October 24, 2003
Breaking News . . .
A pre-hearing conference will
be held on October 31, 2003 at 2 p.m. in Room 102 of the William P. Hobby, Jr. State
Office Building, 333 Guadalupe St., Austin, Texas. The purpose of the
conference is to schedule testimony and address procedural matters pertaining to
the December 15, 2003 Rate Hearing.
Special sessions come to
an end . . . for now
The redistricting battle is
finally over, at least at the legislature. Governor Perry signed the
redistricting bill last week; however several lawsuits have been filed by
Democratic Party supporters on grounds that the new plan is unconstitutional
and violates the Voting Rights Act. Procedurally, the next step in the process
is the pre-clearance of the plan by the U.S. Department
of Justice (DOJ). Texas Attorney General Greg Abbott met with DOJ attorneys to
present the plan for consideration. A decision is expected in 60 days.
Highlights of the plan: 8 districts are considered to be
“endangered districts”, meaning they were significantly redrawn or incumbents
were paired with other incumbents; 18 districts appear to be safe for
re-election; 6 districts are open seats meaning they will have no incumbents.
Although redistricting was the number one issue during the three special
sessions, another highly debated bill, House Bill 7, was also finally passed.
It contains a number of provisions related to state government. One provision
amends the Insurance Code to reduce from 10 to 5 years the requisite years of
experience the commissioner of insurance must have in the administration of
business or government or as practicing attorney or certified public
accountant and eliminates the requirement that those years of experience be in
an executive capacity. It would also require an insurance commissioner
appointee
to complete a training program
no later than 90 days from the date of assuming office, and establishes
the content of that program. Another provision added to House Bill 7 in the
last hour relates to the sale or lease of certain vacant public land.
Currently, the statute requires that good-faith claimant designation must be
made prior to the determination of the existence or non-existence of a
vacancy. This provision will apply to all current vacancy applications pending
before the Land Commission and will allow thousands of good faith claimants to
have an adequate amount of time to solidify their status. This amendment was
added to House Bill 7 by two East Texas legislators to give hundreds of
landowners in Upshur County more time to buy family land if it is decided that
almost 5,000 acres are actually state property.
For now state
legislators have gone home. Some are making decisions on whether or not to
run for newly redrawn congressional districts while others are beginning
their re-election campaigns to their current seats. More than likely,
whoever survives the primaries will be back in the spring to tackle
another difficult issue - Public School Finance. Stay tuned
to “These are the Legislative Days of Our Lives . . .”
This month's
political kudos go to . . .
Jack Rogers,
President of TICOR Title Agency of San Antonio, who recently attended a fundraiser
for his state representative, Frank Corte. Jack also attended a local fundraiser
for Lt. Governor David Dewhurst. And thanks to Brad Hatfield with
Central Texas Land Titles in Horseshoe Bay who played in Senator Troy Fraser’s
annual fundraising golf tournament on behalf of the TLTA PAC. Foster
Edwards, President of Stewart Title of Corpus Christi, attended a
fundraising event for Representative Gene Seaman and presented him with a TLTA PAC
check. If you or someone you know recently participated in a fundraising
event, please email
mindy@tlta.com.
Texas Voter’s
approve 22 Constitutional Amendments.
The measure
Proposition 16, one of twenty-two amendments approved by voter’s on September
13th, authorizes home equity lines of credit. The measure also
modified the rules for closed-end home equity loans, including a rule for
closed and open end loans that requires disclosure of all fees one day in
advance of closing. (Effective: 9/29/03) Title insurance companies and title
insurance agents who close home equity loans are required to adhere to the new
laws. The Texas Department of Insurance is expected to hold a special title
insurance hearing to evaluate amendments intended to conform to these recent
changes. Another measure relating to home equity law, Proposition 6, allows
homeowners 62 years old or older to take out reverse mortgages on their home
equity.
Rules for
open-end loans include:
· Minimum advance of $4,000
· No access via credit card,
debit card, preprinted solicitation check, or similar device to obtain an
advance.
· Fees allowed only when the
credit plan is established and disallowed when charged or collected in
connection with a debit or advance.
· Unilateral amendments of
credit plan by lender are disallowed.
· Initial payment must not
be more than 2 months from the date the extension of credit is established.
· Draw period
- during the
period in which the borrower may request advances, payments must equal or
exceed the accrued interest.
· Repayment period -after the
draw period, payments must be substantially equal.
· 80% Loan to Value-the
credit limit and the total of all other loans secured by the homestead
together may not exceed 80% of the fair market value of the homestead at the
time the credit is established.
· 50% Loan to Value-the
credit limit must not be greater than 50% of the fair market value of the
homestead at the time the account is established.
New rules for
closed and open end loans include:
· Payment
frequency-repayment must be in regular, periodic installments and must not be
made less often than monthly or more often than every 14 days.
· Itemized disclosure-an
extension of credit may not be closed before one business day after the date
that the homestead owner receives a final itemized disclosure of the actual
fees, points, interest, costs, and the chares that will be charged at closing
(a bona fide emergency exception exists).
·
A revised twelve-day Texas
constitutional notice is required.
·
Mortgage brokers may make
home equity loans.
·
Specific cure methods for
noncompliance are provided.
·
Interpretive Authority and
Safe Harbor-SJR 42 allows for interpretive authority and safe harbor for
conformance with interpretations.
TLTA Web site
adds link to TDI’s disciplinary actions
In keeping with TLTA Board policy, our Web site will now provide links to
reports on TDI's Web site regarding violations and enforcement actions. Click on
http://www.tdi.state.tx.us/commish/actions.html to view all disciplinary
actions from September 1996 through August 2003 as well as the Guaranty
Association Quarterly Report regarding audits. For all future searches, the
“new” link will be available on the TLTA Web site at
www.tlta.com under the Regulatory section.
Board approves
appointment of a Master Indemnity Form Task Force
The TLTA Board of
Directors recently approved the appointment of a Master Indemnity Form Task
Force to study and possibly make the recommendation for adoption of a master
indemnity form by the TDI Commissioner. Several TLTA members had voiced
interest in a study of this issue.
Texas tries to
fight Spam!
A new law became
effective September 2nd, requiring businesses that send unsolicited
e-mails to add “ADV:” at the beginning of the subject line. Messages with
obscene content will be required to have “ADV: Adult Advertisement.” The
purpose of the additional heading is to make it easier for e-mail filters to
route these messages to trash folders. The law also requires that businesses
remove people from their electronic mailing lists within three days of being
asked to do so. If not, the businesses face a fine of $10 per email with a
maximum fine of $25,000 a day. The law exempts companies that have
pre-existing business relationships, a provision that allows legitimate
marketers to e-mail items such as newsletters.
Support for
HUD’s RESPA proposal losing ground . . .
Sources report that
the Mortgage Bankers Association of America (MBA) has withdrawn its support of
HUD’s RESPA reform proposal. While MBA cites internal conflict as their
reason for the change, other organizations have declined to comment while
reformulating their positions. Also, HUD Secretary Mel Martinez recently
cancelled his MBA conference speaking engagement due to a scheduling conflict.
In light of these developments, the National Association of Realtors (NAR)
has doubts about appearing publicly to discuss their position on RESPA
reform. We encourage you to continue to educate your local lawmakers on HUD’s
RESPA reform proposal and we will keep you updated as this issue evolves.
Recent changes
to IRS Form 8288
The IRS has
recently adopted changes to Section 1445 of the Tax Code with respect to
withholding and filing Form 8288. Now the Transferee, in filing of the form,
must secure a TIN (Taxpayer Identification Number) for the foreign Transferor
before the form and the funds withheld may be filed/delivered to the IRS by
the Transferee. We expect that those title companies who file this form on
behalf of their client might experience some delay in obtaining a TIN. For
more information on this issue please click on
http://www.irs.gov/pub/irs-regs/td9082.pdf.
Consumers get
weapons to fight identity theft . . .
The U.S. House of
Representatives recently passed HR 2622, the Fair and Accurate Credit
Transactions Act, to protect consumers from identity theft. The Federal Trade
Commission estimates identity theft cost consumers and businesses $53 billion
last year. The proposed changes will help curb the amount of identity theft
cases by giving consumers more rights regarding their own credit. Also, the
measure creates legislation that imposes obligations on financial institutions
to prevent identity theft and insure accuracy. The bill will:
·
Allow consumers to place
“fraud alerts” in their credit reports to prevent identity thieves from
opening accounts in their name.
·
Allow consumers to block
information from being given to credit bureaus and being reported by them, if
such information results from identity theft.
·
Give consumers right to
see their credit scores.
·
Give consumers the right
to receive a free copy of their credit report annually.
·
Provide consumers with
one-call-for-all protection by requiring credit bureaus to share consumer
calls on identity theft.
·
Require creditors to take
extra precautions before extending credit to consumers who have placed fraud
alerts in their files.
·
Prohibit merchants from
printing more than the last five digits of a payment card on an electronic
receipt.
·
Require financial
institutions to reconcile potentially fraudulent consumer address information.
·
Require lenders to notify
consumers before submitting negative credit information.
·
Require lenders to
disclose their contact information on consumer reports.
·
Prohibit credit bureaus
from providing credit reports that contain medical information for employment
purposes or in connection with credit or insurance transactions.
Treasury
announces results of PATRIOT ACT 326 Notice of Inquiry.
The July Notice of
Inquiry sought comments on customer identification requirements for financial
institutions. The two specific issues in question were, whether financial
institutions should be required to retain photocopies of identification
documents to verify customer identities and whether financial institutions
should be prohibited from accepting foreign identification documents other
than passports. The treasury concluded that the retention of photocopies
should not be required and that ample measures are already in place to address
security concerns. All financial institutions covered by the customer
identification regulations should have had their customer identification
program drafted and approved as of October 1st.