Bill Text: TX SB767 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to the regulation of certain residential mortgage foreclosure consulting services; providing a criminal penalty.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2011-06-17 - Effective on 9/1/11 [SB767 Detail]
Download: Texas-2011-SB767-Enrolled.html
S.B. No. 767 |
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relating to the regulation of certain residential mortgage | ||
foreclosure consulting services; providing a criminal penalty. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Title 2, Business & Commerce Code, is amended by | ||
adding Chapter 21 to read as follows: | ||
CHAPTER 21. REGULATION OF CERTAIN RESIDENTIAL FORECLOSURE | ||
CONSULTING SERVICES | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 21.001. DEFINITIONS. (a) In this chapter: | ||
(1) "Foreclosure consultant" means a person who makes | ||
a solicitation, representation, or offer to a homeowner to perform | ||
for compensation, or who for compensation performs, a service that | ||
the person represents will do any of the following: | ||
(A) prevent or postpone a foreclosure sale; | ||
(B) obtain a forbearance from: | ||
(i) a mortgagee; | ||
(ii) a beneficiary of a deed of trust; or | ||
(iii) another person who holds a lien | ||
secured by the residence in foreclosure; | ||
(C) assist the homeowner: | ||
(i) to cure the default giving rise to the | ||
foreclosure action; or | ||
(ii) to exercise the right of reinstatement | ||
of the homeowner's obligation secured by the residence in | ||
foreclosure; | ||
(D) obtain an extension of the period within | ||
which the homeowner may reinstate the homeowner's obligation | ||
secured by the residence in foreclosure; | ||
(E) obtain a waiver of an acceleration clause | ||
contained in a promissory note or contract secured by a deed of | ||
trust or mortgage on a residence in foreclosure or contained in the | ||
deed of trust or mortgage; | ||
(F) assist the homeowner to obtain a loan or | ||
advance of funds to prevent foreclosure; | ||
(G) avoid or ameliorate the impairment of the | ||
homeowner's credit resulting from the recording of a notice of | ||
default or the conduct of a foreclosure sale; | ||
(H) save the homeowner's residence from | ||
foreclosure; or | ||
(I) assist the homeowner in obtaining excess | ||
proceeds from a foreclosure sale of the homeowner's residence. | ||
(2) "Homeowner" means a person that holds record title | ||
to a residence in foreclosure at the time the foreclosure action has | ||
been commenced. | ||
(3) "Mortgage servicer" has the meaning assigned by | ||
Section 51.0001, Property Code. | ||
(4) "Residence in foreclosure" means residential real | ||
property consisting of not more than four single-family dwelling | ||
units, at least one of which is occupied as the property owner's | ||
principal place of residence, and against which a foreclosure | ||
action has been commenced. | ||
(b) For purposes of Subsections (a)(2) and (4), a | ||
foreclosure action has been commenced if: | ||
(1) notice of sale has been filed under Section | ||
51.002(b), Property Code; or | ||
(2) a judicial foreclosure action has been commenced. | ||
Sec. 21.002. EXCEPTION FROM APPLICABILITY OF CHAPTER. | ||
(a) Except as provided by Subsection (b), this chapter does not | ||
apply to the following persons that perform foreclosure consulting | ||
services: | ||
(1) an attorney admitted to practice in this state who | ||
performs those services in relation to the attorney's | ||
attorney-client relationship with a homeowner or the beneficiary of | ||
the lien being foreclosed; | ||
(2) a person that holds or is owed an obligation | ||
secured by a lien on a residence in foreclosure if the person | ||
performs those services in connection with the obligation or lien; | ||
(3) a mortgage servicer of an obligation secured by a | ||
lien on a residence in foreclosure if the servicer performs those | ||
services in connection with the obligation or lien; | ||
(4) a person that regulates banks, trust companies, | ||
savings and loan associations, credit unions, or insurance | ||
companies under the laws of this state or the United States if the | ||
person performs those services as part of the person's normal | ||
business activities; | ||
(5) an affiliate of a person described by Subdivision | ||
(4) if the affiliate performs those services as part of the | ||
affiliate's normal business activities; | ||
(6) a judgment creditor of the homeowner of the | ||
residence in foreclosure, if: | ||
(A) the legal action giving rise to the judgment | ||
was commenced before the notice of default required under Section | ||
5.064, 5.066, or 51.002(d), Property Code; and | ||
(B) the judgment is recorded in the real property | ||
records of the clerk of the county where the residence in | ||
foreclosure is located; | ||
(7) a licensed title insurer, title insurance agent, | ||
or escrow officer authorized to transact business in this state if | ||
the person is performing those services in conjunction with title | ||
insurance or settlement services; | ||
(8) a licensed real estate broker or real estate | ||
salesperson if the person is engaging in an activity for which the | ||
person is licensed; | ||
(9) a person licensed or registered under Chapter 156, | ||
Finance Code, if the person is engaging in an activity for which the | ||
person is licensed or registered under that chapter; | ||
(10) a person licensed or registered under Chapter | ||
157, Finance Code, if the person is engaging in an activity for | ||
which the person is licensed or registered under that chapter; | ||
(11) a nonprofit organization that provides solely | ||
counseling or advice to homeowners who have a residence in | ||
foreclosure or have defaulted on their home loans, unless the | ||
organization is an associate of the foreclosure consultant; | ||
(12) a depository institution, as defined by Section | ||
31.002, Finance Code, subject to regulation or supervision by a | ||
state or federal regulatory agency; or | ||
(13) an affiliate or subsidiary of a depository | ||
institution described by Subdivision (12). | ||
(b) This chapter applies to a person described by Subsection | ||
(a) if the person is providing foreclosure consulting services to a | ||
homeowner designed or intended to transfer title, directly or | ||
indirectly, to a residence in foreclosure to that person or the | ||
person's associate, unless the person is a mortgagee or mortgage | ||
servicer that negotiates with or accepts from the mortgagor a deed | ||
in lieu of foreclosure for the benefit of the mortgagee. | ||
Sec. 21.003. CONFLICT WITH OTHER LAW. To the extent of a | ||
conflict between this chapter and Chapter 393, Finance Code, this | ||
chapter controls. | ||
[Sections 21.004-21.050 reserved for expansion] | ||
SUBCHAPTER B. CONTRACT FOR SERVICES | ||
Sec. 21.051. FORM AND TERMS OF CONTRACT. Each contract for | ||
the purchase of the services of a foreclosure consultant by a | ||
homeowner of a residence in foreclosure must be in writing, dated, | ||
and signed by each homeowner and the foreclosure consultant. | ||
Sec. 21.052. REQUIRED DISCLOSURE. Before entering into a | ||
contract with a homeowner of a residence in foreclosure for the | ||
purchase of the services of a foreclosure consultant, the | ||
foreclosure consultant shall provide the homeowner written notice | ||
stating the following, in at least 14-point boldfaced type: | ||
NOTICE REQUIRED BY TEXAS LAW | ||
_______ (Name) or an associate of _________ (Name) cannot ask you to | ||
sign or have you sign any document that transfers any interest in | ||
your home or property to __________ (Name) or ___________ (Name's) | ||
associate. | ||
_______ (Name) or ________ (Name's) associate cannot guarantee you | ||
that they will be able to refinance your home or arrange for you to | ||
keep your home. | ||
You may, at any time, cancel or rescind this contract, without | ||
penalty of any kind. | ||
If you want to cancel this contract, mail or deliver a signed and | ||
dated copy of this notice of cancellation or rescission, or any | ||
other written notice, indicating your intent to cancel or rescind | ||
to _________________ (Name and address of foreclosure consultant) | ||
at ________________________ (Address of foreclosure consultant, | ||
including facsimile and electronic mail address). | ||
As part of any cancellation or rescission, you (the homeowner) must | ||
repay any money spent on your behalf by _____________________ (Name | ||
of foreclosure consultant) prior to receipt of this notice and as a | ||
result of this agreement, within 60 days, along with interest | ||
calculated at the rate of eight percent per year. | ||
[Sections 21.053-21.100 reserved for expansion] | ||
SUBCHAPTER C. LIMITATIONS, PROHIBITIONS, AND DUTIES REGARDING | ||
SERVICES | ||
Sec. 21.101. RESTRICTIONS ON CHARGE OR RECEIPT OF | ||
CONSIDERATION. A foreclosure consultant may not: | ||
(1) charge or receive compensation until the | ||
foreclosure consultant has fully performed each service the | ||
foreclosure consultant has contracted to perform or has represented | ||
the foreclosure consultant can or will perform unless the | ||
foreclosure consultant has obtained a surety bond or established | ||
and maintained a surety account for each location at which the | ||
foreclosure consultant conducts business in the manner that | ||
Subchapter E, Chapter 393, Finance Code, provides for credit | ||
services organizations; or | ||
(2) receive any consideration from a third party in | ||
connection with foreclosure consulting services provided to the | ||
homeowner of a residence in foreclosure unless the consideration is | ||
fully disclosed in writing to the homeowner. | ||
Sec. 21.102. PROHIBITED CONDUCT. A foreclosure consultant | ||
may not: | ||
(1) take any power of attorney from a homeowner for any | ||
purpose other than to inspect documents; | ||
(2) for purposes of securing payment of compensation, | ||
acquire an interest, directly or indirectly, in the real or | ||
personal property of the homeowner of a residence in foreclosure | ||
with whom the foreclosure consultant has contracted to perform | ||
services; or | ||
(3) take an assignment of wages to secure payment of | ||
compensation. | ||
Sec. 21.103. RETENTION OF RECORDS. (a) A foreclosure | ||
consultant shall keep each record and document, including the | ||
foreclosure consultant contract, related to foreclosure consulting | ||
services performed on behalf of a homeowner. | ||
(b) A foreclosure consultant shall retain the records | ||
described by Subsection (a) until at least the third anniversary of | ||
the day the foreclosure consultant contract entered into by the | ||
consultant and the homeowner was terminated or concluded. | ||
[Sections 21.104-21.150 reserved for expansion] | ||
SUBCHAPTER D. ENFORCEMENT | ||
Sec. 21.151. CRIMINAL PENALTY. (a) A person commits an | ||
offense if the person violates this chapter. | ||
(b) An offense under this chapter is a Class C misdemeanor. | ||
SECTION 2. The changes in law made by this Act apply only to | ||
a contract entered into on or after the effective date of this Act. | ||
A contract entered into before the effective date of this Act is | ||
governed by the law in effect on the date the contract was entered | ||
into, and the former law is continued in effect for that purpose. | ||
SECTION 3. This Act takes effect September 1, 2011. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 767 passed the Senate on | ||
April 28, 2011, by the following vote: Yeas 31, Nays 0; and that | ||
the Senate concurred in House amendment on May 27, 2011, by the | ||
following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 767 passed the House, with | ||
amendment, on May 23, 2011, by the following vote: Yeas 142, | ||
Nays 0, one present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |