2005 Texas Finance Code CHAPTER 343. HOME LOANS

FINANCE CODE

CHAPTER 343. HOME LOANS

SUBCHAPTER A. GENERAL PROVISIONS


	§ 343.001. DEFINITIONS.  In this chapter:                                   
		(1)  "Bridge loan" means temporary or short-term 
financing requiring payment of only interest until the entire 
unpaid balance is due.
		(2)  "Home loan" means a loan that is:                                        
			(A)  made to one or more individuals for personal, 
family, or household purposes;  and
			(B)  secured in whole or part by:                                            
				(i)  a manufactured home, as defined by 
Section 347.002, used or to be used as the borrower's principal 
residence;  or
				(ii)  real property improved by a dwelling 
designed for occupancy by four or fewer families and used or to be 
used as the borrower's principal residence.
		(3)  "Restructure" means a change in the payment 
schedule or other terms of a home loan as a result of the borrower's 
default. 

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.002. APPLICABILITY.  This chapter does not apply 
to:                
		(1)  a reverse mortgage;  or                                                  
		(2)  an open-end account, as defined by Section 
301.002.                    

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.003. CONFLICT WITH OTHER PROVISIONS OF TITLE.  If 
this chapter conflicts with another provision of this title, this 
chapter controls.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           

SUBCHAPTER B. PROVISIONS RELATING TO HOME LOANS IN GENERAL


	§ 343.101. REFINANCING.  (a) For purposes of this 
section, a low-rate home loan is a home loan that at its inception 
carries an interest rate two 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, shall be used instead of the rate at the loan's 
inception to determine whether the loan is a low-rate loan.
	(b)  A lender may not replace or consolidate a low-rate home 
loan directly made by a government or nonprofit lender before the 
seventh anniversary of the date 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.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.104. RESTRICTIONS ON SINGLE PREMIUM CREDIT 
INSURANCE.  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 the following 
notice is provided to each applicant for the loan by hand delivery 
or mail to the applicant not later than the third business day after 
the date the applicant's application for a home loan is received:

INSURANCE NOTICE TO APPLICANT

You may elect to purchase credit life, disability, or 
involuntary unemployment insurance in conjunction 
with this mortgage loan.  If you elect to purchase this 
insurance coverage, you may pay for it either on a 
monthly premium basis or with a single premium payment 
at the time the lender closes this loan.  If you choose 
the single premium payment, the cost of the premium 
will be financed at the interest rate provided for in 
the mortgage loan.

This insurance is NOT required as a condition of 
closing the mortgage loan and will be included with the 
loan only at your request.

You have the right to cancel this credit insurance once 
purchased.  If you cancel it within 30 days of the date 
of your loan, you will receive either a full refund or 
a credit against your loan account.  If you cancel this 
insurance at any other time, you will receive either a 
refund or credit against your loan account of any 
unearned premium.  YOU MUST CANCEL WITHIN 30 DAYS OF 
THE DATE OF THE LOAN TO RECEIVE A FULL REFUND OR 
CREDIT.

To assist you in making an informed choice, the 
following estimates of premiums are being provided 
along with an example of the cost of financing.  The 
examples assume that the term of the insurance product 
is ____ years and that the interest rate is ______ 
percent (a rate that has recently been available for 
the type of loan you are seeking). PLEASE NOTE THAT THE 
ACTUAL LOAN TERMS YOU QUALIFY FOR MAY VARY FROM THIS 
EXAMPLE. "Total amount paid" is the amount that would 
be paid if you financed only the total insurance 
premium for a ___ year period and is equal to the 
amount you would have paid if you made all scheduled 
payments.  This is NOT the total of payments on your 
loan.

CREDIT LIFE INSURANCE:  Estimated premium of $_______                         

DISABILITY INSURANCE:  Estimated premium of $_______                          

INVOLUNTARY UNEMPLOYMENT INSURANCE:  Estimated premium of 
$________         

TOTAL INSURANCE PREMIUMS:  $_______                                           

TOTAL AMOUNT PAID:  $_______                                                  

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           

SUBCHAPTER C. HIGH-COST HOME LOANS


	§ 343.201. DEFINITIONS.  In this subchapter:                                
		(1)  "High-cost home loan" means a loan that:                                 
			(A)  is made to one or more individuals for 
personal, family, or household purposes;
			(B)  is secured in whole or part by:                                         
				(i)  a manufactured home, as defined by 
Section 347.002, used or to be used as the borrower's principal 
residence;  or
				(ii)  real property improved by a dwelling 
designed for occupancy by four or fewer families and used or to be 
used as the borrower's principal residence;
			(C)  has a principal amount equal to or less than 
one-half of the maximum conventional loan amount for first 
mortgages as established and adjusted by the Federal National 
Mortgage Association;
			(D)  is not:                                                                 
				(i)  a reverse mortgage;  or                                                
				(ii)  an open-end account, as defined by 
Section 301.002;  and            
			(E)  is a credit transaction described by 12 
C.F.R. Section 226.32, as amended, except that the term includes a 
residential mortgage transaction, as defined by 12 C.F.R. Section 
226.2, as amended, if the total loan amount is $20,000 or more and:
				(i)  the annual percentage rate exceeds the 
rate indicated in 12 C.F.R. Section 226.32(a)(1)(i), as amended;  
or
				(ii)  the total points and fees payable by 
the consumer at or before loan closing will exceed the amount 
indicated in 12 C.F.R. Section 226.32(a)(1)(ii), as amended.
		(2)  "Points and fees" has the meaning assigned by 12 
C.F.R. Section 226.32(b), as amended.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.202. BALLOON PAYMENT.  A high-cost home loan may 
not contain a provision for a scheduled payment that is more than 
twice as large as the average of earlier scheduled monthly 
payments, unless the balloon payment becomes due not less than 60 
months after the date of the loan.  This prohibition does not apply 
if the payment schedule is adjusted to account for the seasonal or 
otherwise irregular income of the borrower or if the loan is a 
bridge loan in connection with the acquisition or construction of a 
dwelling intended to become the borrower's principal dwelling.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.203. NEGATIVE AMORTIZATION.  A high-cost home loan 
may not provide for a payment schedule with regular periodic 
payments that cause the principal balance to increase, except that 
this section does not prohibit negative amortization as a 
consequence of a temporary forbearance, bridge loan, or restructure 
sought by the borrower.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.204. CONSIDERATION OF OBLIGOR'S PAYMENT 
ABILITY.  (a) In this section, "obligor" means a person obligated 
to pay a loan, including a borrower, cosigner, or guarantor.  If 
more than one person is obligated to pay a loan, the term refers to 
those persons collectively.
	(b)  A lender may not engage in a pattern or practice of 
extending credit to consumers under high-cost home loans based on 
the consumers' collateral without regard to the obligor's repayment 
ability, including the obligor's current and expected income, 
current obligations, employment status, and other financial 
resources, other than the obligor's equity in the dwelling that 
secures repayment of the loan.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.205. PREPAYMENT PENALTIES PROHIBITED.  A lender may 
not make a high-cost home loan containing a provision for a 
prepayment penalty.

Added by Acts 2001, 77th Leg., ch. 622, § 1, eff. Sept. 1, 2001.           


	§ 343.206. CHARGE PROHIBITED FOR PRODUCT OR SERVICE NOT 
RECEIVED.  A lender, in connection with a high-cost home loan, may 
not charge a borrower an amount for a service or product if the 
borrower does not receive the service or product.

Added by Acts 2003, 78th Leg., ch. 1207, § 3, eff. Sept. 13, 
2003.