HBA-JLV H.B. 1268 77(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 1268
By: Dukes
Financial Institutions
7/3/2001
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 77th Legislature, state law attempted to deter the practice of
appraisal fixing by providing penalties for appraisers who provided or
offered to provide an artificially high or low appraisal in exchange for
some derived benefit from the lender requesting their services.  However,
without similar penalties for lenders who attempt to secure an artificial
appraisal, the law only addressed half of the problem.  House Bill 1268
makes it a Class A misdemeanor if a lender makes or attempts to make a
contract with an appraiser that is contingent on a minimum, maximum, or
pre-agreed estimate of property value when securing a residential mortgage
loan. 

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. 

ANALYSIS

House Bill 1268 amends the Business & Commerce Code to provide that a
lender commits a Class A misdemeanor offense if, in connection with a
mortgage loan transaction, the lender compensates or offers to compensate a
person for appraisal services and the compensation is contingent on a
minimum, maximum, or pre-agreed estimate of value of the property securing
the loan and  interferes with the person's ability or obligation to provide
an independent and impartial opinion of the property's value.  

EFFECTIVE DATE

September 1, 2001.