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A BILL TO BE ENTITLED
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AN ACT
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relating to the licensing and other regulation of wrap lenders. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 156.002, Finance Code, is amended by |
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adding Subdivision (16) to read as follows: |
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(16) "Wrap mortgage loan" has the meaning assigned by |
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Section 180.002. |
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SECTION 2. Section 156.202(a-1), Finance Code, is amended |
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to read as follows: |
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(a-1) The following entities are exempt from this chapter: |
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(1) a nonprofit organization: |
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(A) providing self-help housing that originates |
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zero interest residential mortgage loans for borrowers who have |
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provided part of the labor to construct the dwelling securing the |
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loan; or |
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(B) that has designation as a Section 501(c)(3) |
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organization by the Internal Revenue Service and originates |
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residential mortgage loans for borrowers who, through a self-help |
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program, have provided at least 200 labor hours or 65 percent of the |
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labor to construct the dwelling securing the loan; |
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(2) a mortgage banker registered under Chapter 157; |
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(3) any owner of residential real estate who in any |
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12-consecutive-month period makes no more than five residential |
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mortgage loans, none of which is a wrap mortgage loan, to purchasers |
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of the property for all or part of the purchase price of the |
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residential real estate against which the mortgage is secured; and |
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(4) an entity that is: |
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(A) a depository institution; |
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(B) a subsidiary of a depository institution that |
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is: |
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(i) owned and controlled by the depository |
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institution; and |
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(ii) regulated by a federal banking agency; |
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or |
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(C) an institution regulated by the Farm Credit |
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Administration. |
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SECTION 3. Section 157.002, Finance Code, is amended by |
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adding Subdivision (7) to read as follows: |
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(7) "Wrap mortgage loan" has the meaning assigned by |
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Section 180.002. |
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SECTION 4. Sections 157.0121(b) and (c), Finance Code, are |
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amended to read as follows: |
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(b) The following individuals are exempt from this chapter: |
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(1) a registered mortgage loan originator when acting |
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for: |
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(A) a depository institution; |
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(B) a subsidiary of a depository institution that |
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is: |
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(i) owned and controlled by the depository |
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institution; and |
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(ii) regulated by a federal banking agency; |
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or |
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(C) an institution regulated by the Farm Credit |
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Administration; |
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(2) an individual who offers or negotiates the terms |
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of a residential mortgage loan with or on behalf of an immediate |
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family member of the individual; |
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(3) a licensed attorney who negotiates the terms of a |
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residential mortgage loan on behalf of a client as an ancillary |
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matter to the attorney's representation of the client, unless the |
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attorney: |
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(A) takes a residential mortgage loan |
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application; and |
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(B) offers or negotiates the terms of a |
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residential mortgage loan; |
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(4) an individual who offers or negotiates terms of a |
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residential mortgage loan secured by a dwelling that serves as the |
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individual's residence; |
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(5) any owner of residential real estate who in any |
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12-consecutive-month period makes no more than five residential |
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mortgage loans, none of which is a wrap mortgage loan, to purchasers |
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of the property for all or part of the purchase price of the |
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residential real estate against which the mortgage is secured; and |
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(6) an individual who is exempt as provided by Section |
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180.003(b). |
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(c) Employees of the following entities, when acting for the |
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benefit of those entities, are exempt from the licensing and other |
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requirements of this chapter applicable to residential mortgage |
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loan originators: |
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(1) a nonprofit organization: |
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(A) providing self-help housing that originates |
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zero interest residential mortgage loans for borrowers who have |
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provided part of the labor to construct the dwelling securing the |
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loan; or |
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(B) that has designation as a Section 501(c)(3) |
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organization by the Internal Revenue Service and originates |
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residential mortgage loans for borrowers who, through a self-help |
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program, have provided at least 200 labor hours or 65 percent of the |
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labor to construct the dwelling securing the loan; |
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(2) any owner of residential real estate who in any |
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12-consecutive-month period makes no more than five residential |
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mortgage loans, none of which is a wrap mortgage loan, to purchasers |
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of the property for all or part of the purchase price of the |
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residential real estate against which the mortgage is secured; and |
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(3) an entity that is: |
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(A) a depository institution; |
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(B) a subsidiary of a depository institution that |
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is: |
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(i) owned and controlled by the depository |
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institution; and |
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(ii) regulated by a federal banking agency; |
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or |
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(C) an institution regulated by the Farm Credit |
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Administration. |
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SECTION 5. Section 158.002, Finance Code, is amended by |
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adding Subdivisions (8) and (9) to read as follows: |
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(8) "Wrap lender" has the meaning assigned by Section |
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180.002. |
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(9) "Wrap mortgage loan" has the meaning assigned by |
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Section 180.002. |
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SECTION 6. Section 158.052, Finance Code, is amended by |
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amending Subsection (a) and adding Subsection (d) to read as |
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follows: |
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(a) This chapter does not require registration by: |
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(1) a federal or state depository institution, or a |
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subsidiary or affiliate of a federal or state depository |
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institution; |
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(2) a person registered under Chapter 157; |
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(3) a person licensed under Chapter 342 or regulated |
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under Chapter 343, if the person does not act as a residential |
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mortgage loan servicer servicing first-lien secured loans; or |
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(4) except as provided by Subsection (d), a person |
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making a residential mortgage loan with the person's own funds, or |
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to secure all or a portion of the purchase price of real property |
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sold by that person. |
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(d) This chapter applies to a wrap lender who services a |
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wrap mortgage loan. |
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SECTION 7. Section 180.002, Finance Code, is amended by |
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adding Subdivisions (24), (25), and (26) to read as follows: |
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(24) "Wrap borrower" means a person obligated to pay a |
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wrap mortgage loan. |
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(25) "Wrap lender" means a person who makes a wrap |
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mortgage loan. |
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(26) "Wrap mortgage loan" means a residential mortgage |
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loan: |
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(A) made to finance the purchase of residential |
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real estate that will continue to be subject to an unreleased lien |
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that: |
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(i) attached to the residential real estate |
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before the loan was made; and |
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(ii) secures a debt incurred by a person |
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other than the wrap borrower that was not paid off at the time the |
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loan was made; and |
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(B) obligating the wrap borrower to the wrap |
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lender for payment of a debt the principal amount of which includes: |
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(i) the outstanding balance of the debt |
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described by Paragraph (A)(ii); and |
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(ii) any remaining amount of the purchase |
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price financed by the wrap lender. |
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SECTION 8. Section 180.003(a), Finance Code, is amended to |
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read as follows: |
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(a) The following persons are exempt from this chapter: |
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(1) a registered mortgage loan originator when acting |
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for an entity described by Section 180.002(16)(A)(i), (ii), or |
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(iii); |
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(2) an individual who offers or negotiates terms of a |
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residential mortgage loan with or on behalf of an immediate family |
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member of the individual; |
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(3) a licensed attorney who negotiates the terms of a |
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residential mortgage loan on behalf of a client as an ancillary |
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matter to the attorney's representation of the client, unless the |
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attorney: |
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(A) takes a residential mortgage loan |
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application; and |
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(B) offers or negotiates the terms of a |
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residential mortgage loan; |
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(4) an individual who offers or negotiates terms of a |
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residential mortgage loan secured by a dwelling that serves as the |
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individual's residence; |
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(5) an owner of residential real estate who in any |
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12-consecutive-month period makes no more than five residential |
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mortgage loans, none of which is a wrap mortgage loan, to purchasers |
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of the property for all or part of the purchase price of the |
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residential real estate against which the mortgage is secured; and |
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(6) an owner of a dwelling who in any |
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12-consecutive-month period makes no more than five residential |
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mortgage loans, none of which is a wrap mortgage loan, to purchasers |
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of the property for all or part of the purchase price of the |
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dwelling against which the mortgage or security interest is |
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secured. |
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SECTION 9. This Act takes effect September 1, 2017. |