The Texas Finance Commission and the Texas Credit Union Commission (collectively, the Commissions”) recently adopted amendments to the home equity lending provisions in Title 7, Chapter 153 of the Texas Administrative Code (“Chapter 153”), as published in the Texas Register (46 TexReg 9240). The amendments went into effect on January 6, 2022.
The amendments to Chapter 153, which contains regulations interpreting home equity lending provisions of the Texas Constitution, Article XVI, Section 50 (“Section 50”), cover both the definition and use of electronic disclosures, along with the applicability of Section 50 to out-of-state financial institutions.
Section 153.1 has been updated to include definitions and statutory citations for the federal Electronic Signatures in Global and National Commerce Act (“E-Sign Act”), under 15 U.S.C. §§ 7001-7006 and the UETA-Texas Uniform Electronic Transaction Act (“UETA”), under Texas Business & Commerce Code, Chapter 322. Similar use of the terms is included in additional amendments to refer to electronic disclosure requirements.
Section 50(a)(6)(M)(ii) of the Texas Constitution requires that a home equity loan closing must occur at least 12 days after the owner submits a loan application to the lender. An amendment to §153.12(3) provides that a loan application may be provided electronically to the lender, referencing the E-Sign Act and the UETA. Similarly, new §153.13(4) also specifies that a lender may provide a preclosing disclosure electronically, in accordance with the E-Sign Act and the UETA. New §153.26(4) adds that both a borrower and a lender may electronically sign a written acknowledgment of fair market value required when an extension of credit is made on a homestead property.
An additional amendment in §153.17 clarifies the applicability of Section 50 to out-of-state financial institutions following a request to the Commissions asking whether a bank organized under the laws of another state may make a Texas home equity loan. Section 50(a)(6)(P) of the Texas Constitution states that entities entitled to make home equity loans include “a bank, savings and loan association, savings bank, or credit union” doing business under the laws of the state or the United States, including financial institutions defined in the Texas Finance Code. New §153.17(2) specifies that this includes financial institutions that are chartered under the laws of another state and do business in Texas in accordance with application state law, including the Texas Finance Code.
DocMagic has determined that the amendments do not require any changes to Texas home equity documents or loan plans which are available for electronic disclosure. If you have any questions regarding this article, please contact DocMagic’s Compliance Department.
