As previously announced, the Finance Commission of Texas and the Texas Credit Union Commission issued finalized joint amendments to 7 Tex. Admin. Code Pt. 153 (see https://compliance.docutech.com/2018/03/14/important-notice-concerning-texas-constitutional-amendments-2/) which were published in the Texas Register on March 23, 2018. Among other provisions, the amendments include the following:
“Refinance Disclosure. To meet the condition in [Tex. Const. art. 16] Section 50(f)(2)(D), the lender must provide the refinance disclosure described in Section 50(f)(2)(D) to the owner on a separate document not later than the third business day after the date the owner submits the loan application to the lender and at least 12 days before the date the refinance of the extension of credit is closed. . . .
(B) For purposes of Section 50(f)(2)(D), the application is submitted on the date the owner submits a loan application specifically for a refinance of home equity loan to a non-home equity loan. If the owner initially applies for another type of loan, then the application is considered submitted on the earliest of:
(i) the date the owner modifies the application, orally or in writing, to specify that it is for a refinance of a home equity loan to a non-home-equity loan; or
(ii) the date the owner submits a new application specifically for a refinance of a home equity loan to a non-home-equity loan.” (7 Tex. Admin. Code § 153.45[B]; 43 Tex. Reg. 1845 [Mar. 23, 2018]; emphasis added)
To gauge whether a consumer has submitted “a loan application specifically for a refinance of a home equity loan to a non-home equity loan” (and, thus, when the new 12-day notice required under Tex. Const. art. 16, § 50[f][D] should be provided), we will be adding the following language to the beginning of the “Continuation Sheet/Residential Loan Application” section of our copy of the FNMA 1003, Cx4193:
“The applicant(s) specifically intend(s) for this loan application to be for a loan which refinances a home equity loan as defined under Subsection 50(a)(6), Article 16 of the Texas Constitution into a non-home-equity loan, as permitted under Subsection 50(f)(2), Article 16 of Texas’ Constitution (see 7 Tex. Admin. Code § 153.45[B]).”
This language will only appear when “No Cash-Out Refinancing a TX Home Equity 50(a)(6) loan” (FI 118143) equals “Yes” (for more details on this field, as well as Texas 50[f] loans, see: https://compliance.docutech.com/2017/11/28/document-updates-various-texas-home-equity-loan-documents-2/) and “Is this a Texas Home Equity Section 50(a)(6) loan?” (FI 29932) is not “Yes”. The language will print in 14-point type, to make it clear and conspicuous to the applicant(s) and the originator that the applicant(s) is specifically applying for a Texas 50(f)(2) loan.
These changes will take effect on March 29, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.