- October 12, 2012
- All Texas Issuing Offices
- Texas Foreclosure Practices amended to protect Servicemembers
The 2011 Texas legislature amended Texas foreclosure practices to provide enhanced protection to servicemembers who incurred debt before going onto active duty with the US Armed Forces. Two bills were passed both dealing with essentially the same notice but slightly different subjects.
Section 51.002, Property Code, was amended by adding Subsection (i) to read as follows:
(i) Notice served under Subsection (b)(3) or (d) must state the name and address of the sender of the notice and contain a statement that is conspicuous, printed in boldface or underlined type, and substantially similar to the following: "Assert and protect your rights as a member of the armed forces of the United States. If you are or your spouse is serving on active military duty, including active military duty as a member of the Texas National Guard or the National Guard of another state or as a member of a reserve component of the armed forces of the United States, please send written notice of the active duty military service to the sender of this notice immediately."
Section 51.015, Property Code, which relates to foreclosure of a dwelling of an active servicemember, and includes a foreclosure of a lien for assessments by both condominium associations and homeowner associations.
The principle reason given for the additional notice was to assure that loan servicers who might not have actual notice of a servicemember's active duty status would be apprised of such status before commencing a foreclosure in a manner prohibited by Federal law.
“The federal Servicemembers' Civil Relief Act (SCRA) was enacted to protect certain military servicemembers on active duty from foreclosures of mortgages, deeds of trust, and similar security devices under certain conditions. There have been reports that homes have been nonjudicially foreclosed on while an owner is on active military duty or deployed to a foreign country when debt servicers have not been informed of the debtor's active duty military status. While SCRA is well-designed to prevent such occurrences, interested parties believe there is a need to eliminate any breakdown in communication between a property owners' association and a property owner that may result in a home being nonjudicially foreclosed on. S.B. 101 seeks to address this issue by providing a safeguard in addition to the federal act in an effort to prevent nonjudicial foreclosures from being carried out on homes owned by active duty military servicemembers.
WHAT YOU SHOULD DO:
The Company’s position on foreclosure when the property may be subject to the SCRA is contained in Bulletin SLS00233 which provides in part:
The SCRA covers servicemembers' rights relating to leases, security deposits, evictions, installment contracts, interest rates and health insurance, as well as rights that affect title to real property, such as mortgage foreclosures and tax sales.
Company Policy: You should insert DTSX28 STGC in all commitments and policies (owner's and loan) where the property to be insured is acquired out of a judicial or non-judicial tax sale, mortgage foreclosure or trustee's sale, if the foreclosed/forfeiting party is a person or persons (including any form of joint tenancy, tenancy in common or tenancy by the entirety). You may omit DTSX28 STGC only in accordance with our underwriting guidelines.
Thus, if you have any indication from the file, the deed of trust or any other source that the person was or may have been on active duty you must make further inquiries as set out in SLS00233 and determine that the notices to the debtor contained the appropriate language.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.