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Lender third party disclosure in Texas

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[email protected]

Junior Member
This matter is in Texas.

Are there any Federal or Texas laws which prohibit a registered creditor (home loan) from releasing a borrower's account number, balance, and payment history to a third party who is sub-letting the property from the original borrower?

A family member of mine is owner-financing a property to an individual here in Texas. Apparently, a while back, the family member was behind on the bank note and the lender sent an agent out to knock on the door of the property to speak with the occupant, who was actually a lease-purchase tenant. The tenant spoke with the leinholder's agent, telling him that he clearly was not the owner referenced in the loan the agent was inquiring about (a female). The agent called the lending institution and initiated a conference call with another individual at the lending institution, asking the tenant to participate in the call. The lending institution proceeded to speak with the tenant without the consent of the loan recipient (my family member). During the course of the conversation, the lending institution disclosed the payment history of the loan, the account number of the loan, and the payoff amount of the loan, and possibly even the interest rate of the loan to the third-party tenant. The tenant proceeded to make payments directly to the leinholder, then has filed suit against my family member as he seemed to believe that he should only be obligated to pay for the remainder of the original bank loan secured by my family member - not the lease-purchase which he agreed to.

I am reasonably certain that some State or Federal law(s) have / has been broken by the unauthorized third-party disclosure of the personal information contained in the loan, but am not sure what laws these might be. Does anyone know of any statutes, legal citations, or case law which might pertain to this matter?

I appreciate any assistance that can be provided.


Keith Norman,

Central Texas Investigative Services
Keith Norman, owner
Tel. (281) 639-0026
TCPS #A-08772
Web: www.ctis.cc
Email: [email protected]

Debt Guy

Senior Member
There is a federal law -- Graham-Leach-Biley (GLEBA) or something close that governs release of personal information by "financial institutions" -- Google it and read the act. Also, there are various privacy laws that govern banks. I can't recall the name but you might be able to call the Federal Reserve Bank in Dallas and ask about consumer privacy laws that govern banks.

There may or may not be something similar in TX. Call the State office that governs banks and ask. The Governor's office should be able to refer you to the right agency. Or, look it up on line at the state website.


Senior Member
I imagine the lender thought the loan to the family member was for owner-occupied home, and when the family member arranged the lease-purchase, they neglected to tell the bank because it would make the mortgage immediately due and payable.

So when the family member fell behind in payments, the lender contacted the occupant, which was supposed to be the mortgagee according to the loan. The lender cannot help it if the occupant was confused with the mortgagee because the family member violated the terms of their loan.

If the lease-purchase (and payments) had been properly arranged with the blessing of the lender, the family member would not be in this situation.


Junior Member
I hope your family member is fully aware of the laws in Texas regarding a Lease/Purchase. You stated -
"The tenant proceeded to make payments directly to the leinholder, then has filed suit against my family member as he seemed to believe that he should only be obligated to pay for the remainder of the original bank loan secured by my family member - not the lease-purchase which he agreed to."
While I cannot offer any help on whether the bank was at fault in disclosing this information I will provide some links to the Texas laws which are very strict and seller unfriendly. Pay particular attention to the following from the Foster and East link:

1 In short, if a lease of residential property is accompanied by an option to purchase the property, the entire transaction (lease and option agreement together) is considered to be a single contract for deed (hereinafter referred to as “lease/option contracts”).
2 Also, the new law prohibits a seller from selling a house through a contract for deed if the property is encumbered by a preexisting lien, although there are some exceptions. For more details, please consult the text of H.B. 1823 or feel free to contact our office.

Bottom line before you start fighting this out with the tenant you should read the following links and definitely consult a good REAL ESTATE attorney. If the tenant has retained an attorney knowledgable in Texas laws your family "may or may not" be in some serious trouble. My wife and I basically had our lease/option house sold for us by the tenant and he kept the profit - which we found out was quite legal under the Texas Contract for Deed laws. (we didn't really care since we wanted to just be rid of it anyway but eye opening nonetheless)

Anyways, here are the links. I would suggest at least getting a consultation from a lawyer and only a lawyer specializing in Texas Real Estate law.



http://www.lawhelp.org/TX/showdocument.cfm/County/ /City/ /demoMode/= 1/Language/1/State/TX/TextOnly/N/ZipCode/ /LoggedIn/0/rpc/1620300/doctype/dynamicdoc/ichannelprofileid/8348/idynamicdocid/1031/iorganizationid/1300/itopicID/498/iProblemCodeID/1620300/iChannelID/91/isubtopicid/1/iproblemcodeid/1620300

And finally from the following link:

Texas Lease Option Law - HB1823 - Update
There have been a lot of people requesting more information on the lease option law that was passed recently here in Texas. For the people (like me) that like to understand all the details of everything you can read Bryan Dunklin's Commentary and Steve Tiemann's Commentary.

For the rest of you, here is the net effect.

Do Not Do Lease Options in Texas.

That is it. There are a lot of other options available to you to sell property, but if you decide to do a lease with an option on a property and have a disagreement with the tenant - you will likely lose the home and maybe more. If you lease-option the house with any financing tied to it - you are breaking the law.

Our solution is to sell our properties on owner financing and wrap the mortgage. The downside of this is that you have to foreclose on the property if you stop getting paid. The upside is that (1) it is legal and (2) the foreclosure process in Texas is fairly quick.

[email protected]

Junior Member
Additional information

Well, after reading the new legislation, I am sure that I do not want any part of this industry. I think that my in-laws will be OK with this new law as the original contract was signed back in 2002 - prior to the new legislation being passed.


Junior Member
To be a little clearer. The original legislation was passed in 2001. HB1823 was an adendum to the original legislation. This really is something to tread lightly on until your in-laws understand the consequences that COULD POSSIBLY happen.

You may want to post this in the Real Estate section and ask about advice with the Texas Lease/Purchase laws.

Here is a link to a description of the original law:

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