87th Texas Legislature 87.20

Issue 20 – June 21st

In this our final update for the session, we provide you a more focused summary of what might enter your daily lives as a mortgage originator in Texas. The first three bills more directly impact the Department of Savings and Mortgage Lending and the last three are focused on the mortgage industry and consumer protections.

Passed Bills that may Impact You

SB 43 Creates a new Chapter 159 to regulate wrap lien lenders and Reduces the licensing exemption for originating from five or fewer residential mortgages in any rolling 12-month period to three. Long standing Savings and Mortgage Lending Department policy on aggregating control will be clearly authorized in statute. Most likely only common ownership of 9.9 percent or less among separate entities would not be aggregated. Effective January 1, 2022

SB 1900 Expands regulatory authority of the Savings and Mortgage Lending commissioner over state savings bank holding companies. It also allows examination, charging of fees and taking enforcement against third party vendors of state savings banks. Similar authority has already been obtained by 38 banking departments around the country and have almost exclusively been used for review of core processors or credit reporting agencies. Effective September 1st

HB 3617 Sets the fee at $20 for the Recovery Fund payments on first time mortgage licensees at the Department of Savings and Mortgage Lending. Effective September 1st

HB 2533 Reverses an unfortunate Attorney General Opinion issued last November regarding Appraisals and other Valuations. Permits licensed appraisers to provide valuations at less than full USPAP requirements. Amends the Occupational Code to permit licensed appraiser to conduct short form evaluations or other alternative or automated valuation models for residential loans less than $400,000 consistent with banking regulators. Also confirms acceptability of lender staff using automated valuation systems. Effective Immediately

HB 3115 regarding Judgment Lien on Homestead property. The Texas Constitution protects a person's homestead from being foreclosed on by a judgment lien. However, there can be difficulty in identifying what land is a person’s homestead and whether a judgment lien attaches against said property. In 2007, the Legislature created Section 52.0012, Property Code, to address this problem. But it left some questions regarding proper notification and certainty of time period. HB3115 seeks to resolve these problems by creating a standard form of notification, proper means of delivery of the form and specific timeframes in which a subsequent buyer can rely on the notification. A bona fide purchaser or a mortgagee is provided a release of record of a judgment lien for a 90-day period that begins on the 31st day after the date the judgment debtor has filed the required certificate, that is provided a contradicting affidavit is not filed by the creditor in that same 31-day time period. Effective September 1st

SB 885 regarding Quit Claim Deeds. In Texas, quitclaims negatively impact the chain of title in perpetuity. Provides certainty by amending the Property Code adding a statute of limitations for quitclaims for subsequent transferees. After the fourth anniversary of the date a quitclaim deed for real property is recorded in the deed records, the deed does not affect the question of the good faith of a subsequent purchaser or creditor and does not constitute notice to a subsequent purchaser or creditor of any unrecorded conveyance, transfer, or encumbrance on the property. Effective September 1st