85R2305 GRM-F     By: Cyrier H.B. No. 454       A BILL TO BE ENTITLED   AN ACT   relating to the use of insurance proceeds paid to an insured and a   lender for residential property damage.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter B, Chapter 343, Finance Code, is   amended by adding Section 343.107 to read as follows:          Sec. 343.107.  NOTICE REQUIRED BY LENDER BEFORE APPLICATION   OF CERTAIN INSURANCE PROCEEDS. A lender may not apply the proceeds   of an insurance claim described by Section 557.002(a), Insurance   Code, to reduce the balance of the home loan secured by the insured   property at any time before the 90th day after the date the lender   sends the notice required by Section 557.002(a)(1), Insurance Code.          SECTION 2.  Section 557.002(a), Insurance Code, is amended   to read as follows:          (a)  If a claim under an insurance policy for damage to   residential real property is paid to the insured and a lender, [and   the lender holds all or part of the proceeds from the insurance   claim payment pending completion of all or part of the repairs to   the property,] the lender shall notify the insured of:                (1)  the insured's options with respect to having the   lender place the proceeds of the claim in escrow for repair or   rebuilding of the property or apply the proceeds to reduce the   balance of the loan secured by the property; and                (2)  each requirement with which the insured must   comply for the lender to release [the] insurance proceeds held by   the lender.          SECTION 3.  Section 343.107, Finance Code, as added by this   Act, applies only to a home loan entered into on or after the   effective date of this Act. A home loan entered into before the   effective date of this Act is governed by the law in effect on the   date the home loan was entered into, and the former law is continued   in effect for that purpose.          SECTION 4.  Section 557.002(a), Insurance Code, as amended   by this Act, applies only to notice concerning insurance proceeds   paid to a lender on or after the effective date of this Act. Notice   concerning insurance proceeds paid to a lender before the effective   date of this Act is governed by the law as it existed immediately   before the effective date of this Act, and that law is continued in   effect for that purpose.          SECTION 5.  This Act takes effect September 1, 2017.