Docutech is updating our HELOC Deed of Trust – TX (Cx21376) to be more consistent with:
- the language in Fannie Mae Texas Home Equity Security Instrument (Form 3044.1);
- the “Applicable Law” paragraph contained in the Texas version of HELOC Agreement (Cx21652); and
- Texas title company requirements for issuing a Texas Equity Loan Mortgage Endorsement (Form T-42).
The new language from the Fannie Mae Texas Home Equity Security Instrument (Form 3044.1) is:
DEFAULT UNDER PRIOR VALID ENCUMBRANCE AGAINST THE HOMESTEAD: If we default under a prior valid encumbrance secured by the Property, then we will be in default of this Deed of Trust and you may accelerate the loan per the Default Section in this Deed of Trust. The loan secured by this Deed of Trust may not be accelerated due to a decrease in market value of the Property or a default under other indebtedness not secured by a prior valid encumbrance against the Property.
NON-RECOURSE LIABILITY: You will be subrogated to any and all rights, superior title, liens, and equities owned or claimed by any owner or holder of any liens and debts outstanding immediately prior to execution, regardless of whether said liens or debts are acquired by you by assignment or are released by the holder thereof upon payment, and regardless of whether the lien established by this Deed of Trust is held to be invalid. We agree that any statute of limitations related to a cause of action or right to foreclose based on such subrogated rights, superior title, liens, and equities are tolled to the extent necessary until, at the earliest, a final adjudication by a court of last resort that the lien established by this Deed of Trust is invalid. We further agree that you will have the same rights and powers provided in the Sections entitled “Default,” “Sale of Premises,” and “Waivers” in connection with any such subrogated rights, superior title, liens, and equities as you have in connection with the lien established by this Deed of Trust.
PROCEEDS: We will not be required to apply the proceeds of the Extension of Credit to repay another debt, unless such debt, if any, is a debt secured by the Property or a debt to another lender. If proceeds of the Extension of Credit are being applied to a debt due to you and not secured by the Property, it is being done voluntarily by us and at our request. You would make the Extension of Credit regardless of whether any proceeds are being applied to a debt due to you and not secured by the Property.
NO ASSIGNMENT OF WAGES: We are not assigning wages, and will not be required to assign wages, as security for the Extension of Credit.
ACKNOWLEDGMENT OF WAIVER BY BENEFICIARY OF ADDITIONAL COLLATERAL: We acknowledge that you waive all terms in any of your loan documentation (whether existing now or created in the future) which: (a) create cross default; (b) provide for additional collateral; (c) create personal liability for any Borrower (except in the event of actual fraud), for the Extension of Credit; and/or (d) allow the Extension of Credit to be accelerated because of a decrease in the market value of the Property or because of a default under other indebtedness not secured by a prior valid encumbrance against the Property. This waiver includes, but is not limited to, any: (aa) guaranty; (bb) cross collateralization; (cc) future indebtedness; (dd) cross Default; and/or (ee) dragnet provisions in any loan documentation with you.
INTENTION TO COMPLY WITH TEXAS CONSTITUTION: This loan is an open-end line of credit secured by our Texas homestead. It is your and our intention to conform strictly to provisions of the Texas Constitution applicable to Extensions of Credit as defined by Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution. All requirements and provisions of Sections 50(a)(6) and 50(t), Article XVI of the Texas Constitution are incorporated into this Deed of Trust.
All agreements between you and us are expressly limited so that in no event will any agreement between you and us, or between either of them and any third party, be construed to limit your right or time period to correct any failure to comply with the provisions of Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution to the fullest extent allowed by Applicable Law. As a precondition to taking any action premised on a failure of you to comply with your obligations under the Extension of Credit, we will advise you of the noncompliance by a notice given as required by the “NOTICE” Section of this Deed of Trust, and will give you at least 60 days after such notice has been received by you to comply. Except as otherwise required by Applicable Law, you will forfeit all principal and interest of the Extension of Credit only if: (a) you receive said notice, the failure to comply may be corrected by one of the methods set forth in Section 50(a)(6)(Q)(x), Article XVI of the Texas Constitution, and you fail to correct the failure to comply within 60 days after you receive said notice; (b) the Extension of Credit is made by a person other than a person described under Section 50(a)(6)(P), Article XVI of the Texas Constitution; or (c) each owner of the Property and each owner’s spouse has not consented to the lien established by this Deed of Trust and each owner and each owner’s spouse who did not initially consent does not subsequently consent. We will cooperate in reasonable efforts to correct any failure by you to comply with Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution, including in reasonable efforts to obtain the subsequent consent of any owner or owner’s spouse who does not initially consent to the lien established by this Deed of Trust.
In the event that, for any reason whatsoever, any obligation of us or of you pursuant to the terms or requirements hereof or of any other loan document will be construed to violate any of the provisions of the Texas Constitution applicable to Extensions of Credit as defined by Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution, then any such obligation will be subject to the provisions of this Section, and the document may be reformed, by written notice or written acknowledgment from you, without the necessity of the execution of any amendment or new document by us, so that our or your obligation will be modified to conform to the Texas Constitution, and in no event will we or you be obligated to perform any act, or be bound by any requirement which would conflict therewith.
It is the express intention of you and us to structure this Extension of Credit to conform to Applicable Law and, specifically, to the provisions of the Texas Constitution applicable to Extensions of Credit as defined by Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution. If, from any circumstance whatsoever, any promise, payment, obligation or provision of the Extension of Credit, this Deed of Trust, or any other loan document involving this Extension of Credit transcends the limit of validity prescribed by Applicable Law or does not comply with Section 50(a)(6) or Section 50(t), Article XVI of the Texas Constitution, then any such promise, payment, obligation or provision is hereby reduced to the limit of such validity, eliminated as a requirement if necessary for compliance with such law, or reformed if necessary to comply with such law without the necessity of the execution of any amendment or the delivery of any other document by us or you.
Your right-to-comply as provided in this Section will survive the payoff of the Extension of Credit. The provision of this Section will supersede any inconsistent provision of the Extension of Credit or this Deed of Trust.
The new language taken from the “Applicable Law” paragraph contained in the Texas version of HELOC Agreement (Cx21652) is:
CHAPTER 346 DOES NOT APPLY. Chapter 346 of the Texas Finance Code does not govern this Deed of Trust.
The new language for more consistency with Texas title company requirements for issuing a Texas Equity Loan Mortgage Endorsement (Form T-42) is:
FUTURE ADVANCE ON TEXAS HOMESTEAD DISCLOSURE: The agreement secured by this Deed of Trust is a Line of Credit Agreement that allows for future advances and conforms to the requirements for a home equity line of credit on a Texas homestead as governed by Section 50(a)(6) and Section 50(t), Article XVI of the Texas Constitution. This line of credit is for specific amount(s) that are extended to us for the term of indebtedness as described in the Line of Credit Agreement. The amount of indebtedness actually outstanding at any particular time is subject to fluctuations up or down due to future disbursements of loan proceeds and/or future repayments thereof from time to time over the term of the indebtedness (which disbursements and repayments are contemplated by the parties at the time the indebtedness is created). Repayments by us neither reduce nor increase the original line of credit extended nor affect our liability to repay the principal sum of all outstanding disbursements plus all accrued interest thereon.
Additionally, grammatical inconsistencies regarding pronoun usage and identification of the Deed of Trust have been corrected.
These changes are available for testing on Stage and Stage 2 servers and will take effect on February 8, 2024. If you have any questions or concerns, please contact Client Support at 1.800.497.3584.
LEG-1639
DR-147926