2019 Legislative Update

The 2019 Texas Legislative Session was relatively quiet for Residential Mortgage Lending, in stark contrast to the 2017 Legislative Session where Texas lenders saw substantial changes to Home Equity Lending, Powers of Attorney, Remote Notarization and other significant legislation.

We have selected Bills from the 2019 Texas Legislative Session that are most pertinent to Credit Unions and their Residential Mortgage Lending Programs.

HB 1254 – Agricultural Exemption and  Home Equity Loans

Removes a prohibition in the Texas Tax Code prohibiting an agricultural exemption on land secured by a Home Equity Loan.

In the 2017 Texas Legislative Session, Home Equity Lending was completely overhauled, including removing the prohibition on making Home Equity Loans secured by property with an agricultural exemption.  However, the Texas legislature, through an oversight, failed to remove a provision in the Texas Tax Code which prohibited agricultural exemptions on property with a Home Equity Loan.  The result of this oversight was that lenders could legally make a Home Equity Loan on property secured by an agricultural tax exemption, but the homeowner’s agricultural exemption was jeopardized with the taxing authority.

This change simply fixes that legislative oversight and there should not be any issues with making Home Equity Loans secured by homesteads with an agricultural tax exemption moving forward.

Effective January 1, 2020

SB 2330 – Temporary Authority Related to a Residential Mortgage Loan Originator

Allows a Residential Mortgage Loan Originator temporary authority to originate loans while their license application is being processed, provided they are employed by a licensed lender and meet certain eligibility requirements.

Effective November 24, 2019

SB 442 – Disclosure of No Flood Insurance

Requires Hazard Insurance Companies to disclose to the homeowner that their Homeowner’s Insurance Policy does not include flood insurance, when applicable.  The goal of this legislation is to educate homeowners on the limits of their Hazard Insurance Policies and to encourage Flood Insurance where none is required by Federal law.

Effective September 1, 2019

SB 339 – Seller’s Disclosure Regarding Flooding

Expands the requirements for the seller’s disclosure on residential property to include more specific information regarding flooding on the property.

Effective September 1, 2019

SB 489 – Notice of Confidentiality Rights

Under Texas Property Code §11.008(c), all Warranty Deeds or Deeds of Trust must include a Notice of Confidentiality Rights at the top of the document.  This legislation expands the disclosure requirement to include any instrument that transfers an interest in real property.  All recorded instruments that transfer an interest in real property should now include a Notice of Confidentiality Rights, including: lien releases, mechanic’s liens, easement agreements, etc.

Effective September 1, 2019

HB 1833 – Transfer of Real Property

Allows for an Affidavit that identifies an individual who has authority to act on behalf of an entity (LLC, limited partnership or corporation) with respect to a real estate transaction.  The affidavit is filed in the real property records and third parties may rely on the affidavit to conduct business.

There are a number of requirements and restrictions applicable to the Affidavit.  BairdLaw has created a sample affidavit for a single member LLC here.

This new legislation will make closings with LLCs, LPs, or corporations more efficient as the entity will no longer need to draft a resolution for lenders and title companies to rely on.

Effective September 1, 2019

SB 2128 – Recording Electronically Signed/Notarized Documents

This bill provides a method for recording a physical copy of electronically created documents in all 254 counties of Texas.  All County Clerks in Texas are required to record an electronic document, provided the electronic document is printed and certified by a notary public.  The notary certification must be substantially in the form found here.

Document recording has historically been a substantial barrier to full eClosings.  Full eClosings were not available in non-eRecording jurisdictions because non-eRecording jurisdictions required an original, wet-signed document for recording.  Only 67 of the 254 counties in Texas allow eRecording.  This legislation removes the document recording barrier to full eClosings, allowing electronically signed and notarized documents to be recorded in all 254 counties of Texas.

Effective September 1, 2019

Texas Department of Insurance revises Title Insurance Rates

The Texas Commissioner of Insurance has issued an order that will adjust basic premium rates for insurance and other rate rules.  The new rates will be effective on all transactions that close on or after September 1, 2019.  Overall, basic title premium rates will be decreasing by approximately 5% with the exception of low policy amounts (less than $25,000.00).  Additionally, the R-8 credit given on refinances will be more generous.  The BairdLaw TRID Title Premium Calculators will be updated to reflect the new rates and how they should be disclosed on the Loan Estimate and Closing Disclosure.  Here is a link to our calculators:

Purchase Title Premium Calculator

Refinance Title Premium Calculator