Texas Senate Bill SB1995

Texas 2017 - 85th Regular

Caption

Relating to disclosures in connection with certain wrap mortgage loan transactions; providing a criminal penalty.

Impact

The enactment of SB1995 is expected to impact existing laws in the Finance Code by adding a new chapter focused on residential wrap mortgage loan financing. The bill establishes mandatory disclosure requirements for lenders, effectively enhancing consumer protection within the context of real estate transactions. It provides both clarity and accountability for wrap mortgage loan transactions, as lenders must maintain documentation of disclosures and adhere to specific guidelines regarding the language used in communications, particularly when non-English languages are involved. The legislative change is designed to protect borrowers from unexpected liabilities and ensure they are aware of their rights and obligations.

Summary

SB1995 proposes amendments regarding disclosures in connection with certain wrap mortgage loan transactions. This bill introduces specific definitions related to wrap mortgage loans and establishes disclosure requirements that must be met by wrap lenders prior to a wrap mortgage loan agreement. By clearly defining the roles of 'wrap borrowers' and 'wrap lenders', the legislation aims to enhance transparency in the mortgage lending process, addressing potential areas of confusion that can arise from such transactions. Furthermore, it includes a requirement for lenders to provide a written disclosure statement that highlights the critical nature of property insurance coverage for buyers, ensuring that prospective homeowners are made aware of the importance of obtaining their own insurance.

Contention

While the specific discussions around SB1995 highlight its consumer protection aims, potential points of contention may include concerns from lenders about increased compliance requirements and the implications of criminal penalties for non-compliance. The bill classifies severe violations, such as failure to provide a required disclosure, as a Class A misdemeanor, which may provoke discussions surrounding regulatory overreach. Stakeholders involved in the real estate industry might express apprehensions about how these new requirements could complicate the mortgage process or lead to higher costs for borrowers, which in turn impacts the affordability and accessibility of home financing.