85R6268 AJA-F
By: Watson, RodrÃguez, Zaffirini S.B. No. 1995
A BILL TO BE ENTITLED
AN ACT
relating to disclosures in connection with certain wrap mortgage
loan transactions; providing a criminal penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
adding Chapter 160 to read as follows:
CHAPTER 160. RESIDENTIAL WRAP MORTGAGE LOAN FINANCING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 160.001. DEFINITIONS. In this chapter:
(1) "Residential mortgage loan" and "residential real
estate" have the meanings assigned by Section 180.002.
(2) "Wrap borrower" means a person obligated to pay a
wrap mortgage loan.
(3) "Wrap lender" means a person who makes a wrap
mortgage loan.
(4) "Wrap mortgage loan" means a residential mortgage
loan:
(A) made to finance the purchase of residential
real estate that will continue to be subject to an unreleased lien
that:
(i) attached to the residential real estate
before the loan was made; and
(ii) secures a debt incurred by a person
other than the wrap borrower that was not paid off at the time the
loan was made; and
(B) obligating the wrap borrower to the wrap
lender for payment of a debt the principal amount of which includes:
(i) the outstanding balance of the debt
described by Paragraph (A)(ii); and
(ii) any remaining amount of the purchase
price financed by the wrap lender.
SUBCHAPTER B. DISCLOSURE REQUIREMENTS
Sec. 160.051. DISCLOSURE STATEMENT. (a) A wrap lender not
otherwise required to provide a written disclosure statement to the
wrap borrower under Section 5.016, Property Code, must, on or
before the seventh day before the wrap mortgage loan agreement is
entered into, provide to the wrap borrower and each holder of a lien
described by Section 160.001(4)(A), a separate written disclosure
statement in at least 12-point type that contains the information
required for a written disclosure statement under Section 5.016,
Property Code.
(b) Regardless of whether the wrap lender provides a written
disclosure statement under Subsection (a) or under Section 5.016,
Property Code, the wrap lender's disclosure statement to the wrap
borrower must include a statement in a form substantially similar
to the following:
NOTICE REGARDING PROPERTY INSURANCE: ANY INSURANCE MAINTAINED BY A
SELLER, LENDER, OR OTHER PERSON WHO IS NOT THE BUYER OF THIS
PROPERTY MAY NOT PROVIDE COVERAGE TO THE BUYER IF THE BUYER SUFFERS
A LOSS OR INCURS LIABILITY IN CONNECTION WITH THE PROPERTY. TO
ENSURE THE BUYER'S INTERESTS ARE PROTECTED, THE BUYER SHOULD
PURCHASE THE BUYER'S OWN PROPERTY INSURANCE. BEFORE PURCHASING
THIS PROPERTY, YOU MAY WISH TO CONSULT AN INSURANCE AGENT REGARDING
THE INSURANCE COVERAGE AVAILABLE TO YOU AS A BUYER OF THE PROPERTY.
Sec. 160.052. RECORD OF DISCLOSURE. A wrap lender must
retain a copy of a disclosure statement provided under Section
160.051 until the first anniversary of the earliest date on which
all liens described by Section 160.001(4)(A) are released.
Sec. 160.053. FOREIGN LANGUAGE REQUIREMENT. Regardless of
whether the wrap lender provides a written disclosure statement
under Section 160.051 or under Section 5.016, Property Code, if the
negotiations that precede the execution of the wrap mortgage loan
agreement are conducted primarily in a language other than English,
the wrap lender shall provide a copy of the required disclosure
statement in that language to the wrap borrower.
Sec. 160.054. FAILURE TO PROVIDE DISCLOSURE: TOLLING OF
LIMITATIONS. If a wrap lender fails to provide the disclosure
statement as required by Section 160.051 or fails to provide the
disclosure statement in the language required by Section 160.053,
the limitations period applicable to any cause of action of the wrap
borrower against the wrap lender arising out of the wrap lender's
violation of a law of this state in connection with the wrap
mortgage loan transaction is tolled until the 120th day after the
date the required disclosure statement is provided.
Sec. 160.055. FAILURE TO PROVIDE NOTICE: OFFENSE. (a) A
wrap lender commits an offense if the wrap lender fails to provide a
written disclosure statement under Section 160.051 or Section
5.016, Property Code, that meets the requirements of this chapter
and Section 5.016, Property Code, as applicable.
(b) An offense under this section is a Class A misdemeanor.
SECTION 2. Chapter 160, Finance Code, as added by this Act,
applies only to a wrap mortgage loan made on or after the effective
date of this Act.
SECTION 3. This Act takes effect September 1, 2017.