11 Aug Texas Legislative Update
The Texas legislature recently enacted laws governing the disclosure of home mortgage information to a surviving spouse; it amended its licensing laws, including the laws governing mortgage companies, mortgage bankers, and mortgage loan originators under the Texas SAFE Act (the “Act”); and enacted legislation regarding notices required for real property adjoining water. All the legislation discussed in this memorandum is effective September 1, 2015.
TEXAS HOUSE BILL 831
“Estate” means a decedent’s property, as that property:
- Exists originally and as the property changes in form by sale, reinvestment, or otherwise;
- Is augmented by any accretions and other additions to the property, including any property to be distributed to the decedent’s representative by the trustee of a trust that terminates on the decedent’s death, and substitutions for the property; and
- Is diminished by any decreases in or distributions from the property.
“Heir” means a person who is entitled under the statutes of descent and distribution to a part of the estate of a decedent who dies intestate. The term includes the decedent’s surviving spouse.
“Mortgage servicer” means the last person to whom a borrower has been instructed by the current lender to send payments for the debt secured by a security instrument. A lender may be the mortgage servicer.
“Mortgagor” means the grantor of a security instrument (the borrower).
Not later than the 30th day after a mortgage servicer of a home loan receives a request for the information from the surviving spouse of a borrower of the home loan, accompanied by the required proof, the mortgage servicer must provide the surviving spouse with information that the borrower would have received in a standard monthly statement, including:
- The current balance information, including the due dates and the amount of any installments;
- Whether the loan is current and any amounts that are delinquent;
- Any loan number; and
- The amount of any escrow deposit for taxes and insurance purposes.
A surviving spouse must prove the person’s status by providing:
- A death certificate of the borrower;
- An affidavit of disinterested witnesses that is in the required form, including language stating that the surviving spouse was married to the borrower at the time of the borrower’s death; and
- An affidavit signed by the surviving spouse stating that the surviving spouse is currently residing in the underlying mortgaged property as the primary residence.
The request from the surviving spouse must also include a notice to the mortgage servicer that states in bold-faced, capital, or underlined letters: “THIS REQUEST IS MADE PURSUANT TO TEXAS FINANCE CODE SECTION 343.103. SUBSEQUENT DISCLOSURE OF INFORMATION IS NOT IN CONFLICT WITH THE GRAMM-LEACH-BLILEY ACT UNDER 15 U.S.C. SECTION 6802(e)(8).”
A mortgage servicer that provides the information as required is not liable to the estate of the borrower or any heir or beneficiary of the borrower as a result of providing this information to the surviving spouse.
TEXAS SENATE BILL 1203
A nonprofit organization is exempt from the mortgage company and mortgage banker laws if it:
- Is a nonprofit organization providing self-help housing that originates zero interest residential mortgage loans for borrowers who have provided part of the labor to construct the dwelling securing the loan; or
- Has a designation as a Section 501(c)(3) organization by the IRS and originates mortgage loans for borrowers who, through a self-help program, have provided at least 200 labor hours or 65% of the labor to construct the dwelling securing the loan.
TEXAS HOUSE BILL 1665
This requirement applies only to the sale of residential or commercial real property adjoining an impoundment of water, including a reservoir or lake, constructed and maintained under Texas Water Resources Finance Authority, that has a storage capacity of at least 5,000 acre-feet at the impoundment’s normal operating level.
A seller of real property must give to the purchaser of the property a written notice in substantially the following form:
“NOTICE OF WATER LEVEL FLUCTUATIONS
The water level of the impoundment of water adjoining the property at ______________ (street address and city) or described as ______________ (legal description) fluctuates for various reasons, including as a result of:
(1) An entity lawfully exercising its right to use the water stored in the impoundment; or
(2) Drought or flood conditions.”
The notice described above must be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property.
If a contract is entered into without the seller providing the notice within the required period, the purchaser may terminate the contract for any reason within seven days after the date the purchaser receives:
- The notice from the seller; or
- Information described by the notice from any other person.
After the date of the conveyance, the purchaser may bring an action for misrepresentation against the seller if the seller:
- Failed to provide the notice before the date of the conveyance; and
- Had actual knowledge that the water level fluctuates for various reasons, including the reasons stated above.