85R6268 AJA-F     By: Watson, Rodríguez, Zaffirini S.B. No. 1995       A BILL TO BE ENTITLED   AN ACT   relating to disclosures in connection with certain wrap mortgage   loan transactions; providing a criminal penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle E, Title 3, Finance Code, is amended by   adding Chapter 160 to read as follows:   CHAPTER 160. RESIDENTIAL WRAP MORTGAGE LOAN FINANCING   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 160.001.  DEFINITIONS. In this chapter:                (1)  "Residential mortgage loan" and "residential real   estate" have the meanings assigned by Section 180.002.                (2)  "Wrap borrower" means a person obligated to pay a   wrap mortgage loan.                (3)  "Wrap lender" means a person who makes a wrap   mortgage loan.                (4)  "Wrap mortgage loan" means a residential mortgage   loan:                      (A)  made to finance the purchase of residential   real estate that will continue to be subject to an unreleased lien   that:                            (i)  attached to the residential real estate   before the loan was made; and                            (ii)  secures a debt incurred by a person   other than the wrap borrower that was not paid off at the time the   loan was made; and                      (B)  obligating the wrap borrower to the wrap   lender for payment of a debt the principal amount of which includes:                            (i)  the outstanding balance of the debt   described by Paragraph (A)(ii); and                            (ii)  any remaining amount of the purchase   price financed by the wrap lender.   SUBCHAPTER B. DISCLOSURE REQUIREMENTS          Sec. 160.051.  DISCLOSURE STATEMENT. (a) A wrap lender not   otherwise required to provide a written disclosure statement to the   wrap borrower under Section 5.016, Property Code, must, on or   before the seventh day before the wrap mortgage loan agreement is   entered into, provide to the wrap borrower and each holder of a lien   described by Section 160.001(4)(A), a separate written disclosure   statement in at least 12-point type that contains the information   required for a written disclosure statement under Section 5.016,   Property Code.          (b)  Regardless of whether the wrap lender provides a written   disclosure statement under Subsection (a) or under Section 5.016,   Property Code, the wrap lender's disclosure statement to the wrap   borrower must include a statement in a form substantially similar   to the following:   NOTICE REGARDING PROPERTY INSURANCE: ANY INSURANCE MAINTAINED BY A   SELLER, LENDER, OR OTHER PERSON WHO IS NOT THE BUYER OF THIS   PROPERTY MAY NOT PROVIDE COVERAGE TO THE BUYER IF THE BUYER SUFFERS   A LOSS OR INCURS LIABILITY IN CONNECTION WITH THE PROPERTY. TO   ENSURE THE BUYER'S INTERESTS ARE PROTECTED, THE BUYER SHOULD   PURCHASE THE BUYER'S OWN PROPERTY INSURANCE. BEFORE PURCHASING   THIS PROPERTY, YOU MAY WISH TO CONSULT AN INSURANCE AGENT REGARDING   THE INSURANCE COVERAGE AVAILABLE TO YOU AS A BUYER OF THE PROPERTY.          Sec. 160.052.  RECORD OF DISCLOSURE. A wrap lender must   retain a copy of a disclosure statement provided under Section   160.051 until the first anniversary of the earliest date on which   all liens described by Section 160.001(4)(A) are released.          Sec. 160.053.  FOREIGN LANGUAGE REQUIREMENT. Regardless of   whether the wrap lender provides a written disclosure statement   under Section 160.051 or under Section 5.016, Property Code, if the   negotiations that precede the execution of the wrap mortgage loan   agreement are conducted primarily in a language other than English,   the wrap lender shall provide a copy of the required disclosure   statement in that language to the wrap borrower.          Sec. 160.054.  FAILURE TO PROVIDE DISCLOSURE: TOLLING OF   LIMITATIONS. If a wrap lender fails to provide the disclosure   statement as required by Section 160.051 or fails to provide the   disclosure statement in the language required by Section 160.053,   the limitations period applicable to any cause of action of the wrap   borrower against the wrap lender arising out of the wrap lender's   violation of a law of this state in connection with the wrap   mortgage loan transaction is tolled until the 120th day after the   date the required disclosure statement is provided.           Sec. 160.055.  FAILURE TO PROVIDE NOTICE: OFFENSE. (a) A   wrap lender commits an offense if the wrap lender fails to provide a   written disclosure statement under Section 160.051 or Section   5.016, Property Code, that meets the requirements of this chapter   and Section 5.016, Property Code, as applicable.          (b)  An offense under this section is a Class A misdemeanor.          SECTION 2.  Chapter 160, Finance Code, as added by this Act,   applies only to a wrap mortgage loan made on or after the effective   date of this Act.          SECTION 3.  This Act takes effect September 1, 2017.