contention

Notable points of contention include potential concerns from lenders about how the restrictions may limit their ability to restructure loans or offer new financing options to distressed borrowers. Critics could argue that while the intention is to protect consumers, it may inadvertently restrict access to credit or create challenges for lenders in managing their loan portfolios. Therefore, striking the right balance between consumer protection and lender flexibility is a central issue in discussions surrounding this bill.