Based on a review from examples provided in Thomas E. Black, Jr. David F. Dulock Daniel S. Engle. 2018: (https://www.bmandg.com/wp-content/uploads/article-repository/2018-Home-Equity-Manual.pdf), we are modifying our Texas Home Equity Loan Closing Instructions Addendum (Cx5004) which is based on Tex. Const. art. 16, § 50(a)(6)(Q)(viii) and 7 Tex. Admin. Code § 153.25, both of which requiring a three-day right of rescission.
Our research concluded that there is no legal requirement that we produce a separate document to certify the rescission, nor does Section 50(a)(6)(Q)(viii) require a rescission notice. The signature provided by the borrower on the TX Home Equity Election Not to Rescind acts as the Certificate of Non-Cancellation. To avoid confusion on Cx5004, we are striking the reference from the heading that reflects the Certificate of Non-Cancellation and changing the paragraph to not refer to multiple forms. This represents the best course of action because signing an acknowledgment of receipt is used as a confirmation that the borrower does not intend to rescind the transaction and the creditor can safely proceed to disburse funds (see Ibid. § 25.19). Furthermore, we are not currently providing the Certificate of Non-Cancellation as we don’t believe it is required.
The Detailed Changes are as follows:
(1) On CX5004 – 1 (D.) – presently reads: “Texas Home Equity Election Not to Rescind and Certificate of Non-Cancellation of Loan”. The following has been removed from the heading: “and Certificate of Non-Cancellation of Loan”.
(2) On CX5004 – 1 (D.) – the second sentence presently reads: “On the fourth (4th) business day after closing, the owners, if they have elected not to rescind/cancel under either their federal Right to Cancel or their state Right to Rescind should return these two (2) forms to the Settlement Agent.” The following will be removed: “These two (2) forms” and replaced with “the form”.
These changes will take effect on January 20, 2021. If you have any questions or concerns about these, please contact Client Support at 1.800.497.3584.