85th TEXAS LEGISLATURE – 2017
INDEPENDENT BANKERS ASSOCIATION OF TEXAS
Download the PDF Version
The Independent Bankers Association of Texas (IBAT) has historically promoted a proactive legislative agenda at each session of the Texas Legislature. Perhaps as important, we will again be dealing with a number of legislative initiatives – some well-intentioned – impacting foreclosure processes, fees, taxation, lien law, credit allocation and a host of other issues. We will remain vigilant and engaged to protect the exclusive interests of the community banking industry.
IBAT will be focusing on the following proactive legislation in the 85th Texas Legislative Session:
Home Equity Enhancements. IBAT, along with the other financial services trade groups, has been working collaboratively with the Texas Association of Realtors to address a number of issues impacting banks’ ability to make home equity loans in Texas, and as importantly, allowing Texas homeowners the ability to access what in most cases is their most significant asset.
This “agreed to” bill addresses the following issues:
- 3% Fee Cap. Fees paid by a borrower to initiate a home equity loan are capped in the Constitution at 3%. This has precluded those homeowners who wish to borrow a more modest amount on the equity in their homes from accessing this option. We are proposing that the fee cap be lowered to 2%, and that costs for survey, appraisal and title be excluded from the cap.
- “Seasoned Refinance”. A homeowner with an existing home equity loan in existence for at least one year will be able to refinance into a “traditional” mortgage, which in most cases will result in a lower interest rate and closing costs.
- Home Equity Lines of Credit (HELOC). Current law allows a homeowner to borrow up to 80% of the appraised value of their home, unless they have opted for a HELOC. In these cases, the maximum loan to value (LTV) is capped at 50%. This provision will increase the LTV for HELOCs to 80% to provide additional flexibility for homeowners utilizing this product.
- Agriculture Use Property. Current law prohibits a home equity loan on property designated for agriculture use unless such property is used primarily for the production of milk. Under this proposal, all homestead property will be eligible for home equity loans.
Multi-party Account Disclosure. (HB 1752, SB 714) In a well-intentioned bill last session (SB 1791), the account opening process was significantly impacted by a new required form regarding multi-party account disclosures. The companion bills introduced will clarify, simplify and expedite the process, while still providing the customer with the necessary information to make an informed decision.
Multi-party Account Types. (HB 1954) The Probate Code and now the Estates Code include two account types that have created confusion to bankers and customers alike. This legislation will eliminate “trust account” and “convenience account” from statute, as these are antiquated terms that are no longer used.
Disclosure of Interested Parties. (HB 1295) Last session, HB 1295 was introduced to provide full disclosure and transparency in government contracts, and required reporting to the Texas Ethics Commission if the contract was in excess of $1 million. An unintended consequence of this bill as finally passed was to require additional reporting for public funds deposit contracts. We appreciate the efforts of Representative Capriglione to exclude contracts with “federally insured financial institutions” in a clean-up bill filed this session.
Public Funds Investment. IBAT is working with several parties to ensure that public entities can invest their funds with community banks on a fully secured basis and keep their funds working in their respective communities. Federal Home Loan Bank Letters of Credit have long been authorized and accepted as an alternate source of security for public funds deposits. We are seeking clarification to ensure these instruments are also acceptable for securing public fund investments. Additionally, we are seeking clarification that federally insured demand deposit accounts are an authorized investment for public entities.
Property Tax Lenders. We continue to receive complaints from bankers who have had issues with property tax lenders. Additionally, there are concerns being raised by consumer advocates that such arrangements are creating additional financial difficulties for already stressed consumers and small businesses. A number of improvements in this troubling area were realized in the 83rd Texas Legislature in SB 247, and other than a requirement to provide accurate and timely payoff information to an existing lienholder, this bill focused on much-needed consumer protections. IBAT and other stakeholders are exploring several options to address concerns in this area.
Gift Card Purchase ID Requirement. (HB 411, HB 721) Stolen and fraudulent debit and credit cards continue to create problems for both consumers and community banks. As gift cards are the “currency of choice” for criminals, these bills require a photo ID, PIN or zip code for any purchase of a gift card at point of sale using a debit or credit card. HB 411 includes this provision and further requires the same safeguards on any purchase over $200.
84th Texas Legislature