| 1 | 1 | | 84R2018 CLG/SMH-F |
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| 2 | 2 | | By: Hinojosa S.B. No. 1956 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to property tax lenders and property tax loans. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. The heading to Chapter 351, Finance Code, is |
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| 10 | 10 | | amended to read as follows: |
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| 11 | 11 | | CHAPTER 351. PROPERTY TAX LENDERS AND ASSOCIATED LIENS |
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| 12 | 12 | | SECTION 2. Section 351.002, Finance Code, is amended to |
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| 13 | 13 | | read as follows: |
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| 14 | 14 | | Sec. 351.002. DEFINITIONS. In this chapter: |
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| 15 | 15 | | (1) "Lienholder" means the holder of a lien created in |
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| 16 | 16 | | favor of a property tax lender as provided by Section 32.06(a-2), |
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| 17 | 17 | | Tax Code, including a successor in interest. |
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| 18 | 18 | | (2) "Property tax lender" means a person that engages |
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| 19 | 19 | | in activity requiring a license under Section 351.051. The term |
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| 20 | 20 | | does not include: |
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| 21 | 21 | | (A) a person who is sponsored by a licensed |
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| 22 | 22 | | property tax lender to assist with or perform the acts of a property |
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| 23 | 23 | | tax lender; or |
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| 24 | 24 | | (B) a person who performs only clerical functions |
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| 25 | 25 | | such as delivering a loan application to a property tax lender, |
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| 26 | 26 | | gathering or requesting information related to a property tax loan |
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| 27 | 27 | | application on behalf of the prospective borrower or property tax |
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| 28 | 28 | | lender, word processing, sending correspondence, or assembling |
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| 29 | 29 | | files. |
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| 30 | 30 | | (3) [(2)] "Property tax loan" means an advance of |
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| 31 | 31 | | money: |
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| 32 | 32 | | (A) [in connection with a transfer of lien under |
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| 33 | 33 | | Section 32.06, Tax Code, or a contract under Section 32.065, Tax |
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| 34 | 34 | | Code; |
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| 35 | 35 | | [(B)] in connection with a contract between a |
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| 36 | 36 | | lender and a property owner under which the lender [which the person |
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| 37 | 37 | | making the transfer] arranges for the payment, with the [a] |
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| 38 | 38 | | property owner's written consent, of property taxes and related |
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| 39 | 39 | | closing costs on behalf of the property owner in accordance with |
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| 40 | 40 | | Section 32.06, Tax Code; and |
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| 41 | 41 | | (B) [(C)] that is secured by a [special] lien |
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| 42 | 42 | | against the property created in favor of the lender under Section |
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| 43 | 43 | | 32.06, Tax Code [transferred from a taxing unit to the property tax |
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| 44 | 44 | | lender and which may be further secured by the lien or security |
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| 45 | 45 | | interest created by a deed of trust, security deed, or other |
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| 46 | 46 | | security instrument]. |
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| 47 | 47 | | SECTION 3. Sections 351.0021(a), (c), and (d), Finance |
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| 48 | 48 | | Code, are amended to read as follows: |
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| 49 | 49 | | (a) The contract between a property tax lender and a |
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| 50 | 50 | | property owner may require the property owner to pay the following |
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| 51 | 51 | | costs after closing: |
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| 52 | 52 | | (1) a reasonable fee for filing the release of a [tax] |
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| 53 | 53 | | lien authorized under Section 32.06(b), Tax Code; |
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| 54 | 54 | | (2) a reasonable fee for a payoff statement authorized |
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| 55 | 55 | | under Section 32.06(f-3), Tax Code; |
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| 56 | 56 | | (3) a reasonable fee for providing information |
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| 57 | 57 | | regarding the current balance owed by the property owner authorized |
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| 58 | 58 | | under Section 32.06(g), Tax Code; |
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| 59 | 59 | | (4) reasonable and necessary attorney's fees, |
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| 60 | 60 | | recording fees, and court costs for actions that are legally |
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| 61 | 61 | | required to respond to a suit filed under Chapter 33, Tax Code, or |
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| 62 | 62 | | to perform a foreclosure, including fees required to be paid to an |
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| 63 | 63 | | official and fees for an attorney ad litem; |
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| 64 | 64 | | (5) to the extent permitted by the United States |
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| 65 | 65 | | Bankruptcy Code, attorney's fees and court costs for services |
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| 66 | 66 | | performed after the property owner files a voluntary bankruptcy |
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| 67 | 67 | | petition; |
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| 68 | 68 | | (6) a reasonable fee for title examination and |
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| 69 | 69 | | preparation of an abstract of title by an attorney, a title company, |
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| 70 | 70 | | or a property search company authorized to do business in this |
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| 71 | 71 | | state; |
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| 72 | 72 | | (7) a processing fee for insufficient funds, as |
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| 73 | 73 | | authorized under Section 3.506, Business & Commerce Code; |
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| 74 | 74 | | (8) a fee for collateral protection insurance, as |
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| 75 | 75 | | authorized under Chapter 307; |
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| 76 | 76 | | (9) a prepayment penalty, unless the loan [lien |
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| 77 | 77 | | transferred] is made in connection with [on] residential property |
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| 78 | 78 | | owned and used by the property owner for personal, family, or |
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| 79 | 79 | | household purposes; |
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| 80 | 80 | | (10) recording expenses incurred in connection with a |
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| 81 | 81 | | modification necessary to preserve a borrower's ability to avoid a |
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| 82 | 82 | | foreclosure proceeding; and |
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| 83 | 83 | | (11) fees for copies of transaction documents |
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| 84 | 84 | | requested by the property owner. |
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| 85 | 85 | | (c) A property tax lender or any successor in interest may |
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| 86 | 86 | | not [charge]: |
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| 87 | 87 | | (1) after closing, charge any fee, other than |
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| 88 | 88 | | interest, [after closing] in connection with the loan [transfer of |
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| 89 | 89 | | a tax lien] unless the fee is expressly authorized under this |
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| 90 | 90 | | section; or |
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| 91 | 91 | | (2) charge any interest that is not expressly |
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| 92 | 92 | | authorized under Section 32.06, Tax Code. |
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| 93 | 93 | | (d) Except for charges authorized under Subsections (a)(1), |
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| 94 | 94 | | (2), (3), (9), and (11), any amount charged by a lienholder |
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| 95 | 95 | | [property tax lender] after closing must be for services performed |
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| 96 | 96 | | by a person that is not an employee of the lienholder [property tax |
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| 97 | 97 | | lender]. |
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| 98 | 98 | | SECTION 4. Section 351.003(a), Finance Code, is amended to |
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| 99 | 99 | | read as follows: |
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| 100 | 100 | | (a) Except as provided by Subsection (b), this chapter does |
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| 101 | 101 | | not prohibit a lienholder [property tax lender] from receiving |
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| 102 | 102 | | compensation from a party other than the property tax loan |
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| 103 | 103 | | applicant for the sale, transfer, assignment, or release of rights |
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| 104 | 104 | | on the closing of a property tax loan transaction. |
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| 105 | 105 | | SECTION 5. Section 351.005, Finance Code, is amended to |
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| 106 | 106 | | read as follows: |
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| 107 | 107 | | Sec. 351.005. APPLICATION OF TAX CODE. This chapter does |
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| 108 | 108 | | not affect the application of Section 32.06 [or 32.065], Tax Code. |
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| 109 | 109 | | SECTION 6. Section 351.006(a), Finance Code, is amended to |
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| 110 | 110 | | read as follows: |
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| 111 | 111 | | (a) In addition to any other applicable enforcement |
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| 112 | 112 | | provisions, Subchapters E, F, and G, Chapter 14, apply to a |
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| 113 | 113 | | violation of this chapter or Section 32.06 [or 32.065], Tax Code, in |
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| 114 | 114 | | connection with property tax loans. |
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| 115 | 115 | | SECTION 7. Section 351.007, Finance Code, is amended to |
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| 116 | 116 | | read as follows: |
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| 117 | 117 | | Sec. 351.007. RULES. The finance commission may adopt |
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| 118 | 118 | | rules to ensure compliance with this chapter and Section [Sections] |
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| 119 | 119 | | 32.06 [and 32.065], Tax Code. |
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| 120 | 120 | | SECTION 8. Sections 351.008(a) and (c), Finance Code, are |
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| 121 | 121 | | amended to read as follows: |
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| 122 | 122 | | (a) The commissioner or the commissioner's representative |
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| 123 | 123 | | shall, at the times the commissioner or the representative |
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| 124 | 124 | | considers necessary: |
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| 125 | 125 | | (1) examine each place of business of each property |
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| 126 | 126 | | tax lender; and |
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| 127 | 127 | | (2) investigate the lender's transactions, including |
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| 128 | 128 | | loans, and records, including books, accounts, papers, and |
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| 129 | 129 | | correspondence, to the extent the transactions and records pertain |
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| 130 | 130 | | to the business regulated under this chapter and Section [Sections] |
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| 131 | 131 | | 32.06 [and 32.065], Tax Code. |
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| 132 | 132 | | (c) During an examination, the commissioner or the |
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| 133 | 133 | | commissioner's representative may administer oaths and examine any |
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| 134 | 134 | | person under oath on any subject pertinent to a matter that the |
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| 135 | 135 | | commissioner or the representative is authorized or required to |
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| 136 | 136 | | consider, investigate, or secure information about under this |
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| 137 | 137 | | chapter or Section 32.06 [or 32.065], Tax Code. |
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| 138 | 138 | | SECTION 9. Section 351.009(a), Finance Code, is amended to |
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| 139 | 139 | | read as follows: |
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| 140 | 140 | | (a) To discover a violation of this chapter or Section 32.06 |
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| 141 | 141 | | [or 32.065], Tax Code, or to obtain information required under this |
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| 142 | 142 | | chapter or Section 32.06 [or 32.065], Tax Code, the commissioner or |
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| 143 | 143 | | the commissioner's representative may investigate the records, |
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| 144 | 144 | | including books, accounts, papers, and correspondence, of a person, |
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| 145 | 145 | | including a property tax lender, who the commissioner or the |
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| 146 | 146 | | representative has reasonable cause to believe is violating this |
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| 147 | 147 | | chapter or Section 32.06 [or 32.065], Tax Code, regardless of |
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| 148 | 148 | | whether the person claims to not be subject to this chapter or |
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| 149 | 149 | | Section 32.06 [or 32.065], Tax Code. |
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| 150 | 150 | | SECTION 10. Sections 351.051(a) and (c), Finance Code, are |
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| 151 | 151 | | amended to read as follows: |
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| 152 | 152 | | (a) A person must hold a license issued under this chapter |
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| 153 | 153 | | to: |
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| 154 | 154 | | (1) engage in the business of making, transacting, or |
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| 155 | 155 | | negotiating property tax loans; or |
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| 156 | 156 | | (2) contract for, charge, or receive, directly or |
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| 157 | 157 | | indirectly, in connection with a property tax loan subject to this |
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| 158 | 158 | | chapter, a charge, including interest, compensation, including |
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| 159 | 159 | | compensation received for a transaction described by Section |
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| 160 | 160 | | 351.003(a), consideration, or another expense, authorized under |
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| 161 | 161 | | this chapter or Chapter 32, Tax Code. |
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| 162 | 162 | | (c) Except as provided by Section 351.003, this chapter does |
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| 163 | 163 | | not apply to: |
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| 164 | 164 | | (1) any of the following entities or an employee of any |
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| 165 | 165 | | of the following entities, if the employee is acting for the benefit |
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| 166 | 166 | | of the employer: |
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| 167 | 167 | | (A) a bank, savings bank, or savings and loan |
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| 168 | 168 | | association, or a subsidiary or an affiliate of a bank, savings |
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| 169 | 169 | | bank, or savings and loan association; or |
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| 170 | 170 | | (B) a state or federal credit union, or a |
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| 171 | 171 | | subsidiary, affiliate, or credit union service organization of a |
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| 172 | 172 | | state or federal credit union; or |
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| 173 | 173 | | (2) an individual [who]: |
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| 174 | 174 | | (A) who is related to the property owner within |
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| 175 | 175 | | the second degree of consanguinity or affinity, as determined under |
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| 176 | 176 | | Chapter 573, Government Code; or |
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| 177 | 177 | | (B) whose only activity that would require |
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| 178 | 178 | | licensure under Subsection (a) consists of making [makes] five or |
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| 179 | 179 | | fewer property tax loans in any consecutive 12-month period from |
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| 180 | 180 | | the individual's own funds. |
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| 181 | 181 | | SECTION 11. Section 351.054, Finance Code, is amended to |
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| 182 | 182 | | read as follows: |
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| 183 | 183 | | Sec. 351.054. NOTICE TO TAXING UNIT. (a) A property tax |
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| 184 | 184 | | lender [transferee of a tax lien] must include with the sworn |
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| 185 | 185 | | document executed by the borrower and delivered to [filed with] the |
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| 186 | 186 | | collector of a taxing unit under Section 32.06(a-1), Tax Code, the |
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| 187 | 187 | | information required by this section. |
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| 188 | 188 | | (b) If the property tax lender [transferee] is licensed |
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| 189 | 189 | | under this chapter, the lender [transferee] shall include with the |
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| 190 | 190 | | filing the licensee's license number assigned by the commissioner. |
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| 191 | 191 | | (c) If the property tax lender [transferee] is exempt from |
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| 192 | 192 | | this chapter under Section 351.051(c)(1), the lender [transferee] |
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| 193 | 193 | | shall include with the filing an affidavit stating the entity's |
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| 194 | 194 | | type of organization that qualifies it for the exemption, any |
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| 195 | 195 | | charter number assigned by the governmental authority that issued |
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| 196 | 196 | | the entity's charter, and the address of the entity's main office. |
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| 197 | 197 | | (d) If the property tax lender [transferee] is exempt from |
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| 198 | 198 | | this chapter under Section 351.051(c)(2), the lender [transferee] |
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| 199 | 199 | | shall include a certificate issued by the commissioner indicating |
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| 200 | 200 | | the entity's exemption. The commissioner shall establish |
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| 201 | 201 | | procedures for issuance of a certificate under this subsection, |
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| 202 | 202 | | application requirements, and requirements regarding information |
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| 203 | 203 | | that must be submitted with an application. |
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| 204 | 204 | | SECTION 12. Section 351.156, Finance Code, is amended to |
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| 205 | 205 | | read as follows: |
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| 206 | 206 | | Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After |
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| 207 | 207 | | notice and a hearing the commissioner may suspend or revoke a |
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| 208 | 208 | | license if the commissioner finds that: |
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| 209 | 209 | | (1) the license holder failed to pay the annual |
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| 210 | 210 | | license fee, an examination fee, an investigation fee, or another |
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| 211 | 211 | | charge imposed by the commissioner under this chapter; |
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| 212 | 212 | | (2) the license holder, knowingly or without the |
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| 213 | 213 | | exercise of due care, violated this chapter or Section 32.06 [or |
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| 214 | 214 | | 32.065], Tax Code, or a rule adopted or an order issued under this |
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| 215 | 215 | | chapter or Section 32.06 [or 32.065], Tax Code; |
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| 216 | 216 | | (3) a fact or condition exists that, if it had existed |
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| 217 | 217 | | or had been known to exist at the time of the original application |
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| 218 | 218 | | for the license, clearly would have justified the commissioner's |
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| 219 | 219 | | denial of the application; or |
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| 220 | 220 | | (4) the license holder has failed to ensure that an |
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| 221 | 221 | | individual acting as a residential mortgage loan originator, as |
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| 222 | 222 | | defined by Section 180.002, in the making, transacting, or |
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| 223 | 223 | | negotiating of a property tax loan for a principal dwelling is |
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| 224 | 224 | | licensed under this chapter in accordance with Section 351.0515. |
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| 225 | 225 | | SECTION 13. The heading to Section 32.06, Tax Code, is |
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| 226 | 226 | | amended to read as follows: |
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| 227 | 227 | | Sec. 32.06. PROPERTY TAX LOANS; ATTACHMENT [TRANSFER] OF |
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| 228 | 228 | | [TAX] LIEN. |
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| 229 | 229 | | SECTION 14. Sections 32.06(a), (a-1), (a-2), (a-3), (a-4), |
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| 230 | 230 | | (a-5), (a-6), (a-7), (a-8), (b), (b-1), (c), (d), (d-1), (e), |
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| 231 | 231 | | (e-1), (e-2), (f), (f-1), (f-3), (f-4), (g), (h), (i), (j), (k-1), |
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| 232 | 232 | | and (l), Tax Code, are amended to read as follows: |
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| 233 | 233 | | (a) In this section, "mortgage servicer" [: |
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| 234 | 234 | | [(1) "Mortgage servicer"] has the meaning assigned by |
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| 235 | 235 | | Section 51.0001, Property Code. |
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| 236 | 236 | | [(2) "Transferee" means a person who is licensed under |
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| 237 | 237 | | Chapter 351, Finance Code, or is exempt from the application of that |
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| 238 | 238 | | chapter under Section 351.051(c), Finance Code, and who is: |
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| 239 | 239 | | [(A) authorized to pay the taxes of another; or |
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| 240 | 240 | | [(B) a successor in interest to a tax lien that is |
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| 241 | 241 | | transferred under this section.] |
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| 242 | 242 | | (a-1) A property owner may authorize another person to pay |
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| 243 | 243 | | the taxes imposed by a taxing unit on the owner's real property by |
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| 244 | 244 | | executing and delivering to [filing with] the collector for the |
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| 245 | 245 | | taxing unit: |
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| 246 | 246 | | (1) a sworn document stating: |
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| 247 | 247 | | (A) the authorization for payment of the taxes; |
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| 248 | 248 | | (B) the name and street address of the person |
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| 249 | 249 | | [transferee] authorized to pay the taxes of the property owner; |
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| 250 | 250 | | (C) a description of the property by street |
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| 251 | 251 | | address, if applicable, and legal description; and |
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| 252 | 252 | | (D) that notice has been given to the property |
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| 253 | 253 | | owner that if the property owner is disabled, the property owner may |
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| 254 | 254 | | be eligible for a tax deferral under Section 33.06; and |
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| 255 | 255 | | (2) the information required by Section 351.054, |
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| 256 | 256 | | Finance Code. |
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| 257 | 257 | | (a-2) Except as provided by Subsection (a-8), a [tax] lien |
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| 258 | 258 | | on the property is created in favor of [may be transferred to] the |
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| 259 | 259 | | person who pays the taxes on behalf of the property owner under the |
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| 260 | 260 | | terms of a loan contract and execution and delivery of the |
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| 261 | 261 | | authorization described by Subsection (a-1) for: |
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| 262 | 262 | | (1) taxes that are delinquent at the time of payment; |
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| 263 | 263 | | or |
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| 264 | 264 | | (2) taxes that are due but not delinquent at the time |
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| 265 | 265 | | of payment if the property is not subject to a recorded mortgage |
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| 266 | 266 | | lien. |
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| 267 | 267 | | (a-3) A person who is 65 years of age or older may not |
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| 268 | 268 | | authorize the creation of a lien under Subsection (a-2) [a transfer |
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| 269 | 269 | | of a tax lien] on real property on which the person is eligible to |
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| 270 | 270 | | claim an exemption from taxation under Section 11.13(c). |
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| 271 | 271 | | (a-4) The Finance Commission of Texas shall: |
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| 272 | 272 | | (1) prescribe the form and content of an appropriate |
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| 273 | 273 | | disclosure statement to be provided to a property owner before the |
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| 274 | 274 | | closing [execution] of a property tax loan [tax lien transfer]; |
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| 275 | 275 | | (2) adopt rules relating to the reasonableness of |
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| 276 | 276 | | closing costs, fees, and other charges permitted under this |
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| 277 | 277 | | section; |
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| 278 | 278 | | (3) by rule prescribe the form and content of the sworn |
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| 279 | 279 | | document under Subsection (a-1) and the certified statement under |
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| 280 | 280 | | Subsection (b); and |
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| 281 | 281 | | (4) by rule prescribe the form and content of a request |
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| 282 | 282 | | a lender with an existing recorded lien on the property must use to |
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| 283 | 283 | | request a payoff statement and the [transferee's] response to the |
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| 284 | 284 | | request of the holder of a loan secured by a lien on the property |
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| 285 | 285 | | created under Subsection (a-2), including the period within which |
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| 286 | 286 | | the holder [transferee] must respond. |
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| 287 | 287 | | (a-5) At the time the property tax lender [transferee] |
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| 288 | 288 | | provides the disclosure statement required by Subsection (a-4)(1), |
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| 289 | 289 | | the lender [transferee] must also describe the type and approximate |
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| 290 | 290 | | cost range of each additional charge or fee that the property owner |
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| 291 | 291 | | may incur in connection with the property tax loan [transfer]. |
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| 292 | 292 | | (a-6) Notwithstanding Subsection (f-3), a lender described |
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| 293 | 293 | | by Subsection (a-4)(4) may request a payoff statement before the |
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| 294 | 294 | | tax loan becomes delinquent. The Finance Commission of Texas by |
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| 295 | 295 | | rule shall require a holder of a loan secured by a lien created |
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| 296 | 296 | | under Subsection (a-2) [transferee] who receives a request for a |
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| 297 | 297 | | payoff statement to deliver the requested payoff statement on the |
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| 298 | 298 | | prescribed form within a period prescribed by finance commission |
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| 299 | 299 | | rule. The prescribed period must allow the holder [transferee] at |
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| 300 | 300 | | least seven business days after the date the request is received to |
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| 301 | 301 | | deliver the payoff statement. The consumer credit commissioner |
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| 302 | 302 | | may assess an administrative penalty under Subchapter F, Chapter |
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| 303 | 303 | | 14, Finance Code, against a holder [transferee] who wilfully fails |
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| 304 | 304 | | to provide the payoff statement as prescribed by finance commission |
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| 305 | 305 | | rule. |
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| 306 | 306 | | (a-7) A contract between a person [transferee] and a |
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| 307 | 307 | | property owner that purports to authorize payment of taxes that are |
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| 308 | 308 | | not delinquent or due at the time of the authorization, or that |
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| 309 | 309 | | lacks the authorization described by Subsection (a-1), is void. |
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| 310 | 310 | | (a-8) A [tax] lien on property may not be created in favor of |
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| 311 | 311 | | [may not be transferred to] the person who pays the taxes on behalf |
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| 312 | 312 | | of the property owner under the authorization described by |
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| 313 | 313 | | Subsection (a-1) if the real property: |
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| 314 | 314 | | (1) has been financed, wholly or partly, with a grant |
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| 315 | 315 | | or below market rate loan provided by a governmental program or |
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| 316 | 316 | | nonprofit organization and is subject to the covenants of the grant |
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| 317 | 317 | | or loan; or |
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| 318 | 318 | | (2) is encumbered by a lien recorded under Subchapter |
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| 319 | 319 | | A, Chapter 214, Local Government Code. |
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| 320 | 320 | | (b) When a person [If a transferee] authorized to pay a |
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| 321 | 321 | | property owner's taxes under Subsection (a-1) pays the taxes and |
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| 322 | 322 | | any penalties, interest, and collection costs imposed, the |
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| 323 | 323 | | collector shall issue a tax receipt to the person who pays the taxes |
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| 324 | 324 | | [that transferee]. In addition, the collector or a person |
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| 325 | 325 | | designated by the collector shall certify that the taxes and any |
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| 326 | 326 | | penalties, interest, and collection costs on the subject property |
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| 327 | 327 | | have been paid [by the transferee on behalf of the property owner |
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| 328 | 328 | | and that the taxing unit's tax lien is transferred to that |
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| 329 | 329 | | transferee]. The collector shall attach to the certified |
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| 330 | 330 | | statement the collector's seal of office or sign the statement |
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| 331 | 331 | | before a notary public and deliver the certified statement and [a] |
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| 332 | 332 | | tax receipt [and the certified statement attesting to the transfer |
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| 333 | 333 | | of the tax lien] to the person [transferee] within 30 days. The tax |
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| 334 | 334 | | receipt and certified statement may be combined into one |
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| 335 | 335 | | document. [The collector shall identify in a discrete field in the |
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| 336 | 336 | | applicable property owner's account the date of the transfer of a |
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| 337 | 337 | | tax lien transferred under this section.] When a [tax] lien |
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| 338 | 338 | | created in favor of a lender under Subsection (a-2) is released, the |
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| 339 | 339 | | holder of the lien [transferee] shall file a release with the county |
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| 340 | 340 | | clerk of each county in which the property encumbered by the lien is |
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| 341 | 341 | | located for recordation by the clerk [and send a copy to the |
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| 342 | 342 | | collector]. The holder of the lien [transferee] may charge the |
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| 343 | 343 | | property owner a reasonable fee for filing the release. |
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| 344 | 344 | | (b-1) Not later than the 10th business day after the date |
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| 345 | 345 | | the certified statement is received [by the transferee], the |
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| 346 | 346 | | property tax lender [transferee] shall send by certified mail a |
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| 347 | 347 | | copy of the sworn document described by Subsection (a-1) to any |
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| 348 | 348 | | mortgage servicer and to each holder of a recorded first lien |
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| 349 | 349 | | encumbering the property. The copy must be sent, as applicable, to |
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| 350 | 350 | | the address shown on the most recent payment invoice, statement, or |
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| 351 | 351 | | payment coupon provided by the mortgage servicer to the property |
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| 352 | 352 | | owner, or the address of the holder of a recorded first lien as |
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| 353 | 353 | | shown in the real property records. |
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| 354 | 354 | | (c) A holder of a lien created in favor of a property tax |
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| 355 | 355 | | lender under Subsection (a-2) [Except as otherwise provided by this |
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| 356 | 356 | | section, the transferee of a tax lien] is entitled to foreclose the |
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| 357 | 357 | | lien in the manner provided by law for judicial foreclosure of |
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| 358 | 358 | | [tax] liens. |
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| 359 | 359 | | (d) A holder of a lien arising under Subsection (a-2) |
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| 360 | 360 | | [transferee] shall record the [a tax] lien [transferred as provided |
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| 361 | 361 | | by this section] with the certified statement [attesting to the |
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| 362 | 362 | | transfer of the tax lien] as described by Subsection (b) in the deed |
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| 363 | 363 | | records of each county in which the property encumbered by the lien |
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| 364 | 364 | | is located. The lien is subordinate to any prior recorded lien |
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| 365 | 365 | | against the property. |
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| 366 | 366 | | (d-1) A right of rescission described by 12 C.F.R. Section |
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| 367 | 367 | | 226.23 applies to a loan for the payment of a property owner's taxes |
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| 368 | 368 | | described by Subsection (a-2) that is made in connection with |
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| 369 | 369 | | [transfer under this section of a tax lien on] residential property |
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| 370 | 370 | | owned and used by the property owner for personal, family, or |
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| 371 | 371 | | household purposes. |
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| 372 | 372 | | (e) A person [transferee] holding a [tax] lien arising under |
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| 373 | 373 | | Subsection (a-2) [transferred as provided by this section] may not |
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| 374 | 374 | | charge a greater rate of interest than 18 percent a year on the |
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| 375 | 375 | | funds advanced. Funds advanced are limited to the taxes, |
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| 376 | 376 | | penalties, interest, and collection costs paid as shown on the tax |
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| 377 | 377 | | receipt, expenses paid to record the lien, plus reasonable closing |
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| 378 | 378 | | costs. |
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| 379 | 379 | | (e-1) A person [transferee of a tax lien] may not charge a |
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| 380 | 380 | | fee for any expenses arising after the closing of the property tax |
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| 381 | 381 | | [a] loan [secured by a tax lien transferred under this section], |
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| 382 | 382 | | including collection costs, except for: |
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| 383 | 383 | | (1) interest expressly authorized under this section; |
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| 384 | 384 | | (2) the fees for filing the release of the [tax] lien |
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| 385 | 385 | | under Subsection (b); |
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| 386 | 386 | | (3) the fee for providing a payoff statement under |
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| 387 | 387 | | Subsection (f-3); |
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| 388 | 388 | | (4) the fee for providing information regarding the |
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| 389 | 389 | | current balance owed by the property owner under Subsection (g); |
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| 390 | 390 | | and |
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| 391 | 391 | | (5) the fees expressly authorized under Section |
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| 392 | 392 | | 351.0021, Finance Code. |
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| 393 | 393 | | (e-2) A property tax loan [The] contract between a property |
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| 394 | 394 | | tax lender and a [the] property owner [and the transferee] may |
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| 395 | 395 | | provide for interest for default, in addition to the interest |
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| 396 | 396 | | permitted under Subsection (e), if any part of the installment |
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| 397 | 397 | | remains unpaid after the 10th day after the date the installment is |
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| 398 | 398 | | due, including Sundays and holidays. If the lien [transferred] is |
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| 399 | 399 | | on residential property owned and used by the property owner for |
|---|
| 400 | 400 | | personal, family, or household purposes, the additional interest |
|---|
| 401 | 401 | | may not exceed five cents for each $1 of a scheduled installment. |
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| 402 | 402 | | (f) The holder of a loan secured by a [transferred tax] lien |
|---|
| 403 | 403 | | created under Subsection (a-2) that is delinquent for 90 |
|---|
| 404 | 404 | | consecutive days must send a notice of the delinquency by certified |
|---|
| 405 | 405 | | mail on or before the 120th day of delinquency or, if the 120th day |
|---|
| 406 | 406 | | is not a business day, on the next business day after the 120th day |
|---|
| 407 | 407 | | of delinquency, to any holder of a recorded preexisting lien on the |
|---|
| 408 | 408 | | property. The holder or mortgage servicer of a recorded |
|---|
| 409 | 409 | | preexisting lien on property encumbered by a [tax] lien created |
|---|
| 410 | 410 | | under Subsection (a-2) [transferred as provided by Subsection (b)] |
|---|
| 411 | 411 | | is entitled, within six months after the date on which the notice is |
|---|
| 412 | 412 | | sent, to obtain a release of the [transferred tax] lien by paying |
|---|
| 413 | 413 | | [the transferee of the tax lien] the balance [amount] owed by the |
|---|
| 414 | 414 | | property owner under the property tax loan contract [between the |
|---|
| 415 | 415 | | property owner and the transferee]. |
|---|
| 416 | 416 | | (f-1) If an obligation secured by a preexisting first lien |
|---|
| 417 | 417 | | on the property is delinquent for at least 90 consecutive days and |
|---|
| 418 | 418 | | the obligation has been referred to a collection specialist, the |
|---|
| 419 | 419 | | mortgage servicer or the holder of the first lien may send a notice |
|---|
| 420 | 420 | | of the delinquency to the holder of a loan secured by a lien created |
|---|
| 421 | 421 | | under Subsection (a-2) [transferee of a tax lien]. The mortgage |
|---|
| 422 | 422 | | servicer or the first lienholder is entitled, within six months |
|---|
| 423 | 423 | | after the date on which that notice is sent, to obtain a release of |
|---|
| 424 | 424 | | the [transferred tax] lien by paying the holder of the lien the |
|---|
| 425 | 425 | | balance [transferee of the tax lien the amount] owed by the property |
|---|
| 426 | 426 | | owner under the property tax loan contract [between the property |
|---|
| 427 | 427 | | owner and the transferee]. The Finance Commission of Texas by rule |
|---|
| 428 | 428 | | shall prescribe the form and content of the notice under this |
|---|
| 429 | 429 | | subsection. |
|---|
| 430 | 430 | | (f-3) Notwithstanding any contractual agreement with the |
|---|
| 431 | 431 | | property owner, the holder of a loan secured by a lien created under |
|---|
| 432 | 432 | | Subsection (a-2) [transferee of a tax lien] must provide the payoff |
|---|
| 433 | 433 | | information required by this section to the greatest extent |
|---|
| 434 | 434 | | permitted by 15 U.S.C. Section 6802 and 12 C.F.R. Part 1016 |
|---|
| 435 | 435 | | [216]. The payoff statement must meet the requirements of a payoff |
|---|
| 436 | 436 | | statement defined by Section 12.017, Property Code. The holder [A |
|---|
| 437 | 437 | | transferee] may charge a reasonable fee for a payoff statement that |
|---|
| 438 | 438 | | is requested after an initial payoff statement is provided. |
|---|
| 439 | 439 | | However, the holder [a transferee] is not required to release |
|---|
| 440 | 440 | | payoff information pursuant to a notice under Subsection (f-1) |
|---|
| 441 | 441 | | unless the notice contains the information prescribed by the |
|---|
| 442 | 442 | | Finance Commission of Texas. |
|---|
| 443 | 443 | | (f-4) Failure to comply with Subsection (b-1), (f), or (f-1) |
|---|
| 444 | 444 | | does not invalidate a [tax] lien arising [transferred] under |
|---|
| 445 | 445 | | Subsection (a-2) [this section] or a deed of trust. |
|---|
| 446 | 446 | | (g) At any time after the end of the six-month period |
|---|
| 447 | 447 | | specified by Subsection (f) and before a notice of foreclosure of |
|---|
| 448 | 448 | | the [transferred tax] lien is sent, the holder [transferee] of the |
|---|
| 449 | 449 | | [tax] lien may require the property owner to provide written |
|---|
| 450 | 450 | | authorization and pay a reasonable fee before providing information |
|---|
| 451 | 451 | | regarding the current balance owed by the property owner to the |
|---|
| 452 | 452 | | holder of the lien [transferee]. |
|---|
| 453 | 453 | | (h) A mortgage servicer who pays a property tax loan secured |
|---|
| 454 | 454 | | by a [tax] lien created under Subsection (a-2) [transferred under |
|---|
| 455 | 455 | | this section] becomes subrogated to all rights in the lien. |
|---|
| 456 | 456 | | (i) A judicial foreclosure of a [tax] lien created under |
|---|
| 457 | 457 | | Subsection (a-2) [transferred under this section] may not be |
|---|
| 458 | 458 | | instituted within one year from the date on which the lien is |
|---|
| 459 | 459 | | recorded in all counties in which the property is located, unless |
|---|
| 460 | 460 | | the contract between the owner of the property and the property tax |
|---|
| 461 | 461 | | lender [transferee] provides otherwise. |
|---|
| 462 | 462 | | (j) After one year from the date on which a [tax] lien |
|---|
| 463 | 463 | | created under Subsection (a-2) [transferred under this section] is |
|---|
| 464 | 464 | | recorded in all counties in which the property is located, the |
|---|
| 465 | 465 | | holder [transferee] of the lien may foreclose the lien in the manner |
|---|
| 466 | 466 | | provided by Subsection (c) unless the contract between the holder |
|---|
| 467 | 467 | | of the lien [transferee] and the owner of the property encumbered by |
|---|
| 468 | 468 | | the lien provides otherwise. The proceeds of a sale following a |
|---|
| 469 | 469 | | judicial foreclosure as provided by this subsection shall be |
|---|
| 470 | 470 | | applied first to the payment of court costs, then to payment of the |
|---|
| 471 | 471 | | judgment, including accrued interest, and then to the payment of |
|---|
| 472 | 472 | | any attorney's fees fixed in the judgment. Any remaining proceeds |
|---|
| 473 | 473 | | shall be paid to other holders of liens on the property in the order |
|---|
| 474 | 474 | | of their priority and then to the person whose property was sold at |
|---|
| 475 | 475 | | the foreclosure [tax] sale. |
|---|
| 476 | 476 | | (k-1) The right of redemption provided by Subsection (k) may |
|---|
| 477 | 477 | | be exercised on or before the second anniversary of the date on |
|---|
| 478 | 478 | | which the purchaser's deed is filed of record if the property sold |
|---|
| 479 | 479 | | was the residence homestead of the owner, was land designated for |
|---|
| 480 | 480 | | agricultural use, or was a mineral interest. For any other |
|---|
| 481 | 481 | | property, the right of redemption must be exercised not later than |
|---|
| 482 | 482 | | the 180th day after the date on which the purchaser's deed is filed |
|---|
| 483 | 483 | | of record. If a person redeems the property as provided by |
|---|
| 484 | 484 | | Subsection (k) and this subsection, the purchaser at the |
|---|
| 485 | 485 | | foreclosure [tax] sale or the purchaser's successor shall deliver a |
|---|
| 486 | 486 | | deed without warranty to the property to the person redeeming the |
|---|
| 487 | 487 | | property. If the person who owned the property at the time of |
|---|
| 488 | 488 | | foreclosure redeems the property, all liens existing on the |
|---|
| 489 | 489 | | property at the time of the foreclosure [tax] sale remain in effect |
|---|
| 490 | 490 | | to the extent not paid from the sale proceeds. |
|---|
| 491 | 491 | | (l) Except as specifically provided by this section, a |
|---|
| 492 | 492 | | property owner cannot waive or limit any requirement imposed by |
|---|
| 493 | 493 | | this section on a holder of a loan secured by a lien created under |
|---|
| 494 | 494 | | Subsection (a-2) [transferee by this section]. |
|---|
| 495 | 495 | | SECTION 15. Sections 32.065, 33.445, 34.02(e), and 34.021, |
|---|
| 496 | 496 | | Tax Code, are repealed. |
|---|
| 497 | 497 | | SECTION 16. The changes in law made by this Act to Section |
|---|
| 498 | 498 | | 32.06, Tax Code, do not apply to the transfer of an ad valorem tax |
|---|
| 499 | 499 | | lien that occurs before the effective date of this Act. An ad |
|---|
| 500 | 500 | | valorem tax lien transferred under Section 32.06, Tax Code, before |
|---|
| 501 | 501 | | the effective date of this Act is governed by the law in effect |
|---|
| 502 | 502 | | immediately before the effective date of this Act, and that law is |
|---|
| 503 | 503 | | continued in effect for that purpose. |
|---|
| 504 | 504 | | SECTION 17. The repeal of Section 32.065, Tax Code, by this |
|---|
| 505 | 505 | | Act does not affect a contract entered into under that section |
|---|
| 506 | 506 | | before the effective date of this Act, and that section is continued |
|---|
| 507 | 507 | | in effect for that purpose. |
|---|
| 508 | 508 | | SECTION 18. The repeal of Section 33.445, Tax Code, by this |
|---|
| 509 | 509 | | Act does not affect the joinder of a transferee in a foreclosure |
|---|
| 510 | 510 | | suit resulting from a tax lien transfer before the effective date of |
|---|
| 511 | 511 | | this Act, and that section is continued in effect for that purpose. |
|---|
| 512 | 512 | | SECTION 19. The repeal of Section 34.021, Tax Code, by this |
|---|
| 513 | 513 | | Act does not affect the distribution of excess proceeds for a |
|---|
| 514 | 514 | | foreclosure of a tax lien under Rule 736, Texas Rules of Civil |
|---|
| 515 | 515 | | Procedure, before the effective date of this Act, and that section |
|---|
| 516 | 516 | | is continued in effect for that purpose. |
|---|
| 517 | 517 | | SECTION 20. This Act takes effect immediately if it |
|---|
| 518 | 518 | | receives a vote of two-thirds of all the members elected to each |
|---|
| 519 | 519 | | house, as provided by Section 39, Article III, Texas Constitution. |
|---|
| 520 | 520 | | If this Act does not receive the vote necessary for immediate |
|---|
| 521 | 521 | | effect, this Act takes effect September 1, 2015. |
|---|