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Summaries of Important Legislation from the Texas 87th Regular Session

Posted: Aug 12, 2021 | Author: Cornerstone Bill Analysis Team
advocacy  Texas Credit Union Association  Texas Legislative Summary 

Over the next few weeks, leading to the effective date of Sept. 1 for many bills, we will be publishing summaries in the newsletter from the last legislative session.

HB 103

Summary: HB 103 requires the Department of Public Safety to develop and implement an alert system to be activated when there is a report of an active shooter. The system will notify people in a 50-mile radius of an active shooter’s location at the request of a local law enforcement agency.

CU Action Needed: Credit unions should train staff to be prepared to respond to an active shooter alert.

Effective Date: Sept. 1, 2021

HB 1939

Summary: Texas appraisers have been faced with lawsuits alleging defects in appraisals performed for mortgage transactions during the 2005–2008 “real estate bubble” that have now gone into default. Under current law, the filing limit does not commence until the claimant discovers, or should have discovered, the alleged defect, resulting in an almost infinite statute of limitations for claims against appraisers.

The Federal Uniform Standards of Professional Appraisal Practice only requires that an appraiser retain a work file for the later of five years after the appraisal was prepared or two years after final disposition of any judicial proceeding in which the appraiser provided testimony. Because this work could have been performed many years ago, the appraiser often cannot adequately defend themselves.

HB 1939 would establish a statutory limitation on the time in which litigation against real estate appraisers can be filed following the date the service was performed. Suit must be filed not later than the earlier of 1) two years after the day the person knew or should have known of the facts on which the action is based, or 2) five years after the day the appraisal or appraisal review was completed.

CU Action Needed: Credit unions should be aware of deadlines to file suit against an appraiser if such a case arises.

HB 2533

Summary: HB 2533 rectifies inconsistencies between federal law and state law concerning appraisals.

In 2019, federal financial institution regulators raised the appraisal exemption threshold from $250,000 to $400,000 for residential properties (and higher for some small commercial properties). Properties below the threshold do not require an official certified appraisal and instead can use an evaluation according to federal law/regulations.

The problem is that Texas law had required licensed appraisers to follow “Uniform Standards for Professional Appraisal Practice” (USPAP), which requires a full certified appraisal without exceptions. The Texas Appraiser and Licensing Board asked the Texas attorney general for a legal opinion, and the AG stated that Texas law would not allow licensed appraisers to do an “evaluation” (nothing less than a full appraisal is permitted). This opinion also meant that an employee of a financial institution could not do an evaluation, as some financial institutions have been doing for some time.

HB 2533 amends Texas law to permit Texas appraisers to do an “evaluation” outside USPAP standards for qualifying real estate loans. It requires the appraiser to disclose that the evaluation is not an appraisal that meets USPAP standards. It also clarifies that an employee of a financial institution can perform an evaluation.

CU Action Needed: Credit unions should review appraisal policies and procedures to ensure compliance with both state and federal laws.

Effective Date: Immediately for appraisals performed after June 14, 2021.

SB 516

Summary: SB 516 makes it a third-degree felony to impair or interrupt access to an automated teller machine.

CU Action Needed: None. Law may have deterrent effect to persons who would damage, destroy, or tamper with an ATM to facilitate theft.

HB 1535

Summary: HB 1535 provides a modest expansion of Texas’ medical marijuana program. It expands eligibility for the Texas Compassionate Use Program to all persons with cancer (no longer limited to those with terminal cancer), as well as post-traumatic stress disorder. It raises the amount of THC (the psychoactive component of cannabis) to 1% from 0.5%, which is still far lower than most that have authorized medical use.

CU Action Needed: Credit unions should consider reviewing internal policies regarding the use of cannabis, as additional employees may qualify for compassionate use. Offering accounts for the state-authorized cannabis industry continues to be a complex, expensive, and risky compliance endeavor due to federal legal restrictions still in place; credit unions should discuss details with local counsel before offering such accounts.

Effective Date: Sept. 1, 2021

HB 1576

Summary: HB 1576 establishes a work group on blockchain matters. The work group shall develop a master plan for the expansion of the blockchain industry. “Blockchain” includes digital assets, virtual currency, and the integration of smart contracts. The work group must submit recommendations and a master plan for the expansion of the blockchain industry in Texas by Oct. 31, 2022.

CU Action Needed: None.

Effective Date: June 7, 2021

SB 2116

Summary: Bill would prohibit business and government entities from entering contracts that would grant direct or remote access, or control of critical infrastructure if that contract involved a company based in, substantially owned by, or headquartered in China, North Korea, or Iran, or in another country designated by the governor.

Critical infrastructure is defined as communication infrastructure systems, cybersecurity systems, electric grids, hazardous waste treatment systems, or water treatment facilities. Bill excludes from prohibitions any access allowed for product warranty and support purposes.

CU Action Needed: Credit unions and CUSOs will need to determine if the purpose of a business loan involves projects that may include access to critical infrastructure, and if so, decline loans to those parties. Credit unions that share critical infrastructure with sponsoring entities should also ensure that access to these systems is not provided through any credit union third parties or vendors. It is likely that credit unions will be prohibited from dealing with these parties due to OFAC restrictions, but other persons designated by the governor may include others not on OFAC-restricted lists.

Effective Date: June 18, 2021

SB 45

Summary: At the federal level, Title VII of the Civil Rights Act of 1964 prohibits discrimination and harassment against employees based on certain protected classifications, such as race, color, religion, sex, and national origin. This act applies to employers with 15 or more employees. Many local governments have passed similar ordinances expanding coverage to smaller employers as well.

SB 45 extends protection of employees from sexual harassment to any employer regardless of size.

CU Action Needed: Small credit unions should update employment policies and procedures to address quid pro quo and hostile work environment sexual harassment and ensure staff and management are properly trained.

Effective Date: Sept. 1, 2021

HB 1156

Summary: HB 1156 adds a new section to the Texas Penal Code making elder financial abuse or exploitation a crime. Offenses would range from a Class B misdemeanor to a first-degree felony depending on the severity.

CU Action Needed: Credit unions should continue to train staff to report suspected financial abuse or exploitation based on obligations, and instruct them on new criminal offenses.

Effective Date: Sept. 1, 2021

HB 4477

Summary: HB 4477 slightly modifies the timeframe for a financial institution to hold a transaction that it believes to be related to suspected financial exploitation. A hold may still be placed on a transaction, but the report does not have to be filed prior to a hold. A hold expires on the 10th business day after a hold is placed.

CU Action Needed: Procedures should be updated to reflect the distinction in hold time and report filing.

Effective Date: Sept. 1, 2021

HB 2106

Summary: HB 2106 builds upon HB 2945 passed in the 2019 legislative session intended to ensure gas station merchants deter and catch skimmers. HB 2106 moves the program from the attorney general’s office to the Department of Licensing and Regulation (TDLR) due to complications including a statutory issue that prevented outside donations to the AG’s office. The revised law permits the TDLR to solicit and accept gifts, grants, and donations (but not from license holders). Grants may be issued for reducing fraud, such as cameras, lights, training, etc. The TDLR will be issuing rules.

HB 2106 would re-establish the “payment card fraud center” as the “financial crimes intelligence center” (the center). This will be the primary entity for planning, coordination, and integration of related fraud activity. The center shall assist financial institutions, credit card and debit card issuers, and payment card networks to detect skimmers and prevent card fraud.

Gas stations continue to have a duty to inspect terminals, disable skimmers, and provide reports to the TDLR. Interested persons may also submit reports of suspected skimmers, including law enforcement, a financial institution, a credit card or debit card issuer, a service technician or service company, a member of the public, and a payment card network. TDLR can also choose to inspect terminals on their own.

The information related to reports is generally confidential, but the TDLR may share information with a credit card or debit card issuer or a financial institution that is not an issuer, or a payment card network that may be impacted.

The TDLR may also share information with a trade association representing financial institutions. Law enforcement may share general information with the public, but not the name of the submitter.

CU Action Needed: Revise policies and procedures and train staff to handle payment card fraud tied to gas stations.

Effective Date: Jan. 1, 2022

SB 692

Summary: SB 692 allows the Guardianship, Abuse, Fraud, and Exploitation Deterrence Program (GAFEDP) to petition a court, in which the guardianship is pending, to order a financial institution to turn over relevant records to that guardianship. These include receipts, deposit and withdrawal records, and invoices for the purposes of conducting reviews and audits under the program.

CU Action Needed: Credit unions should review procedures for information release and amend them to include information release from GAFEDP-related, court-ordered requests.

Effective Date: May 30, 2021

HB 1927

Summary: HB 1927 allows persons who can legally possess a firearm to carry them into a non-prohibited public place without a license.

List of places that are prohibited include schools, polling places, courts, racetracks, airports past security, bars, sporting events, correctional facilities, civil commitment facilities, hospitals, nursing homes, mental hospitals, amusement parks, governmental open meetings if notice is provided.

If a credit union wants to prohibit carry, the credit union will need to post signage consistent with the Penal Code or provide notice through other means. The bill amends section 30.05 to allow a business to prohibit all carry with one sign or notice. Credit unions may also limit concealed or open carry using existing notice requirements under Section 30.06 and 30.07, respectively.

CU Action Needed: Credit unions should review existing signage or notice distribution procedures to ensure that the desired prohibitions on carrying a firearm in the credit union are properly posted or disseminated.

Effective Date: Sept. 1, 2021

HB 2112

Summary: Bill removes the limitation that persons carrying a firearm openly, or in a concealed manner, holster the firearm in only a shoulder or belt holster. This will allow persons to holster weapons using other kinds of holsters, such as belly bands or waistband, ankle, and pocket holsters. The bill makes conforming changes to other sections to match new definition of holster.

CU Action Needed: None.

Effective Date: Sept. 1, 2021

SB 550

Summary: SB 550 removes the limitation that persons carrying a firearm openly, or in a concealed manner, holster the firearm in only a shoulder or belt holster. This will allow persons to holster weapons using other kinds of holsters, such as belly bands or waistband, ankle, and pocket holsters. Bill makes conforming changes and replaces references to shoulder and belt holsters.

CU Action Needed: None.

Effective Date: Sept. 1, 2021

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