Greta Garbo said it best: “I want to be left alone.”  The Texas Legislature appears to have taken that statement as its mantra this session.  Many of the critical bills under consideration involve either confidentiality concerns, identity theft worries, or a general desire not to be hassled by unwanted telephone and emails.  Here are some highlights from this week:

 

 

HB 2061 by Keffer was signed into law by Governor Perry on March 28, taking effect immediately.  This bill amends the Property Code so that release of county records (such as to title insurance companies) would not subject county clerks to criminal penalties.  At the same time, this bill requires a new notice on the first page of instruments transferring an interest in real property (like deeds of trust).  The notice must be in 12 pt. bold face type or 12 pt. UPPER CASE LETTERS as follows:  “NOTICE OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.”

 

It is critical that doc prep attorneys and forms companies change their forms immediately in order to comply with this new requirement.

 

 

On the side of protecting from identity theft, HB 2002 and 2003 by Giddings deal with allowing persons whose identity has been stolen to file a police report and affidavit with their bank and request the bank to notify check verification companies of the identity theft scenario.  The check verification companies would then use this in their notifications to merchants.  The Business and Industry Committee, chaired by Representative Giddings heard these bills on Tuesday with input for community banks provided by Steve Scurlock.  IBAT is very sympathetic to the problems of identity theft.  However, we want to insure that banks making these reports are not later sued by the customers and are not subject to excessive penalties under these bills.  Details are being ironed out at this time.  IBAT has provided the author with “hold harmless” language.

 

 

The Business and Industry Committee also heard two bills on retail rebates, HB 1479 by Castro and HB 2069 by Hochberg.  IBAT had some mild concerns with Castro’s bill.  Banks would be providing a retail service under the various pending legislation as drafted.  Banks also sometimes provide rebates of ATM fees or waivers of safe deposit box fees.  These rebates are performed automatically and do not require the submission of a request or form by the customer.  Thus, we requested – and got – an exclusion from the definition of retailer in Castro’s bill.  There are more bills filed on retail rebates.  The general public is mightily annoyed with businesses that advertise a rebate and then somehow never make good on that promise.

 

 

A number of cleanup bills proposed by the Department of Banking were moved by the Financial Institutions Committee on Monday.  These include HB 1962 by Orr and HB 2219 and 2007 by Solomons.  The Committee also heard HB 2754 by Anchia.  That bill was left pending.  Anchia’s bill deals with the issue of protests with regard to charter and other filings.  Commissioner James noted that competition in the banking world has increased and some competitors use the application process to protest thereby slowing down a competitor’s app.  Currently protestors are not required to give a reason for their protest.  This bill would change that.  In addition it makes some accounting adjustments and allows banks to make certain adjustments without department approval.

 

 

HB 2207 by Gallego deals with a new issue emerging largely from internet real property sales.  In these transactions, often the buyer does not receive a title policy.  In that event, Gallego’s bill would require the seller to provide the purchaser with a written disclosure of existing filed liens.  IBAT communicated our concerns with the representative that this bill should not apply to foreclosure and other involuntary sales.  Appropriate amendments have been drafted to accomplish that.  We appreciate the responsiveness of Representative Gallego.

 

 

HB 3219 by Elkins changes Article 3 of the Uniform Commercial Code to make the Texas nonuniform language consistent with the changes implemented by the Federal Reserve on remotely created drafts.  As you may recall, about 10 years ago IBAT worked to shift the warranty on remotely created paper drafts from the payee bank back to the bank whose customer issued these items.  That bank is in a better position to know its customer and assure that the paper drafts are not resulting in a fraudulent hit on Texas customer checking accounts.  The Federal Reserve concurred with this and amended Regulation CC to accomplish the same thing.

 

 

Most of the House Financial Institutions committee hearing on Monday was devoted to a wide array of witnesses on the issues relating to tax lien finance.  A number of bills with competing approaches were heard as a group.  These include HB 2137 and 2138 by Paxton and HB 3387 by Orr.  The issues include regulation of property tax lenders as well as appropriate disclosures to pre-existing lien holders, notices to consumers, foreclosures processes, and other matters. 

 

The need for this bill arises out of a new Texas industry.  Occasionally when there is no escrow for taxes, borrowers neglect to set aside enough funds to pay their property taxes.  The tax lien financers scour the public records for these delinquent taxpayers and then offer them financing so that they can avoid foreclosure by the taxing authority.  The property tax laws provide for an interest rate up to 18% and “reasonable” fees.  The rates on these loans tend to be high with extremely large fees.  Furthermore, the pre-existing lien holder often does not learn of this new super priority lien until the borrower gets into trouble with the tax lien financer.  These financers also have asserted that they cannot give payoff information to the prior lien holder due to privacy concerns.  (Please note that IBAT received an opinion letter from the OCC indicating that providing payoff quotes is not a violation of GLBA!)

 

The bills were all left pending.  Negotiations continue to develop.  Ultimately we expect to see these lenders regulated by either the Office of Consumer Credit Commissioner or the Savings and Mortgage Loan Commissioner.  Some form of notice will be provided to pre-existing lien holders.  The form and timing of that is being worked out.  Other details to follow . . .