Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 1.
CONSUMER CREDIT COMMISSIONER
Subchapter E. INTEREST CHARGES IN LOANS
7 TAC §§1.501, 1.504, 1.505
The Finance Commission of Texas adopts amendments to 7 TAC §§1.501,
1.504, and 1.505 concerning interest charges on loans and refunds in precomputed
loans. The amendments are adopted without changes to the proposal as published
in the July 6, 2001, issue of the
Texas Register
(26 TexReg 4940).
The purpose of the amendments are to harmonize the provisions of Senate
Bill 272, 77th Legislature, with the existing rule. Senate Bill 272 established
a new alternative rate structure for Subchapter E loans and modified the appropriate
refunding method for these loans. The amendments make technical changes to
provide guidance on complying with Chapter 342, Subchapter E, as amended.
Furthermore, the rule clarifies the appropriate methods for assessing default
(late) charges in 7 TAC §1.504.
The agency received no written comments on this proposal.
The amendments are adopted under the Texas Finance Code §11.304
and §342.551, which authorizes the Finance Commission to adopt rules
to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104817
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §1.503
The Finance Commission of Texas adopts new rule 7 TAC §1.503,
concerning administrative loan fee.
The purpose of this new rule is to provide the procedures for assessing
the administrative loan fee and incorporate technical changes made by Senate
Bill 272, 77th Legislature. The new rule is adopted without changes to the
proposal as published in the July 6, 2001, issue of the
Texas Register
(26 TexReg 4942).
The agency received no written comments on this proposal.
The new section is adopted under the Texas Finance Code §11.304
and §342.551, which authorizes the Finance Commission to adopt rules
to ensure compliance with Title 4 of the Texas Finance Code.
These rules affect new Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104836
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §1.706
The Finance Commission of Texas adopts amendments to 7 TAC §1.706,
concerning interest charges on loans and refunds in precomputed loans. The
amendments are adopted without changes to the proposal as published in the
July 6, 2001, issue of the
Texas Register
(26 TexReg 4940).
The purpose of the amendments are to harmonize the provisions of Senate
Bill 272, 77th Legislature, with the existing rule. Senate Bill 272 established
a new alternative rate structure for Subchapter E loans and modified the appropriate
refunding method for these loans. The amendments make technical changes to
provide guidance on complying with Chapter 342, Subchapter E, as amended.
Furthermore, the rule clarifies the appropriate methods for assessing default
(late) charges in 7 TAC §1.504.
The agency received no written comments on this proposal.
The amendments are adopted under the Texas Finance Code §11.304
and §342.551, which authorizes the Finance Commission to adopt rules
to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104818
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §§1.751, 1.754, 1.755
The Finance Commission of Texas adopts amendments to 7 TAC §§1.751,
1.754, and 1.755, concerning interest charges on loans and refunds in precomputed
loans. The amendments are adopted without changes to the proposal as published
in the July 6, 2001, issue of the
Texas Register
(26 TexReg 4940).
The purpose of the amendments are to harmonize the provisions of Senate
Bill 272, 77th Legislature, with the existing rule. Senate Bill 272 established
a new alternative rate structure for Subchapter E loans and modified the appropriate
refunding method for these loans. The amendments make technical changes to
provide guidance on complying with Chapter 342, Subchapter E, as amended.
Furthermore, the rule clarifies the appropriate methods for assessing default
(late) charges in 7 TAC §1.504.
The agency received no written comments on this proposal.
The amendments are adopted under the Texas Finance Code §11.304
and §342.551, which authorizes the Finance Commission to adopt rules
to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104819
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §§1.753, 1.756, 1.757
The Finance Commission of Texas adopts the repeal of §§1.753,
1.756 and 1.757. The repeal is adopted without changes to the proposal as
published in the July 6, 2001, issue of the
Texas
Register
(26 TexReg 4944).
This repeal is necessary because the sections have been rewritten and incorporated
into proposed amendments to §1.754 and §1.755. The passage of Senate
Bill 272, 77th Legislature required modification of all the provisions of §§1.753
- 1.757.
The agency received no written comments on this proposal.
The repeal is adopted under Texas Finance Code, §11.304,
which authorizes the Finance Commission to adopt rules to enforce Title 4
of the Texas Finance Code. Additionally, Texas Finance Code, §342.551
authorizes the Finance Commission to adopt rules for the enforcement of the
consumer loan chapter.
The statutory provisions (as currently in effect) affected by the adopted
repeal are Subchapter E and G of Chapter 342, Texas Finance Code and the rest
of Title 4.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104816
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §1.758
The Finance Commission of Texas adopts an amendment to 7
TAC §1.758, concerning specific application to Subchapter F loans. The
amendment is adopted without changes to the proposal as published in the July
6, 2001, issue of the
Texas Register
(26 TexReg
4945).
The purpose of the amendment is to harmonize the rule with the new language
as enacted in House Bill 198, 77th Legislature. This legislative enactment
provides that the acquisition charge on loans of $100 or more is earned at
the time the loan is made and is not subject to refund.
The agency received no written comments on this proposal.
The amendment is adopted under the Texas Finance Code §11.304
and §342.551, which authorizes the Finance Commission to adopt rules
to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104820
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §1.807
The Finance Commission of Texas adopts an amendment to 7
TAC §1.807, concerning collateral protection insurance on loans authorized
by Chapter 342.
The purpose of the amendment is to harmonize the rule with the new provisions
of Senate Bill 707, 77th Legislature. Senate Bill 707 repealed the former
provisions of the Credit Title relating to collateral protection insurance
and replaced them with new provisions in Chapter 307. The amendment corrects
the statutory reference. The amendment is adopted without changes to the proposal
as published in the July 6, 2001, issue of the
Texas
Register
(26 TexReg 4945).
The agency received no written comments on this proposal.
The amendment is adopted under the Texas Finance Code §
11.304 and §342.551, which authorizes the Finance Commission to adopt
rules to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104821
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
7 TAC §4.3
The Finance Commission of Texas (the commission) adopts an
amendment to §4.3 concerning reporting and recordkeeping requirements
applicable to currency transmission licensees under Finance Code, Chapter
153. The section is adopted without changes to the proposed text as published
in the July 6, 2001, issue of the
Texas Register
(26 TexReg 4946), and the text will not be republished.
Before amendment, §4.3(a) included within "currency exchange" a transaction
in which a currency transmitter accepts currency of one government for transmission
from Texas to another location and pays at the destination in the currency
of another government. As amended, §4.3(a) implements the agency's determination
that currency transmission transactions involving the receipt of the currency
of one government and payment in the currency of another government are not
currency exchange transactions.
Before amendment, §4.3(e)(2) required that certain information be
maintained for currency transmission transactions that exceed $1,000. The
amendment to §4.3(e)(2) increases the threshold limit to $3,000, the
same as the threshold amount imposed under the federal Bank Secrecy Act, 31
United States Code, §5313, and 31 Code of Federal Regulations, Part 103.
The commission received no comments regarding the proposal.
The amendment is adopted under the authority of Finance Code, §153.002,
which authorizes the commission to adopt rules necessary to enforce and administer
Finance Code, Chapter 153, including rules relating to recordkeeping requirements.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104809
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 475-1300
7 TAC §4.12
The Finance Commission of Texas (the commission) adopts an
amendment to §4.12 concerning processing times for currency exchange
license applications submitted to the Texas Department of Banking (department).
The section is adopted without change to the proposed text as published in
the July 6, 2001, issue of the
Texas Register
(26 TexReg 4946), and the text will not be republished.
Section 4.12 implements the requirements of Government Code, §2005.003,
pertaining to permit processing periods. During the past 12 months, the department's
minimum, maximum, and median time for processing a currency exchange license
application was 63 days, 228 days, and 114 days, respectively. Processing
time is measured from the date the department received an initial application
to the date of the final license decision. Disclosure of the minimum, maximum,
and median processing time for an application is required by Government Code, §2005.003.
The amendment provides a more efficient, equitable, and predictable application
process by clarifying the time for review of applications and conforming the
processing times to the actual times required to review and evaluate an application.
The amendment also provides for a finding of abandonment for applications
not timely pursued.
The amendment to §4.12(b) changes the time from 10 days to 15 days
for the department to notify the applicant that the application is complete
or that additional information is required.
The commission received no comments regarding the proposal.
The amendment is adopted under Finance Code, §153.002, which
authorizes the commission to adopt rules necessary to enforce and administer
Finance Code, Chapter 153, including rules relating to issuance of a license.
Additional authority and applicable requirements are provided by Government
Code, §2005.003.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104810
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 475-1300
7 TAC §5.1
The Finance Commission of Texas adopts new rule 7 TAC §5.1,
concerning required disclosures in connection with certain home loans.
The purpose of this section is to establish the required disclosures mandated
in Senate Bill 1581, 77th Legislature, and to provide the means by which lenders
may comply with the notice requirements of the Texas Finance Code, Section
343.102. Senate Bill 1581 primarily restricts certain mortgage lending practices
or requires enhanced disclosure in connection with certain triggering events.
There was a general agreement among the parties involved with Senate Bill
1581 that the interim period between the 77th and 78th Legislature would be
used to study mortgage lending practices with an emphasis on identifying any
types of pattern or practice that might require future legislative action.
One benefit of the disclosure required by the rule is that it provides a source
for consumers to contact state regulatory agencies to report complaints as
well as providing an avenue for general information, housing counseling, and
education. The state regulatory agencies may then collect and analyze data
related to consumer contacts and complaints and report to the 78th Legislature
regarding the effectiveness of the disclosure or identification of potential
pattern or practices of concern. By statute the requirement to provide the
notice on covered loans expires September 1, 2003. Compliance with this section
is deemed compliance with these notice requirements.
The rule describes the applicability of the notice requirements, the actual
content requirements of the notices, provisions relating to timing of delivery
of the notice, and provisions relating to record retention.
The new rule is adopted with changes to the proposal as published in the
July 6, 2001, issue of the
Texas Register
(26 TexReg 4948).
The agency received several comments generally in support of the rule,
but raising concerns over individual requirements of the rule proposal. The
agency worked to resolve issues by consensus among interested parties; however,
a few issues were not able to be resolved through consensus. Due to the limited
time for implementation of the required disclosure by the legislation's September
1 effective date, the agency was faced with very little opportunity to work
through some of these issues in advance of the initial proposal. In the initial
proposal it was the Finance Commission's intent to bring forward all of the
various issues and during the comment period the interested parties could
work through the issues with an opportunity for some modifications. The interested
parties worked on the language and arrived at a draft that addressed many
of the concerns of the parties and represented a workable product for the
majority of lenders who would be required to distribute the notice. The working
group was comprised of representatives of the following organizations:
Consumers Union
Citifinancial / Travelers Bank & Trust
Independent Bankers of Texas
Texas Association of Community Development Corporations
Texas Association of Mortgage Brokers
Texas Bankers Association
Texas Financial Services Association
Texas Low Income Housing Service
Texas Mortgage Bankers Association
Texas Savings and Community Bankers Association
Texas Department of Banking
Texas Office of Consumer Credit Commissioner (OCCC)
Texas Savings & Loan Department
A comment letter was also received from Bank of America requesting clarification
on complying with the provision to distribute a list of HUD-approved counseling
agencies and expressing concern over the text and content of the official
notice.
There were five issues upon which the working group was unable to reach
agreement, so the Finance Commission held a special meeting on July 20, 2001,
to take testimony and deliberate on the policy issues and merits of the alternatives
of these five issues. Members of the working group were present and given
the opportunity to provide public comment. The five issues are discussed within
the specific subsections of the rule that they affect.
Subsection (a) describes the purpose and applicability of the rule. At
the Finance Commission July 20, 2001, meeting a representative from the Independent
Bankers Association of Texas raised a question concerning the applicability
of the section to adjustable rate mortgages. After discussion and deliberation,
the Finance Commission made recommended amendments to this section to appropriately
describe the types of adjustable rate mortgages that would be covered by the
section. The amended language addresses adjustable rate mortgages in two ways:
1) an adjustable rate mortgage that may not initially bear a rate of 12%,
but through a series of rates or steps specifies a fixed rate of 12% later
in the contract would require disclosure and 2) a variable rate mortgage with
a floating index that when applying the maximum margin increases to the floating
index base at the time of application results in a rate of 12% or greater
would also require disclosure. This method would eliminate the uncertainty
surrounding the impact of the future volatility of interest rates in the general
economy. This subsection is necessary to advise lenders concerning which mortgages
loans are required to receive the notices required under Texas Finance Code §343.102.
Some concern was expressed over the types of transactions covered by this
section of the statute and the proposed rule. Section 343.102, Texas Finance
Code states that: "For a home loan with an interest rate of 12 percent or
greater a year, when the lender makes the disclosure required under the Real
Estate Settlement Procedures Act, as amended, for the good faith estimate,
or if that Act does not apply, within three days after the date the application
is made, the lender shall provide to the borrower..." The statutory language
expressly provides that these provisions apply to "home loans." One commenter
inquired if the disclosure requirements would apply to a retail installment
sale of home improvements between a contractor and a home owner. The applicable
statutes in the Texas Finance Code provide distinct differences between loans
and retail installment sales. The transactions have different legal treatment
and basis in statute. The rule does not specifically address or include retail
installment sales within its application as the statute is expressly stated
to apply to loans and not retail installment sales.
Subsection (b) details definitions that are necessary to ensure that terms
are uniformly applied and used. The term application was drafted closely following
the provisions of the Real Estate Settlement Procedures Act to ensure consistency
among lenders in determining the timing of the disclosure the notice required
by Texas Finance Code §343.102 and the delivery of the good faith estimate
required under the Real Estate Settlement Procedures Act.
Subsection (c) contains the notice requirements. Subsection (c)(1) prescribes
the content of the notice. Members of the working group arrived at a consensus
on the content of the notice with two exceptions. Members of the working group
have expressed strong feelings about the location and layout of the "official
notice concerning high cost home loans." While the members have agreed on
the content of the official notice, there was disagreement about its placement
on the disclosure and use of the state seal in the official notice. The Finance
Commission took testimony on these items. Consumers Union and Texas Low Income
Housing Information Service favored placing the text box with the official
notice information at the top of the page. Additionally, they recommended
that the state seal accompany the official notice. Representatives from the
Texas Bankers Association and the Independent Bankers Association of Texas,
as well as other lending industry representatives voiced concern over the
placement of the notice at the top and the use of the state seal, recommending
placement of the notice at the bottom of the page. In citing their concern,
these representatives expressed that the entirety of the disclosure was not
"an official notice from the Finance Commission." The remainder of the disclosure
addresses other statutorily required items of information, such as the availability
of housing counseling. The banking representatives stated that they believed
the disclosure would be misleading to consumers if the official notice text
box were placed at the top of the page. The Finance Commission agrees with
reasons stated by the banking representatives and adopts the rule with the
official notice text box at the bottom of page. The Finance Commission agrees
with the representatives from Consumers Union and Texas Low Income Housing
Information Service that an accompanying state seal conveys the importance
of the official notice and thus adopts the rule to include the state seal
in the official notice text box.
Subsection (c)(3) provides that a lender may request an applicant to acknowledge
receipt of the disclosure. The proposed rule required the lender to obtain
the applicant's signature on the notice. Several parties, including the Texas
Bankers Association and the Independent Bankers Association, offered comments
in opposition to this section. Generally these commenters believed that the
requirement to obtain a signature exceeds the statutory requirement and thus
should not be adopted in the rule. The commenters did acknowledge that the
practice of obtaining an acknowledgment is a good business practice that many
lenders would probably require as part of their loan procedures. The representative
from Consumers Union expressed support for the proposed rule as well as an
alternative proposed procedure that permitted the lender to obtain a statement
acknowledging receipt of the disclosure at closing. The Finance Commission
agrees with the comments from the lending industry that the rule should not
require an acknowledgment and adopts the rule accordingly. The proposed rule
also contained a subsection that required a retention period for authenticated
acknowledgments. Since the adopted rule will not require an acknowledgment
of the notice, there is no need for a subsection requiring retention of the
authenticated acknowledgments.
Subsection (c)(4) in the proposed rule required that a lender provide a
borrower with a list of the HUD-approved housing counseling agencies located
in Texas. The statute requires that a lender distributes a list of the "nearest"
housing counseling agencies. Some lenders expressed concern about the cumbersome
nature of distributing the entire list, which at the time of rule proposal
consisted of 122 agencies. Other lenders though expressed concern that the
lender did not want to determine, with exact precision, which agencies were
nearest the applicant's residence. The Finance Commission agrees with both
concerns and adopts the rule to permit lender's flexibility in this area by
supplementing the proposed rule with another option for providing the borrower
with this required information. Subsection (c)(4) was amended to provide an
alternative of providing the entire list for Texas or to provide a list of
at least five agencies nearest the applicant's residence. The Texas Financial
Services Association also suggested that the Office of Consumer Credit Commissioner
publish a reformatted list of HUD-approved counselors quarterly, so that lenders
have a consistent and concise list. The agency, as a matter of practice, plans
to accommodate this request. Additionally, the Texas Financial Services Association
suggests that lenders be able to add a disclaimer to the list of counselors.
For example, the disclaimer might read: "The lender is not affiliated with
any of the housing counseling agencies whose names are provided to you with
this notice. The lender is not responsible for information or advice given
by a housing counseling agency from which you may seek advice." The Finance
Commission has no objection to the addition of this disclaimer to the notice,
but does not believe that an amendment to the rule is necessary.
Subsection (c)(5) requires that a Spanish translation of the notice must
be given if the transaction is conducted primarily in Spanish. The Independent
Bankers Association, the Texas Bankers Association, and the Texas Mortgage
Bankers Association disagree with the adoption of this subsection because
they believe it exceeds the statutory authority in Senate Bill 1581. The Finance
Commission believes that it is the appropriate public policy decision to require
the notice to be given in Spanish when the borrower and the lender are conducting
the transaction primarily in Spanish. Several provisions were added to the
Finance Commission Agencies' responsibilities during the Sunset Process in
2000-2001 that require the agencies to ensure that contracts and publications
are printed in Spanish as well as English. Specifically, Senate Bill 317 requires
contracts to be in plain language, whether in English or in Spanish, and requires
the Finance Commission to adopt rules providing model contract provisions
and disclosures. The Finance Commission will provide the standard Spanish
disclosure text. It is important to note that the rule does not prohibit a
lender from giving a Spanish disclosure in every transaction, in addition
to the English disclosure. Some lenders may choose to implement this type
of disclosure with English on one side and Spanish on the other. Use of a
disclosure of this type would comply with the rule.
Subsection (d) provides the procedures for delivery of the notice. The
delivery procedures established in this section parallel the delivery procedures
for other types of notices in mortgage loans, such as the good faith estimate
or the 12-day notice for home equity loans.
Subsection (e) states that this rule will be considered for repeal or amendment
in June 2003. As stated above, the statute requiring the disclosure expires
September 1, 2003. Consumers Union and Texas Low Income Housing Information
Service expressed a desire to urge the Finance Commission to continue the
disclosure requirement beyond September 1, 2003, even if the statute expires.
The lending industry groups generally expressed a desire to sunset the rule
at the same time as the statute. The language added in this subsection merely
informs the reader that the Finance Commission will reconsider this rule and
the arguments of these parties in June 2003 rather than at this time.
The new section is adopted under the Texas Finance Code §
11.304, which authorizes the Finance Commission to adopt rules to ensure compliance
with Title 4 of the Texas Finance Code and §343.102 which requires the
Finance Commission to promulgate a high cost home loan notice.
These rules affect new Chapter 343, Texas Finance Code.
§5.1.Required Disclosures in Connection with Certain Home Loans.
(a)
Purpose and Applicability.
(1)
The purpose of this section is to provide the means by
which lenders may comply with the notice requirements of the Finance Code,
Section 343.102. Compliance with this section is deemed compliance with these
notice requirements.
(2)
This section applies to any mortgage application received
on or after September 1, 2001, for each home loan that:
(A)
is a fixed rate loan that has a contract interest rate
of 12% or greater a year; or
(B)
is an adjustable rate loan that:
(i)
has a maximum fixed rate of interest pursuant to a schedule
of steps or tiered rates that is 12% or greater a year; or
(ii)
has a maximum variable rate of interest that when calculated
upon the index's value at the time of application plus maximum margin increases
may result in an interest rate of 12% or greater a year.
(b)
Definitions.
(1)
Application means the submission of a borrower's financial
information in anticipation of a credit decision, whether written or computer
generated. If the submission does not state or identify a specific property,
the submission is not an application for the purposes of this section.
(2)
Authenticate means:
(A)
to sign; or
(B)
to execute or otherwise adopt a symbol, or encrypt or similarly
process a record in whole or in part, with the present intent of the authenticating
person to identify the person and adopt or accept a record.
(3)
Home Loan shall have the meaning given in Finance Code §343.001(2).
(4)
Lender means, generally, the secured creditor or creditors
named in the debt obligation and document creating the lien.
(c)
Notice Requirements.
(1)
Prescribed content. The notice must appear on a full, separate
page with no text other than that provided in this section. The form of the
notice shall be substantially similar to that provided by this section.
Figure: 7 TAC §5.1(c)(1)
(2)
Notice Requirement. A lender shall deliver a notice for
each home loan described in subsection (a)(2) of this section.
(3)
Acknowledgement. A lender may request that the applicant
authenticate the notice acknowledging applicant's timely receipt of the notice.
(4)
List of housing counseling agencies.
(A)
A lender must provide the applicant with either:
(i)
a list of the Texas-located housing counseling agencies
approved by the United States Department of Housing and Urban Development
("HUD"); or
(ii)
a list of at least five HUD-approved housing counseling
agencies nearest the applicant's residence.
(B)
The list provided under subparagraph (A) of this paragraph
must contain housing counseling agency information that is not more than 90
days old or if more than 90 days old, is the most recent information available
from HUD.
(5)
Spanish translation. A Spanish translation of the notice,
provided by the Finance Commission, is required if the transaction is conducted
primarily in Spanish.
(d)
Delivery of notice.
(1)
The notice shall be delivered to an applicant:
(A)
on the date required for delivery of the Good Faith Estimate
under the Real Estate Settlement Procedures Act;
(B)
within three business days after application if the Real
Estate Settlement Procedures Act does not apply to the covered mortgage loan;
or
(C)
within three business days of determining that the loan
will be covered by this section, if on the date for delivery under subparagraph
(A) or (B) of this paragraph the lender after reasonable diligence has not
yet determined whether the home loan is a loan as described in subsection
(a)(2) of this section.
(2)
The notice must be delivered to an applicant at least one
business day prior to closing.
(3)
A mortgage broker may deliver the notice for the lender.
(4)
Mail delivery. The notice may be delivered by placing it
in the mail or with an overnight delivery service on the date required for
delivery, addressed to the applicant at the given mailing address. An applicant
is presumed to have received the notice within three business days of mailing
with prepaid first-class postage or within one business day of deposit with
an overnight delivery service.
(5)
Electronic delivery. A lender may provide the required
disclosure by electronic communication in compliance with state and federal
law governing electronic signatures and electronic transactions (15 U.S.C. §7.001
(A)
send the disclosure to the consumer's electronic address;
or
(B)
make the disclosure available at another location such
as an Internet website; and
(i)
alert the consumer of the disclosure's availability by
sending a notice to the consumer's electronic address. The notice shall identify
the account involved and the address of the Internet website or other location
where the disclosure is available; and
(ii)
make the disclosure available for at least 90 days from
the date the disclosure first becomes available or from the date of the notice
alerting the consumer of the disclosure, whichever comes later.
(6)
Denied Applications. If the application is denied before
the time for delivery of the notice, the lender need not provide the denied
borrower with notice.
(7)
Multiple Applicants. In the case of multiple applicants
for a home loan, it is only necessary for the lender to deliver the notice
to one applicant.
(e)
Sunset provision. This section will be considered for repeal
or amendment in June 2003.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104841
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 936-7640
Chapter 27.
APPLICATIONS
7 TAC §27.1
The Finance Commission of Texas (the commission) adopts an
amendment to §27.1 concerning application processing times and notices
to applicants. This section is adopted without changes to the proposed text
as published in the July 6, 2001, issue of the
Texas
Register
(26 TexReg 4949), and the text will not be republished.
The amendment removes sale of checks licenses from the application of this
section. A new rule regarding sale of checks license applications is being
adopted in this issue of the
Texas Register
.
This change will place the sale of checks rule in the same chapter as other
rules pertaining to sale of checks.
The commission received no comments regarding the proposal.
The amendment is adopted under Finance Code, §152.102(a),
which authorizes the commission to adopt rules necessary to enforce and administer
Finance Code, Chapter 152 "including rules relating to an application of a
license." Additional authority and applicable requirements are provided by
Government Code, §2005.003.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on August 17, 2001.
TRD-200104811
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: September 6, 2001
Proposal publication date: July 6, 2001
For further information, please call: (512) 475-1300
Subchapter G. INTEREST AND OTHER CHARGES ON SECONDARY MORTGAGE LOANS
Subchapter H. REFUNDS IN PRECOMPUTED LOANS
Subchapter I. INSURANCE
Chapter 4.
CURRENCY EXCHANGE
Chapter 5.
HOME LOANS
Part 2.
TEXAS DEPARTMENT OF BANKING
Chapter 29.
SALE OF CHECKS ACT