HBA-TYH H.B. 2743 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2743
By: Wise
Financial Institutions
3/26/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, there are many  fees associated with residential mortgage loans
and closing costs involved in purchasing a home that may not be readily
apparent to the borrower.  They include document preparation fees,
appraisal review fees, credit report fees, application fees, overnight mail
fees, inspection fees, recording fees, attorney's fees, and settlement
fees.  Some of these fees can be duplicative  or may be otherwise
unnecessary.  H.B. 2743 requires lenders to disclose to the borrower in
good faith, and in writing, all of the closing costs required to be paid by
the borrower in connection with a mortgage loan, within three days of the
closing of the deal.  The bill also requires the lender to state the exact
amount of each fees as outlined in the legislation.  Failure to provide
such information constitutes a Class C misdemeanor. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Title 5, Finance Code, by adding Chapter 396, as follows:

CHAPTER 396.  RESIDENTIAL MORTGAGE LOAN DISCLOSURES
 
Sec. 396.001.  DEFINITIONS.  Defines, for this chapter, "borrower,"
"closing costs," "lender,"  and "residential mortgage loan." 

Sec. 396.002.  DISCLOSURE OF CLOSING COSTS REQUIRED.  Requires the lender,
not later than the third business day after the date on which a borrower
signs a completed residential mortgage loan application, to provide to the
borrower a good faith, written estimate of all closing costs required to be
paid by the borrower in connection with the loan. Provides that the
disclosure must contain a complete description of the closing costs and
state the total amount of each of the closing costs. 
 
Sec. 396.003.  CRIMINAL PENALTY.  Provides that a lender commits a Class C
misdemeanor if the lender violates Section 396.002.  

SECTION 2.  Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 3.  Emergency clause.