Mortgage servicing bill advances in Texas House
Austin American Statesman
By Barry Harrell | Wednesday, March 23, 2011, 11:58 AM
A bill aimed at setting up disclosure requirements for some nontraditional mortgage servicers that aren’t covered by federal rules has been approved in committee and advanced to the full Texas House.
The measure, House Bill 213, was filed by state Rep. Eddie Rodriguez, D-Austin. The measure was unanimously approved by the House committee on Pensions, Investments and Financial Services.
Mortgage servicers are middlemen for investors in the residential mortgage industry. They don’t originate or own loans; instead, the loan holders pay them to send bills, collect payments and pursue homeowners who are behind on payments.
Mortgage servicers have been thrust into the national spotlight in recent months amid allegations of abuses, including unethical delaying and collection tactics and the “robo-signing” foreclosure documents without verifying their accuracy, that government officials and housing advocates say have contributed to the nation’s foreclosure problems.
Rodriguez’s bill would amend the state finance code to specifically address a handful of mortgage servicers that aren’t covered by federal law. As a result, those servicers aren’t required to provide their customers with disclosures that are standard for federally regulated mortgages. Those include a list of fees and charges and records of how the borrower’s payments are applied, as well as setting guidelines for how a consumer can request records from the companies, in the event of a dispute or error. The bill would give enforcement power to the Texas attorney general’s office and the state Department of Savings and Mortgage Lending.
Rodriguez’s bill is one of three that have been filed in this legislative session addressing the mortgage servicing industry. State Sen. John Carona, R-Dallas, and Sen. Eddie Lucio Jr., D-Brownsville, have also filed measures that touch on mortgage servicing. Lucio’s bill, Senate Bill 1319, is similar to Rodriguez’s, in that it addresses nontraditional mortgage servicers.
Carona’s measure, Senate Bill 17, would establish registration requirements for some mortgage servicers and give the Texas Department of Savings and Mortgage Lending regulatory authority over them. It would also set up that office as a central place for consumer complaints.
The bills by Carona and Lucio have not yet been approved by legislative committees.