Pursuant to our yearly audit of state-specific disclosures, we will be creating the following new documents for loans secured by property in Texas:
TX Spanish Plain Language Truth-in-Lending Statement (Cx19328)
According to Tex. Fin. Code Ann. § 341.502(a-1), if the terms of the agreement for certain loans are “negotiated in Spanish, a copy of a summary of those terms and other pertinent information shall be provided to the debtor in Spanish in a form identical to disclosures required for a closed-end transaction under 12 C.F.R. Section 226.18.” These loans include ones subject to Chapter 342 of the Texas Finance Code (commonly referred to as “Plain Language” loans) and home equity loans regulated by the Texas Office of Consumer Credit Commissioner (OCCC).
7 Tex. Admin. Code §§ 90.701 et seq. provides for model “Plain Language Contract Provisions” in Spanish for such loans, particularly formatted into four model forms promulgated in Section 703. Of these model forms, the one entitled: “Notificacion de Crédito Al Consumidor (Préstamo de Segunda Hipoteca)” applies to loans generated through our system (which are subject to Subchapter G of Chapter 342).
We have created a duplicate of this Model Form as Cx19328 and will configure it to print under the following conditions:
- Document Package Type = Closing
- HELOC = No
- State Code = Texas
- Use Texas Plain Language = Yes
TX Lock-In Agreement (Cx19606)
Tex. Fin. Code § 156.304(b) requires the following:
“A residential mortgage loan originator may not charge or receive a fee for locking in an interest rate unless there is a written agreement signed by the mortgage applicant and residential mortgage loan originator that contains a statement of whether the fee to lock in the interest rate is refundable and, if so, the terms and conditions necessary to obtain the refund.”
To accommodate for this requirement, we will be providing a standard, Texas-specific lock-in agreement (Cx19606) which is substantially similar to other state-specific lock-in agreements which we have created for other states – with the caveat that Cx19606 will also include the “Notice of No Oral Agreements” required under Tex. Bus. & Com. Code § 26.02(e).
This document will print under the following conditions:
- Document Package Type = Initial Disclosure
- Lock-In Fee Charged on Loan = Yes
- State Code = Texas
TX Notice of Right to Cancel PMI (Cx19607)
This document is being created due to the following provisions of Tex. Ins. Code Ann. § 3502.202(a):
“A lender that requires a borrower to purchase mortgage guaranty insurance shall provide annually to the borrower a copy of the following written notice printed in at least 10-point boldfaced type:
‘NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE: If you currently pay private mortgage insurance premiums, you may have the right to cancel the insurance and cease paying premiums. This would permit you to make a lower total monthly mortgage payment and to possibly receive a refund of any unearned premiums on the policy. In most cases, you have the right to cancel private mortgage insurance if the principal balance of your loan is 80 percent or less of the current fair market appraised value of your home. If you want to learn whether you are eligible to cancel this insurance, please contact us at (address and telephone number of lender) or the Texas Department of Insurance consumer help line at (the appropriate toll-free telephone number).’”
Since this document is required to be provided annually, it is most likely that it will be provided by servicers after the closing of the loan. Nevertheless, we are providing it as an “upon request” document for any clients who would like to provide it in their Closing packages. Once requested, the document will print under the following circumstances:
- Base Type = Conventional
- Document Package Type = Closing
- Monthly Mortgage Insurance = Yes
- State Code = Texas
TX Homestead Affidavit (Cx19609)
Although a homestead of the borrower can be established without a written designation (see Blake v. Fuller, 184 S.W.2d 148, 151 [Tex. Civ. App. 1944]), Tex. Prop. Code § 41.005 provides for processes under which the borrower may designate specific property as his homestead.
In addition, Tex. Const. art. 16, § 50(d) provides for the following:
“A purchaser or lender for value without actual knowledge may conclusively rely on an affidavit that designates other property as the homestead of the affiant and that states that the property to be conveyed or encumbered is not the homestead of the affiant.”
To accommodate these conditions, a Homestead Affidavit may be recorded which designates which property the borrower considers to be his homestead and which property he does not claim as his homestead. Some Texas counties provide model affidavits for this, including Kaufman County (see http://www.kaufmancountyclerk.com/forms.html).
We will be providing our own Homestead Affidavit which is substantially similar to the model Homestead Affidavit provided by Kaufman County, with some modifications to allow the borrowers to designate either a family or single person homestead and to designate whether the homestead is on rural property (and, if so, how many acres).
This document will be available “upon request.” Once requested, it will print under the following conditions:
- Document Package Type = Closing
- State Code = Texas
TX Methods of Notification Disclosure (Cx19610)
In regards to Texas home equity or “50(a)(6)” loans, 7 Tex. Admin. Code § 153.93(a) provides for the following:
“At closing, the lender or holder may make a reasonably conspicuous designation in writing of the location where the borrower may deliver a written or oral notice of a violation under 50(a)(6)(Q)(x) [which occurs when the lender or holder fails to comply with their mortgage loan obligations]. The designation may include a mailing address, physical address, and telephone number. In addition, the lender or holder may designate an email address or other point of contact for delivery of a notice.”
New Cx19610 sets forth the different means by which the borrower can contact the lender concerning any violations. Since Texas Administrative Law allows, but does not require, the lender to provide this disclosure, our document will only be available “upon request.” Once requested, it will print under the following conditions:
- Document Package Type = Closing
- Is this a Texas Home Equity Section 50(a)(6) loan? = Yes
- State Code = Texas
TX Depository Institutions Insurance Disclosure (Cx19611)
Similar to most other states, Tex. Ins. Code §§ 556.052, 556.153, & 556.154 require depository institutions, which sell insurance, to provide a disclosure to the borrower that such insurance products are not guaranteed by the FDIC and that the consumer is not obligated to purchase the insurance through the depository institution.
The specific language of the disclosure is set forth in Section 154 and will be used, verbatim, in Cx19611. This document will be available “upon request” and, once requested, will print under the following conditions:
- Document Package Type = Initial Disclosure
- State Code = Texas
These documents will be available on May 21, 2015. If you have any questions or concerns about these new disclosures, please contact Client Support at 1.800.497.3584.
May 14, 2015
DR 152024