| 1 | 1 | | 85R2305 GRM-F |
|---|
| 2 | 2 | | By: Cyrier H.B. No. 454 |
|---|
| 3 | 3 | | |
|---|
| 4 | 4 | | |
|---|
| 5 | 5 | | A BILL TO BE ENTITLED |
|---|
| 6 | 6 | | AN ACT |
|---|
| 7 | 7 | | relating to the use of insurance proceeds paid to an insured and a |
|---|
| 8 | 8 | | lender for residential property damage. |
|---|
| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|---|
| 10 | 10 | | SECTION 1. Subchapter B, Chapter 343, Finance Code, is |
|---|
| 11 | 11 | | amended by adding Section 343.107 to read as follows: |
|---|
| 12 | 12 | | Sec. 343.107. NOTICE REQUIRED BY LENDER BEFORE APPLICATION |
|---|
| 13 | 13 | | OF CERTAIN INSURANCE PROCEEDS. A lender may not apply the proceeds |
|---|
| 14 | 14 | | of an insurance claim described by Section 557.002(a), Insurance |
|---|
| 15 | 15 | | Code, to reduce the balance of the home loan secured by the insured |
|---|
| 16 | 16 | | property at any time before the 90th day after the date the lender |
|---|
| 17 | 17 | | sends the notice required by Section 557.002(a)(1), Insurance Code. |
|---|
| 18 | 18 | | SECTION 2. Section 557.002(a), Insurance Code, is amended |
|---|
| 19 | 19 | | to read as follows: |
|---|
| 20 | 20 | | (a) If a claim under an insurance policy for damage to |
|---|
| 21 | 21 | | residential real property is paid to the insured and a lender, [and |
|---|
| 22 | 22 | | the lender holds all or part of the proceeds from the insurance |
|---|
| 23 | 23 | | claim payment pending completion of all or part of the repairs to |
|---|
| 24 | 24 | | the property,] the lender shall notify the insured of: |
|---|
| 25 | 25 | | (1) the insured's options with respect to having the |
|---|
| 26 | 26 | | lender place the proceeds of the claim in escrow for repair or |
|---|
| 27 | 27 | | rebuilding of the property or apply the proceeds to reduce the |
|---|
| 28 | 28 | | balance of the loan secured by the property; and |
|---|
| 29 | 29 | | (2) each requirement with which the insured must |
|---|
| 30 | 30 | | comply for the lender to release [the] insurance proceeds held by |
|---|
| 31 | 31 | | the lender. |
|---|
| 32 | 32 | | SECTION 3. Section 343.107, Finance Code, as added by this |
|---|
| 33 | 33 | | Act, applies only to a home loan entered into on or after the |
|---|
| 34 | 34 | | effective date of this Act. A home loan entered into before the |
|---|
| 35 | 35 | | effective date of this Act is governed by the law in effect on the |
|---|
| 36 | 36 | | date the home loan was entered into, and the former law is continued |
|---|
| 37 | 37 | | in effect for that purpose. |
|---|
| 38 | 38 | | SECTION 4. Section 557.002(a), Insurance Code, as amended |
|---|
| 39 | 39 | | by this Act, applies only to notice concerning insurance proceeds |
|---|
| 40 | 40 | | paid to a lender on or after the effective date of this Act. Notice |
|---|
| 41 | 41 | | concerning insurance proceeds paid to a lender before the effective |
|---|
| 42 | 42 | | date of this Act is governed by the law as it existed immediately |
|---|
| 43 | 43 | | before the effective date of this Act, and that law is continued in |
|---|
| 44 | 44 | | effect for that purpose. |
|---|
| 45 | 45 | | SECTION 5. This Act takes effect September 1, 2017. |
|---|