Texas Origination Reference Guide
- Kacey Olson
Owned by Kacey Olson
Aug 30, 2017
13 min read
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| Citation | Topic | Requirement |
| Constitution - General Provisions / Texas Const. Art. XVI, §50(a)(6)(Q)(ix) | Acknowledgement of Fair Market Value (Homestead Property) | The owner of the homestead and the lender must sign a written acknowledgment as to the fair market value of the homestead property on the date the extension of credit is made. |
| Constitution - General Provisions / Tex. Const. Art. XVI, §50(k)(8) | Affidavit of Reverse Mortgage Counseling | A reverse mortgage may not be made unless the owner of the homestead attests in writing that the owner received counseling regarding the advisability and availability of reverse mortgages and other financial alternatives. |
| Finance Code / Tex. Fin. Code Ann. §303.015(c) | ARM Loans - Not Subject to TILA | A variable-rate agreement for credit extended primarily for personal, family, or household use must include the disclosures required by the Truth in Lending Act, except that if the Truth In Lending Act does not apply, the following disclosure must be included in a size equal to at least 10-point type that is boldface, capitalized, underlined, or otherwise set out from surrounding material so as to be conspicuous: NOTICE TO CONSUMER: UNDER TEXAS LAW, IF YOU CONSENT TO THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 24 PERCENT PER YEAR. |
| Secondary Mortgage Loan Act / Tex. Fin. Code Ann. §342.506 | Blank Spaces | Loan documents may not have blanks to be filled in after the loan is made. |
| Home Equity Lending Regulations / 7 Tex. Admin. Code §153.11(3) | Closed-End Equity Loans (Homestead) | In order to have a valid lien on homestead property, a closed-end equity loan may not contain a balloon payment. |
Closing Disclosure Form | Effective August 1, 2015, When a settlement agent is required to use a federal Closing Disclosure form in Texas, the settlement agent must also prepare Form T-64 to provide a clear and complete disclosure of costs related to closing and title insurance in Texas. | |
Constitution - General Provisions / Texas Const. Art. XVI, §50(a)(6)(Q)(v) | Copies of Documents (Homestead Property - Equity Loans) | In order to have a valid lien on homestead property, at the time an equity loan is made, the owner of the homestead must receive a copy of the final loan application and all executed documents signed by the owner at closing related to the extension of credit. Only 1 copy of these documents is required to be provided to married owners. This requirement does not obligate the lender to give the owner copies of documents that were signed by the owner prior to or after closing. |
| Mortgage Banker Registration and Residential Mortgage Loan Originator Regulations / 7 Tex. Admin. Code §81.202 | Discount Points | It is considered an "improper dealing" with an applicant to represent that a charge or fee is a discount point paid to the company unless the loan is closed and: (A) The company or originator is the lender in the transaction. The company or originator is deemed to be the lender if the company or originator, is the payee as evidenced on the face of the note or other written evidence of indebtedness; or (B) The company or originator, is not the lender, but demonstrates by clear and convincing evidence that the lender has charged or collected discount point(s) or other fees which the company or originator has remitted to the lender on behalf of the mortgage applicant, to buy down the interest rate on a residential mortgage loan. |
| Tex. Gov't. Code Ann. §§ 83.001, & 83.006 (West 2012) | Document Preparation Fee | A person, other than an attorney licensed in the state of Texas, a licensed real estate broker, or a person perform acts relating to a mineral or mining interest in real property, cannot “charge or receive, either directly or indirectly, any compensation for all or any part of the preparation of a legal instrument affecting title to real property, including a deed, deed of trust, note, mortgage, and transfer or release of lien.” Such behavior constitutes the unauthorized practice of law. |
| Residential Mortgage Loan Company Licensing and Registration Act / Tex. Fin. Code Ann. §156.303 | Dual Capacity Disclosure | If a person is acted in the dual capacity of a residential mortgage loan company or residential mortgage loan originator and real estate broker, salesperson, or attorney in a transaction must have written consent of the mortgage applicant. |
| Secondary Mortgage Loan Act / 7 Tex. Admin. Code §83.851 | Duplicate Loans | A licensee may have more than 1 loan contract with the same borrower at the same time. However, total interest charges assessed must not exceed the total interest charges that could be legally imposed on 1 cash advance of an amount equal to the total of the several separate cash advances. Married applicants, who under the authority of Regulation B, 12 CFR §202.11(c), voluntarily apply for and maintain separate accounts, and who have the ability to repay the obligation, will not trigger the prohibition on duplicate loans. No loan may be made by a licensee in 1 office to any borrower or to the spouse of the borrower when the borrower or spouse has a loan in another office operated by the same entity, affiliate, parent, subsidiary, or an entity under the same ownership, management, or control when the total interest charges of the separate loans exceed the total interest charges that could be legally imposed on 1 cash advance. |
| Home Equity Lending Regulations / 7 Tex. Admin. Code §153.5; §153.14(2)(D) & Texas Const. Art. XVI, §50(a)(6)(B) & §50(a)(6)(E) | Equity Loan 3% Fee Limitation | An equity loan must not require the owner or the owner's spouse to pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, 3% of the original principal amount of the extension of credit. This 3% cap applies to the original home equity loan and any subsequent modification as a single transaction. In general, charges an owner or an owner's spouse is required to pay that are not interest are fees subject to the 3% limitation. For more information regarding charges included this limitation see citations. |
| Home Equity Lending Regulations / 7 Tex. Admin. Code §153.5; §153.14(2)(D) & Texas Const. Art. XVI, §50(a)(6)(B) & §50(a)(6)(E) | Equity Loan 80% LTV Limitation | In order to have a valid lien against homestead property, an equity loan must be in a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80% of the fair market value of the homestead on the date the extension of credit is made. |
| Constitution - General Provisions / Tex. Const. Art. XVI, §50(k)(9) | Important Notice to Borrowers Related to Your Reverse Mortgage | A reverse mortgage cannot be closed before the 12th day after the date the lender provides to the prospective borrower the Important Notice to Borrowers Related to Your Reverse Mortgage disclosure on a separate instrument, which the lender or originator and the borrower must sign for the notice to take effect. |
| Anti-Predatory Lending Law / Tex. Fin. Code Ann. §343.104(a) | Insurance Notice to Applicant (Home Loans) | A lender may not offer any individual or group credit life, disability, or unemployment insurance on a prepaid single premium basis in conjunction with a home loan unless this notice is provided to each applicant for the loan by hand delivery or mail no later than 3 business days after the date the application is received. “Home loan” means a loan that is: (1) Made to one or more individuals for personal, family, or household purposes; and (2) secured in whole or part by: (A) a manufactured home used or to be used as the borrower's principal residence; or (B) real property improved by a dwelling designed for occupancy by 4 or fewer families and used or to be used as the borrower's principal residence. |
| Secondary Mortgage Loan Act / Tex. Fin. Code Ann. §342.402(c) & §342.404 | Junior Lien Insurance Disclosure | A lender may require that a borrower provide credit life insurance and credit accident and health insurance as additional protection for the loan. If insurance is required on a loan made the lender must give to the borrower written notice that clearly and conspicuously states that: (1) insurance is required in connection with the loan; and (2) the borrower as an option may furnish the required insurance coverage through an insurance policy that is in existence and that is owned or controlled by the borrower or an insurance policy obtained from an insurance company authorized to do business in Texas. If notice is required, the lender must include that fact in the notice. The notice may be in a separate writing delivered with the loan contract or a part of the loan contract. If insurance requested or required on a loan is sold or obtained by a lender at a premium or rate of charge that is not fixed or approved by the Commissioner of Insurance, the lender must notify the borrower of that fact. |
| Business and Commercial Law / Tex. Bus. & Com. Code Ann. §26.02 | Loan Agreement Disclosure | Financial institutions are required to give a loan commitment disclosure for loan agreements in the amount of $50,000 or more. A “financial institution” means a state or federally chartered bank, savings bank, savings and loan association, or credit union, a holding company, subsidiary, or affiliate of such an institution, or a lender approved by the United States Secretary of Housing and Urban Development for participation in a mortgage insurance program under the National Housing Act (12 U.S.C. §1701 et seq.). The notice must be in a separate document signed by the debtor or incorporated into one or more of the documents constituting the loan agreement. The notice must be in boldface, capitalized, underlined, or otherwise set out from surrounding written material so as to be conspicuous. |
| Residential Mortgage Loan Company Licensing and Registration Act / 7 Tex. Admin Code §80.201(a) | Mortgage Banker Conditional Qualification Letter | When provided to a mortgage applicant, written confirmation of conditional qualification shall include the information in this form. |
Mortgage Banker Disclosure | A mortgage banker that is a residential mortgage loan originator must include a notice to a residential mortgage loan applicant with an application for a residential mortgage loan. The form must: (1) include the name, address, and toll-free telephone number for the Department of Savings and Mortgage Lending; (2) contain information on how to file a complaint or recovery fund claim; and (3) prescribe a method for proof of delivery to the consumer. | |
| Residential Mortgage Loan Company Licensing and Registration Act / 7 Tex. Admin Code §80.201(b) | Mortgage Company Conditional Approval Letter | When provided to a prospective mortgage applicant or mortgage applicant, written notification of loan application approval on the basis of credit worthiness, but not on the basis of collateral, must include the information contained in the Conditional Approval Letter. This information can be provided by utilizing Form B or an alternate form that includes all of the information found on Form B. Either form may be modified by adding any of the following as needed, or disclosure of fees charged: (1) any additional aspects of the loan as long as not misleading; (2) any additional items that the originator has reviewed in determining conditional qualifications; or (3) any additional terms, conditions, and requirements. A disclosure of fees charged, on Form B or an alternate form, does not serve as a substitute for any fee disclosure required by state or federal laws or regulations. The letter in this section does not apply to a “firm offer of credit” as defined under the Fair Credit Reporting Act |
Residential Mortgage Loan Company Licensing and Registration Act / Tex. Fin. Code Ann. §156.004(a) | Mortgage Company Disclosure | At the time an applicant submits an application to a residential mortgage loan originator sponsored by and conducting business for a licensed or registered residential mortgage loan company, the residential mortgage loan originator must provide to the applicant a disclosure that specifies: (1) the nature of the relationship between the applicant and the residential mortgage loan originator; (2) the duties the residential mortgage loan originator has to the applicant; and (3) how the residential mortgage loan originator will be compensated. |
| Secure and Fair Enforcement for Mortgage Licensing Act / Tex. Fin. Code Ann. §180.151 | NMLS Unique Identifier | The NMLS unique identifier of a person originating a residential mortgage loan must be clearly shown on each residential mortgage loan application form, solicitation, or advertisement, including business cards and websites, and any other document required by rule of the rulemaking authority. |
| Constitution - General Provisions / Texas Const. Art. XVI, §50(g) | Notice Concerning Extensions of Credit (12 Day Notice) | An extension of credit described by Texas Const. Art. XVI, §50(a)(6) (Texas Equity Loan) may be secured by a valid lien against homestead property if the extension of credit is not closed before the 12th day after the lender provides the owner with the Home Equity Lending Contract Disclosure. : |
| Tex. Fin. Code Ann. §343.105 | Notice of Penalties for Making a False or Misleading Written Statement | This notice must be provided at the loan closing. |
| Constitution - General Provisions / Tex. Const. Art. XVI, §50(k)(9) | Notice of Repayment Provisions for Reverse Mortgage Loan | At the time a reverse mortgage is made, the lender must disclose to the borrower, by written notice, the specific provisions under which the borrower is required to repay the loan. |
| 7 Tex. Admin. Code §90.703(a)(1) | Notificacion De Credito Al Consumidor (Prestamo A Plazos) | If a contract for a loan under Tex. Fin. Code Ann. Chapter 342 (Subchapters F or G) is negotiated in Spanish, then the licensee must deliver a Spanish disclosure specified in Tex. Fin. Code Ann. §90.703(a) relating to Form of Disclosure to the debtor. |
| 7 Tex. Admin. Code §90.703(a)(2) | Notificacion De Credito Al Consumidor (Prestamo) | If a contract for a loan under Tex. Fin. Code Ann. Chapter 342 (Subchapters F or G) is negotiated in Spanish, then the licensee must deliver a Spanish disclosure specified in Tex. Fin. Code Ann. §90.703(a) relating to Form of Disclosure to the debtor. |
| Home Equity Lending Regulations / Texas Const. Art. XVI, §50(a)(6)(M)(iii) & 7 Tex. Admin. Code §153.14(1) | One Year Equity Loan Refinance Restriction | An equity loan may not be closed before the first anniversary of the closing date of any other equity loan secured by the same homestead property, except a refinance for the purpose of curing a failure in the previous homestead loan. Texas Rules expand on the above prohibition by stating that an owner who has obtained an equity loan is prohibited from: (1) refinancing the equity loan before 1 year has elapsed since the loan's closing date; or (2) obtaining a new equity loan on the same homestead property before 1 year has elapsed since the previous equity loan's closing date, regardless of whether the previous equity loan has been paid in full. |
| Anti-Predatory Lending Law / Tex. Fin. Code Ann. §343.105 | Penalties for Making False or Misleading Statement Notice | A lender must provide to each applicant for a home loan a written notice at closing. The notice must be provided on a separate document, in at least 14-point type, and must have the following or substantially similar language: Warning: Intentionally or knowingly making a materially false or misleading written statement to obtain property or credit, including a mortgage loan, is a violation of Section 32.32, Texas Penal Code, and, depending on the amount of the loan or value of the property, is punishable by imprisonment for a term of 2 years to 99 years and a fine not to exceed $10,000. I/we, the undersigned home loan applicant(s), represent that I/we have received, read, and understand this notice of penalties for making a materially false or misleading written statement to obtain a home loan. I/we represent that all statements and representations contained in my/our written home loan application, including statements or representations regarding my/our identity, employment, annual income, and intent to occupy the residential real property secured by the home loan, are true and correct as of the date of loan closing. On receipt of the notice, the loan applicant must verify the information and execute the notice. |
| Home Equity Lending Regulations / 7 Tex. Admin. Code §153.13 & Texas Const. Art. XVI, §50(a)(6)(M)(ii) | Pre-Closing Disclosure (Homestead Property) | An equity loan may not be closed before 1 business day after the date that the owner of the homestead receives a “preclosing disclosure”. The “preclosing disclosure” consists of a copy of the loan application, if not previously provided, and a final itemized disclosure of the actual fees, points, interest, costs, and charges that will be charged at closing. If a bona fide emergency or another good cause exists and the lender obtains the written consent of the owner, the lender may provide the preclosing disclosure to the owner or the lender may modify the previously provided preclosing disclosure on the date of closing. The copy of the loan application submitted to the owner in satisfaction of the preclosing disclosure requirement must be the most current version at the time the document is delivered. A lender is not obligated to provide another copy of the loan application if (1) the only difference from the version previously provided to the owner is formatting; or (2) the information contained on the more recent application is the same as that contained on the application of which the owner has a copy. A lender may satisfy the disclosure requirement of providing a final itemized disclosure of the actual fees, points, interest, costs, and charges that will be charged at closing by delivery to the borrower of a properly completed Closing Disclosure (or, HUD disclosure Form HUD-1 or HUD-1A, as applicable). |
| Residential Mortgage Loan Company Licensing and Registration Act / Tex. Fin. Code Ann. §156.304(b) | Rate Lock Agreement (Optional Form) | 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. |
| Anti-Predatory Lending Law / Tex. Fin. Code Ann. §343.101 | Refinancing Restrictions (Home Loans) | A lender is prohibited from replacing or consolidating a low-rate home loan directly made by a government or nonprofit lender before the 7th anniversary of the loan unless the new or consolidated loan has a lower interest rate and requires payment of a lesser amount of points and fees than the original loan or is a restructure to avoid foreclosure. A low-rate home loan is a home loan that carries an interest rate 2 percentage points or more below the yield on treasury securities having comparable periods of maturity to the loan maturity, except that if the loan's interest rate is a discounted introductory rate or a rate that automatically steps up over time, the fully indexed rate or the fully stepped-up rate, as appropriate, must be used instead of the rate at the loan's inception to determine whether the loan is a low-rate loan. “Home loan” means a loan that is: (1) Made to one or more individuals for personal, family, or household purposes; and (2) secured in whole or part by: (A) a manufactured home used or to be used as the borrower's principal residence; or (B) real property improved by a dwelling designed for occupancy by 4 or fewer families and used or to be used as the borrower's principal residence. |
| Constitution - General Provisions / Texas Const. Art. XVI, §50(a)(6)(Q)(vi) | Security Instrument Requirements | In order to have a valid lien on homestead property, the security instruments securing an equity loan must contain a disclosure that the extension of credit is the type of credit defined by Section 50(a)(6), Article XVI, Texas Constitution. |
| Secondary Mortgage Loan Act / Tex. Fin. Code Ann. §342.507 | Waiver of Rights | Loan documents may not permit a borrower to waive any right available to the borrower under the Secondary Mortgage Loan Act. |