Austin Real Estate Networking Club

AN ACT

relating to transactions involving residential mortgage foreclosures;
providing a penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 2, Business & Commerce Code, is amended by adding Chapter
21 to read as follows:

CHAPTER 21. HOMEOWNER PROTECTION FROM CERTAIN FORECLOSURE-RELATED
TRANSACTIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 21.001. DEFINITIONS. In this chapter:

(1) “Equity purchase contract” means a contract between an equity purchaser
and the homeowner of a residence in foreclosure.

(2) “Equity purchaser” means a person who, in the course of the person’s
business, vocation, or occupation, acquires title to a residence in
foreclosure. The term does not include a person who acquires the title:

(A) for purposes of using the property as the person’s residence for at
least one year;

(B) by a deed in lieu of foreclosure to the holder of a voluntary lien or
encumbrance of record;

(C) by a deed from the officer charged with selling property under Chapter
34, Tax Code;

(D) at a sale of real property authorized by statute;

(E) by court order or judgment; or

(F) from the person’s spouse or a relative of the person related by
consanguinity or affinity.

(3) “Foreclosure consultant” means a person who performs, or represents
that the person can or will perform, for compensation services in connection
with the prevention or postponement of foreclosure proceedings against a
homeowner’s residential property or other services related to the
foreclosure of the property.

(4) “Residence in foreclosure” means residential real property consisting
of not more than four single-family dwelling units, at least one of which is
occupied as the homeowner’s principal place of residence, and against which
a foreclosure action has been commenced.

Sec. 21.002. EXCEPTION FROM APPLICABILITY OF CERTAIN SUBCHAPTERS. (a)
Except as provided by Subsection (b), Subchapters B and C do not apply to
the following persons who perform foreclosure consulting services:

(1) an attorney admitted to practice in this state who performs those
services in relation to the attorney’s attorney-client relationship with a
homeowner or the beneficiary of the lien being foreclosed;

(2) a person who holds or is owed an obligation secured by a lien on a
residence in foreclosure if the person performs those services in connection
with the obligation or lien;

(3) a person that regulates banks, trust companies, savings and loan
associations, credit unions, or insurance companies under the laws of this
state or the United States if the person performs those services as part of
the person’s normal business activities;

(4) an affiliate of a person described by Subdivision (3) if the affiliate
performs those services as part of the affiliate’s normal business
activities;

(5) a judgment creditor of the homeowner of the residence in foreclosure,
if:

(A) the legal action giving rise to the judgment was commenced before the
notice of default required under Section 5.064 or 51.002(d), Property Code;
and

(B) the judgment is recorded in the real property records of the clerk of
the county where the residence in foreclosure is located;

(6) a licensed title insurer, title insurance agent, or escrow officer
authorized to transact business in this state if the person is performing
those services in conjunction with title insurance or settlement services;

(7) a licensed real estate broker or real estate salesperson if the person
is engaging in an activity for which the person is licensed;

(8) a mortgage broker or loan officer licensed under Chapter 156, Finance
Code, if the person is engaging in an activity for which the person is
licensed; or

(9) a nonprofit organization that provides solely counseling or advice to
homeowners who have a residence in foreclosure or have defaulted on their
home loans, unless the organization is an associate of the foreclosure
consultant.

(b) Subchapters B and C apply to a person described by Subsection (a) if
the person is providing foreclosure consulting services designed or intended
to transfer title, directly or indirectly, to a residence in foreclosure to
that person or the person’s associate.

[Sections 21.003-21.050 reserved for expansion]

SUBCHAPTER B. CONTRACT FOR FORECLOSURE CONSULTING SERVICES

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