Bill Caption

Fiscal Notes

Bill Analysis

Summary: SB 247 would seek to regulate the property tax lending industry in an effort to protect consumers and remove loopholes in the process. Currently, a homeowner can sign a certification with a property tax lender that would allow the lender to pay the homeowner's property taxes in exchange for charging the homeowner interest and fees. On behalf of the homeowner, the lender pays the property taxes to the taxing entity, a government entity, and the taxing entity transfers the lien to the lender. As a result, the lender's lien becomes a priority lien with rights to payment first before the mortgage banker.

SB 247 would make seven primary changes to the property tax lender's process as follows:

1. Would remove the non-judicial foreclosure and replace with the judicial foreclosure to involve a judge and ensure that the lender is charging appropriate fees and not taking advantage of the consumer.
2. Would forbid the sale transfer of a lien to another entity who is not licensed nor is exempted from licensure.
3. Would prohibit the lender from making a provision in the contract that would impose on a homeowner's statutorily waived right.
4. Would require solicitation notices in an effort to provide full disclosure on who the taxing entity is and that there are opportunities available for more affordable options. The Finance Commission's Consumer Credit Commissioner will impose penalties if these actions are not taken regardless of knowledge or willful action.
5. Would require the lenders to provide truth and lending disclosure.
6. Would not allow the lender to use a certificate towards past due taxes.
7. Would protect seniors by exempting them from using lenders since individuals 65 years and older under current law are exempted from paying property taxes if they are unable to do so.

Analysis: The bill would expand the scope of government by granting more authority to the Finance Commission of Texas and the Consumer Credit Commissioner, allowing the Commission to provide more oversight and charge penalties. However, this legislation does provide some sensible consumer protection by requiring the relevant lenders to clearly state interest rates, prevent them from charging fees that are not agreed to by the consumer, prevent certain fees that are prohibited in the tax code, and require full disclosure about the payment period, number of payments, finance charges, etc. We are neutral on SB 247.