Office of House Bill AnalysisH.B. 2834
By: Grusendorf
Financial Institutions


The current real property foreclosure process reflects business practices
that were in place when the local Texas banks or savings and loan
associations sold its local customers' residential or commercial loans to
the secondary market such as Fannie Mae, Freddie Mac, and Ginnie Mae for
residential mortgages and Wall Street for commercial loans.  Bringing the
present foreclosure statement into compliance with current business
practices may provide for a more efficient process of property foreclosure.
House Bill 2834 sets forth provisions regarding the duties of a trustee
under a mortgage and the possession of property after a nonjudicial
foreclosure sale. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 2834 amends the Property Code to set forth provisions regarding
the duties of a trustee under a mortgage including the appointment of
additional or substitute trustees, a trustee's entitled fee, holding of
excess proceeds, and the  release of liability for a trustee when excess
proceeds are given to a district court to determine who receives the
proceeds.  The bill provides that a trustee is liable for false
representations and false promises made in a real estate transaction and
requires a trustee holding abandoned excess proceeds on June 30 to file a
report on or before the following November 1 and deliver the proceeds to
the comptroller of public accounts.  The bill also provides that the
condition of foreclosed property sold at a public sale is "as is," a person
with interest in the foreclosed property may serve a statement relating to
the validity of a public sale, the trustee may rescind the foreclosure of
the property after receiving the statement, and the cash purchaser of
property acquired at a rescinded sale is entitled to the return of the
sales price plus interest (Secs. 51.007 and 51.008).  Notice of a sale of
foreclosed real property must contain the name and street address of each
trustee and can be posted on an Internet website prominently described in
each notice filed with the office of the county clerk of each county in
which the property is located or served on each debtor by the mortgagee
(Sec. 51.002).  The bill sets forth provisions regarding the requirements
of an obligor of a mortgage or an occupant of property that is sold at a
public sale and who continues to reside on or control the property to
continue to pay an amount equal to the mortgage when filing suit to regain
control of the property and sets forth provisions regarding actions to be
taken if this requirement is not met and when all legal proceedings become
final (51.009).   


September 1, 2001.