bill letting some borrowers close home equity loans remotely

The text as introduced · 2,991 words

By: Toth
H.B. No. 957

A BILL TO BE ENTITLED

AN ACT

relating to requirements for the physical presence of a borrower

for signing certain documents related to a home equity loan.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 343.002(b), Finance Code, is amended to

read as follows:

(b) Except as provided by Subchapter D, this [ This ] chapter

does not apply to:

(1) a reverse mortgage; or

(2) an open-end account, as defined by Section

301.002.

SECTION 2. Chapter 343, Finance Code, is amended by adding

Subchapter D to read as follows:

SUBCHAPTER D. HOME EQUITY LOANS

Sec. 343.301. DEFINITION. In this subchapter, "home equity

loan" means an extension of credit described by Section 50(a)(6),

Article XVI, Texas Constitution.

Sec. 343.302. PHYSICAL PRESENCE OF CERTAIN BORROWERS AT

CLOSING NOT REQUIRED. (a) This section applies to the closing of a

home equity loan by a borrower who:

(1) is located outside of this state at the time of the

closing and is:

(A) a member of the armed forces of the United

States who is on active duty;

(B) an officer of the Commissioned Corps of the

United States Public Health Service who is on active duty;

(C) a member of reserve components of the armed

forces of the United States not described by Paragraph (A) who is on

active duty;

(D) the spouse or surviving spouse of a person

described by Paragraph (A), (B), or (C); or

(E) a civilian employee of the federal government

employed by, serving with, or accompanying the armed forces of the

United States, if assigned to a foreign country or a vessel or unit

of the armed forces of the United States;

(2) has a disability that prohibits travel or is

quarantined to protect the borrower's health or the health of

others, as verified by a written letter from a physician; or

(3) is unable to travel to the closing because the

borrower is incarcerated or under house arrest.

(b) In lieu of closing a home equity loan in person at the

office of the lender, an attorney, or a title company, a borrower

described by Subsection (a) may close the loan:

(1) from a remote location using remote online

notarization; or

(2) through an agent who:

(A) is acting under a durable power of attorney

that expressly grants the agent the authority to engage in a home

equity loan transaction on behalf of the borrower, regardless of

where the borrower signed the power of attorney; and

(B) appears in person for the closing at the

office of the lender, attorney, or title company on behalf of the

borrower.

SECTION 3. Section 751.203(b), Estates Code, is amended to

read as follows:

(b) A certification described by Subsection (a) may be in

the following form:

CERTIFICATION OF DURABLE POWER OF ATTORNEY BY AGENT

I, ___________ (agent), certify under penalty of perjury

that:

1. I am the agent named in the power of attorney validly

executed by ___________ (principal) ("principal") on ____________

(date), and the power of attorney is now in full force and effect.

2. The principal is not deceased and is presently domiciled

in ___________ (city and state/territory or foreign country).

3. To the best of my knowledge after diligent search and

inquiry:

a. The power of attorney has not been revoked by the

principal or suspended or terminated by the occurrence of any

event, whether or not referenced in the power of attorney;

b. At the time the power of attorney was executed, the

principal was mentally competent to transact legal matters and was

not acting under the undue influence of any other person;

c. A permanent guardian of the estate of the principal

has not qualified to serve in that capacity;

d. My powers under the power of attorney have not been

suspended by a court in a temporary guardianship or other

proceeding;

e. If I am (or was) the principal's spouse, my marriage

to the principal has not been dissolved by court decree of divorce

or annulment or declared void by a court, or the power of attorney

provides specifically that my appointment as the agent for the

principal does not terminate if my marriage to the principal has

been dissolved by court decree of divorce or annulment or declared

void by a court;

f. No proceeding has been commenced for a temporary or

permanent guardianship of the person or estate, or both, of the

principal; and

g. The exercise of my authority is not prohibited by

another agreement or instrument.

4. If under its terms the power of attorney becomes

effective on the disability or incapacity of the principal or at a

future time or on the occurrence of a contingency, the principal now

has a disability or is incapacitated or the specified future time or

contingency has occurred.

5. I am acting within the scope of my authority under the

power of attorney, and my authority has not been altered or

terminated.

6. If applicable, I am the successor to ___________

(predecessor agent), who has resigned, died, or become

incapacitated, is not qualified to serve or has declined to serve as

agent, or is otherwise unable to act. There are no unsatisfied

conditions remaining under the power of attorney that preclude my

acting as successor agent.

7. I agree not to:

a. Exercise any powers granted by the power of

attorney if I attain knowledge that the power of attorney has been

revoked, suspended, or terminated; or

b. Exercise any specific powers that have been

revoked, suspended, or terminated.

8. A true and correct copy of the power of attorney is

attached to this document.

9. If applicable and if used in connection with an extension

of credit under Section 50(a)(6), Article XVI, Texas Constitution,

the power of attorney was executed in the office of the lender, the

office of a title company, or the law office of

____________________.

Date: __________, 20__.

__________________________________ (signature of agent)

SECTION 4. Section 752.051, Estates Code, is amended to

read as follows:

Sec. 752.051. FORM. The following form is known as a

"statutory durable power of attorney":

STATUTORY DURABLE POWER OF ATTORNEY

NOTICE: THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND SWEEPING.

THEY ARE EXPLAINED IN THE DURABLE POWER OF ATTORNEY ACT, SUBTITLE P,

TITLE 2, ESTATES CODE. IF YOU HAVE ANY QUESTIONS ABOUT THESE POWERS,

OBTAIN COMPETENT LEGAL ADVICE. THIS DOCUMENT DOES NOT AUTHORIZE

ANYONE TO MAKE MEDICAL AND OTHER HEALTH-CARE DECISIONS FOR YOU. YOU

MAY REVOKE THIS POWER OF ATTORNEY IF YOU LATER WISH TO DO SO. IF YOU

WANT YOUR AGENT TO HAVE THE AUTHORITY TO SIGN HOME EQUITY LOAN

DOCUMENTS ON YOUR BEHALF, THIS POWER OF ATTORNEY MUST BE SIGNED BY

YOU AT THE OFFICE OF THE LENDER, AN ATTORNEY AT LAW, OR A TITLE

COMPANY , UNLESS YOU QUALIFY FOR AN EXCEPTION UNDER SECTION 343.302,

FINANCE CODE .

You should select someone you trust to serve as your agent.

Unless you specify otherwise, generally the agent's authority will

continue until:

(1) you die or revoke the power of attorney;

(2) your agent resigns, is removed by court order, or

is unable to act for you; or

(3) a guardian is appointed for your estate.

I, __________ (insert your name and address), appoint

__________ (insert the name and address of the person appointed) as

my agent to act for me in any lawful way with respect to all of the

following powers that I have initialed below. (YOU MAY APPOINT

CO-AGENTS. UNLESS YOU PROVIDE OTHERWISE, CO-AGENTS MAY ACT

INDEPENDENTLY.)

TO GRANT ALL OF THE FOLLOWING POWERS, INITIAL THE LINE IN

FRONT OF (O) AND IGNORE THE LINES IN FRONT OF THE OTHER POWERS

LISTED IN (A) THROUGH (N).

TO GRANT A POWER, YOU MUST INITIAL THE LINE IN FRONT OF THE

POWER YOU ARE GRANTING.

TO WITHHOLD A POWER, DO NOT INITIAL THE LINE IN FRONT OF THE

POWER. YOU MAY, BUT DO NOT NEED TO, CROSS OUT EACH POWER WITHHELD.

____ (A) Real property transactions , including home equity

loan transactions ;

____ (B) Tangible personal property transactions;

____ (C) Stock and bond transactions;

____ (D) Commodity and option transactions;

____ (E) Banking and other financial institution

transactions;

____ (F) Business operating transactions;

____ (G) Insurance and annuity transactions;

____ (H) Estate, trust, and other beneficiary transactions;

____ (I) Claims and litigation;

____ (J) Personal and family maintenance;

____ (K) Benefits from social security, Medicare, Medicaid,

or other governmental programs or civil or military service;

____ (L) Retirement plan transactions;

____ (M) Tax matters;

____ (N) Digital assets and the content of an electronic

communication;

____ (O) ALL OF THE POWERS LISTED IN (A) THROUGH (N). YOU DO

NOT HAVE TO INITIAL THE LINE IN FRONT OF ANY OTHER POWER IF YOU

INITIAL LINE (O).

SPECIAL INSTRUCTIONS:

Special instructions applicable to agent compensation

(initial in front of one of the following sentences to have it

apply; if no selection is made, each agent will be entitled to

compensation that is reasonable under the circumstances):

____ My agent is entitled to reimbursement of reasonable

expenses incurred on my behalf and to compensation that is

reasonable under the circumstances.

____ My agent is entitled to reimbursement of reasonable

expenses incurred on my behalf but shall receive no compensation

for serving as my agent.

Special instructions applicable to co-agents (if you have

appointed co-agents to act, initial in front of one of the following

sentences to have it apply; if no selection is made, each agent will

be entitled to act independently):

____ Each of my co-agents may act independently for me.

____ My co-agents may act for me only if the co-agents act

jointly.

____ My co-agents may act for me only if a majority of the

co-agents act jointly.

Special instructions applicable to gifts (initial in front of

the following sentence to have it apply):

____ I grant my agent the power to apply my property to make gifts

outright to or for the benefit of a person, including by the

exercise of a presently exercisable general power of appointment

held by me, except that the amount of a gift to an individual may not

exceed the amount of annual exclusions allowed from the federal

gift tax for the calendar year of the gift.

ON THE FOLLOWING LINES YOU MAY GIVE SPECIAL INSTRUCTIONS

LIMITING OR EXTENDING THE POWERS GRANTED TO YOUR AGENT.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

UNLESS YOU DIRECT OTHERWISE BELOW, THIS POWER OF ATTORNEY IS

EFFECTIVE IMMEDIATELY AND WILL CONTINUE UNTIL IT TERMINATES.

CHOOSE ONE OF THE FOLLOWING ALTERNATIVES BY CROSSING OUT THE

ALTERNATIVE NOT CHOSEN:

(A) This power of attorney is not affected by my

subsequent disability or incapacity.

(B) This power of attorney becomes effective upon my

disability or incapacity.

YOU SHOULD CHOOSE ALTERNATIVE (A) IF THIS POWER OF ATTORNEY

IS TO BECOME EFFECTIVE ON THE DATE IT IS EXECUTED.

IF NEITHER (A) NOR (B) IS CROSSED OUT, IT WILL BE ASSUMED THAT

YOU CHOSE ALTERNATIVE (A).

If Alternative (B) is chosen and a definition of my

disability or incapacity is not contained in this power of

attorney, I shall be considered disabled or incapacitated for

purposes of this power of attorney if a physician certifies in

writing at a date later than the date this power of attorney is

executed that, based on the physician's medical examination of me,

I am mentally incapable of managing my financial affairs. I

authorize the physician who examines me for this purpose to

disclose my physical or mental condition to another person for

purposes of this power of attorney. A third party who accepts this

power of attorney is fully protected from any action taken under

this power of attorney that is based on the determination made by a

physician of my disability or incapacity.

I agree that any third party who receives a copy of this

document may act under it. Termination of this durable power of

attorney is not effective as to a third party until the third party

has actual knowledge of the termination. I agree to indemnify the

third party for any claims that arise against the third party

because of reliance on this power of attorney. The meaning and

effect of this durable power of attorney is determined by Texas law.

If any agent named by me dies, becomes incapacitated,

resigns, refuses to act, or is removed by court order, or if my

marriage to an agent named by me is dissolved by a court decree of

divorce or annulment or is declared void by a court (unless I

provided in this document that the dissolution or declaration does

not terminate the agent's authority to act under this power of

attorney), I name the following (each to act alone and

successively, in the order named) as successor(s) to that agent:

__________.

Signed this ______ day of __________, _____________

___________________________

(your signature)

State of _______________________

County of ______________________

This document was acknowledged before me on ____________ (date) by

________________________

(name of principal)

____________________________

(signature of notarial officer)

(Seal, if any, of notary) ______________________________________

(printed name)

My commission expires: __________

IMPORTANT INFORMATION FOR AGENT

Agent's Duties

When you accept the authority granted under this power of

attorney, you establish a "fiduciary" relationship with the

principal. This is a special legal relationship that imposes on you

legal duties that continue until you resign or the power of attorney

is terminated, suspended, or revoked by the principal or by

operation of law. A fiduciary duty generally includes the duty to:

(1) act in good faith;

(2) do nothing beyond the authority granted in this

power of attorney;

(3) act loyally for the principal's benefit;

(4) avoid conflicts that would impair your ability to

act in the principal's best interest; and

(5) disclose your identity as an agent when you act for

the principal by writing or printing the name of the principal and

signing your own name as "agent" in the following manner:

(Principal's Name) by (Your Signature) as Agent

In addition, the Durable Power of Attorney Act (Subtitle P,

Title 2, Estates Code) requires you to:

(1) maintain records of each action taken or decision

made on behalf of the principal;

(2) maintain all records until delivered to the

principal, released by the principal, or discharged by a court; and

(3) if requested by the principal, provide an

accounting to the principal that, unless otherwise directed by the

principal or otherwise provided in the Special Instructions, must

include:

(A) the property belonging to the principal that

has come to your knowledge or into your possession;

(B) each action taken or decision made by you as

agent;

(C) a complete account of receipts,

disbursements, and other actions of you as agent that includes the

source and nature of each receipt, disbursement, or action, with

receipts of principal and income shown separately;

(D) a listing of all property over which you have

exercised control that includes an adequate description of each

asset and the asset's current value, if known to you;

(E) the cash balance on hand and the name and

location of the depository at which the cash balance is kept;

(F) each known liability;

(G) any other information and facts known to you

as necessary for a full and definite understanding of the exact

condition of the property belonging to the principal; and

(H) all documentation regarding the principal's

property.

Termination of Agent's Authority

You must stop acting on behalf of the principal if you learn

of any event that terminates or suspends this power of attorney or

your authority under this power of attorney. An event that

terminates this power of attorney or your authority to act under

this power of attorney includes:

(1) the principal's death;

(2) the principal's revocation of this power of

attorney or your authority;

(3) the occurrence of a termination event stated in

this power of attorney;

(4) if you are married to the principal, the

dissolution of your marriage by a court decree of divorce or

annulment or declaration that your marriage is void, unless

otherwise provided in this power of attorney;

(5) the appointment and qualification of a permanent

guardian of the principal's estate unless a court order provides

otherwise; or

(6) if ordered by a court, your removal as agent

(attorney in fact) under this power of attorney. An event that

suspends this power of attorney or your authority to act under this

power of attorney is the appointment and qualification of a

temporary guardian unless a court order provides otherwise.

Liability of Agent

The authority granted to you under this power of attorney is

specified in the Durable Power of Attorney Act (Subtitle P, Title 2,

Estates Code). If you violate the Durable Power of Attorney Act or

act beyond the authority granted, you may be liable for any damages

caused by the violation or subject to prosecution for

misapplication of property by a fiduciary under Chapter 32 of the

Texas Penal Code.

THE AGENT, BY ACCEPTING OR ACTING UNDER THE APPOINTMENT,

ASSUMES THE FIDUCIARY AND OTHER LEGAL RESPONSIBILITIES OF AN AGENT.

SECTION 5. The changes in law made by this Act apply only to

a durable power of attorney executed on or after the effective date

of this Act. A durable power of attorney executed before the

effective date of this Act is governed by the law in effect on the

date the power of attorney was executed, and that law continues in

effect for that purpose.

SECTION 6. This Act takes effect January 1, 2026, but only

if the constitutional amendment proposed by the 89th Legislature,

Regular Session, 2025, authorizing the legislature to provide for

exceptions to the requirement that a home equity loan be closed only

at the office of the lender, an attorney at law, or a title company

is approved by the voters. If that proposed constitutional

amendment is not approved by the voters, this Act has no effect.