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


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



BACKGROUND AND PURPOSE 

Current law attempts to deter the practice of appraisal fixing by providing
penalties for appraisers who provide or offer 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 addresses 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.