Easter week has reflected an increased pace of activity in the state house.  A number of bills of interest to banking were heard this week.  Here are some highlights.

 

 

Possibly the two most innocuous bills we are following, SB 1540 and 1541, were passed out of the Senate Business & Commerce Committee this week.  This make technical corrections to the UCC, clarifying that a creditor can rely on the driver’s license name as the “correct” name for UCC-1s, fixing a glitch in continuations due to the timing of revised Article 9, and correcting Article 3 to match the Fed’s rule on remotely created drafts.

 

 

HB 1809 would provide that a servicemember (active, reserve, guards), wounded in a combat zone, could defer their debt (with no interest accrual) until returned to duty plus one year.  We prepared a careful analysis of this bill and all of the unintended consequences.  The House Financial Institutions heard testimony and received a copy of this “fact sheet” along with a letter from NCUA reflecting that it would be preempted for federal charters.  This proposal is not limited to loans.  It would also apply to any “obligation”, which could include rent, utilities, phone contracts, taxes, child support, and much more.  Interestingly enough, the Texas Apartment Association testified against the bill.  They pointed out that a middle class person who has a rent house (and a mortgage) could lose that property if their tenant is a wounded vet who doesn’t pay for over a year! 

 

The debt doesn’t go away.  Thus, after the deferral expires, the servicemember is facing a mountain of debt.  IBAT has suggested alternative solutions for the very real needs of this segment of our society that is fighting and sacrificing for US security.  Also, witnesses pointed out that military members may purchase cheap traumatic injury insurance that can pay as much as $100,000.  The bill was left pending….for now.  Another part of the servicemember package, HB 285, was voted out of the Defense Affairs Committee recently.

 

 

HB 2754 by Anchia (a Dept. of Banking bill) was voted out of the House Financial Institutions Committee.  The Senate Business & Commerce committee supported SB 607 by Ellis, which creates banking development districts (a kind of CRA program).

 

 

HB 1555 by Pickett was amended and approved by the House Financial Institutions Committee.  The bill will now give credit card issuers 45 days (instead of 48 hours!) to respond to disputes over interest and fees on periodic statements.  In addition, the statement will need to include the name and contact info for the relevant federal consumer ombudsman.

 

 

HB 345 by Flynn was approved by the House Financial Institutions Committee.  It was amended to add FHLB to TIB as permissible custodian for securities.  Unfortunately, the bill still omits the Fed in that capacity.  Also, arguably it still provides for cross collateralization.  The concerns of the government treasurers regarding reporting and controls also were not addressed!

 

 

SB 224 by Ellis was approved by the Senate Business & Commerce Committee as amended.  This bill would require an “opt-in” before a financial institution could sell consumer financial information to an unaffiliated third party.  An exception was added for joint marketing arrangements (at IBAT’s request).  Only true “sales” of info trigger the opt-in.

 

Meanwhile, the interested parties have been working hard on HB 2002 by Giddings, which requires banks to provide a notice to check verification entities for victims of ID theft.  The Dept. of Banking would set up a secure web site for this purpose. The bill has not been finalized at this writing….

 

 

More re-drafts.  Another stakeholders’ meeting has been scheduled for next week.  The question du jour is whether the final product—on balance—achieves enough forward movement.  At this point, it fixes the ag use valuation timing problem (very important to most community banks).  In addition, it answers the "blanks to be filled in" question, allows for early closing (less than one year) for declared disaster areas, and limits docs copied at closing to those signed then.  It prohibits unsolicited checks for HELOCs but permits the lender to provide checks to the customer who wants them.  It does NOT fix the In Re Box debt consolidation problem.  Also, it does not incorporate a clear cap (0.125% of principal) for fee variances in order to waive the one day advance provision of the settlement statement and in fact eliminates the waiver.  On the other hand, it does not include limitations on who can exercise the power of attorney for closings.  The earliest this revised bill will be considered in committee for final approval is April 16.

 

 

HB 716 by Solomons was passed by the House this week.  It creates criminal sanctions for mortgage fraud.  Thanks to Chairman Solomons for listening to our concerns about a proposed new document that could destroy confidentiality of borrower info by amending the bill to include a generic rather than specific disclosure.

 

Happy Easter!