Texas Senate Bill SB1431

Texas 2017 - 85th Regular

Caption

Relating to escrow payments for a loan secured by a new dwelling.

Impact

The legislation is expected to influence Texas state law regarding how mortgages and related escrow accounts are managed. Specifically, the bill modifies the existing regulations under the Finance Code to provide clearer guidelines for lenders. These changes are anticipated to bring more transparency and predictability for homebuyers regarding their escrow accounts, alleviating potential financial strains caused by insufficient escrow contributions for property taxes.

Summary

SB1431 introduces regulations pertaining to escrow payments for loans secured by new dwellings. The bill mandates that when an escrow account is established for such loans, lenders or mortgage servicers must make a good-faith effort to ensure that the initial escrow amount is sufficient to cover property taxes. This requirement is based on the appraised value of the newly constructed dwelling and market comparisons to similar properties. By establishing this standard, the bill aims to protect borrowers from undue financial burdens arising from unexpected property tax assessments following new construction.

Contention

While the bill seeks to create a structured approach to escrow payments for new dwellings, there may be some points of contention among stakeholders. Critics may argue that the implementation of such regulations could impose additional requirements on lenders, leading to higher administrative costs that may be passed on to borrowers. Furthermore, the bill's stipulation that failure to ensure sufficient escrow payments does not affect the lender's security interest could raise concerns about consumer protections in instances where homeowners might face unexpected tax liabilities.