40 TAC §§175.51 - 175.60
The Texas Veterans Land Board adopts new §§175.51
- 175.60 without changes to the text as proposed in the October 26, 2001,
issue of the
Texas Register
(26 TexReg 8502).
House Bill 3567, 77th Legislature, adds new Subchapter K, relating to Land
Loans, to Chapter 161 of the Natural Resources Code. Subchapter K authorizes
the Veterans Land Board of the State of Texas (the "Board") to finance the
purchase of eligible land by an eligible Texas veteran by making a mortgage
loan to the veteran, and it requires the Board to adopt rules to implement
its provisions. Prior to the passage of House Bill 3567, the Board was only
authorized to finance the purchase of land by taking legal title to the property
in the name of the State and reselling it to a Texas veteran on a contract
of sale and purchase.
In order to comply with the requirements of House Bill 3567, the Board
proposed amendments to The General Rules of the Veterans Land Board, Title
40, Part 5, Chapter 175 of the Texas Administrative Code. The Board finds
that it is in the best interests of the Veterans Land Program (the "Program")
for the initial implementation of financing by mortgage loans to follow to
the maximum extent possible the existing rules that govern financing using
contracts of sale and purchase. Therefore, the Board adopts the new subchapter
A, relating to General Rules and Contract Financing, and subchapter B, relating
to Mortgage Financing, for Chapter 175. Subchapter A comprises of all the
existing rules, §§175.1 - 175.24, of Chapter 175. These sections
contain the general provisions of the Program that pertain to all methods
of financing, as well as the rules specific to financing by contract of sale.
The Board adopts new rules, §§175.51 - 175.60, which comprise subchapter
B and pertain only to financing by mortgage loans.
The adopted new §§175.51 - 175.60 contain references to relevant
provisions of new subchapter A and clarify distinctions between financing
with a contract of sale and purchase, and financing with a mortgage loan,
as authorized by House Bill 3567. By referring to existing provisions of subchapter
A, the new rules establish consistent definitions and provisions for both
methods of financing available for participants in the Program.
The following new sections are adopted:
Section 175.51, relating to Construction of Subchapter B, describes its
purpose to effectuate a mortgage loan program as described in Natural Resources
Code, Chapter, 161, Subchapter K. It provides guidelines for the application
of existing rules in new subchapter A of Chapter 175 to mortgage loans. It
also defines the terms "borrower," "contract of sale," "lending institution,"
"loan" and "mortgage loan."
Section 175.52, relating to Borrower's Eligibility and Number of Loans,
provides that eligibility for a mortgage loan is defined in Subchapter A.
It further states that a person may hold only one loan as a Texas veteran
at any one time.
Proposed §175.53, relating to Eligibility and Description of Land,
refers to Subchapter A for the definition of an eligible tract, survey requirements,
and appraisal requirements.
Section §175.54, relating to Protection of Security Interests, describes
how the Board may be protected in the event of a default on the loan or the
destruction of any improvements on the property serving as collateral for
the loan.
Section 175.55, relating to Loan Approval, describes the procedures for
a determination of the amount the Board will loan for a particular tract.
Section 175.56, relating to Fees, Loan Amount, Interest Rate, and Down
Payments, sets forth the fees that may be charged for services provided by
the Board in connection with an application for a mortgage loan. It also provides
for a down payment not to exceed 5% of the loan amount.
Section §175.57, relating to Title Insurance and Closing Requirements,
provides for the selection of closing representatives and trustees for liens.
The borrower is required to personally execute all closing documents. The
Board must review and approve all proposed fees charged to the borrower.
Section §175.58, relating to Removal of Material Assets, Releases,
and Payment in Full, provides for the execution of partial or full releases
of the lien upon request of the borrower and payment of the amount determined
by the Board. This section describes the requirements for removing material
assets from a tract financed by the board.
Section §175.59, relating to Easements and Mineral Leases, describes
how the borrower can obtain the Board's approval for mineral leases and grants
of rights-of-ways.
Section §175.60, relating to Purchasing Loans from Lending Institutions,
provides a general framework in which the Board may purchase loans originated
by lending institutions.
No comments were received regarding the proposed new subchapters and new
sections.
The new sections are adopted under the Natural Resources Code,
Title 7, Chapter 161, §§161.063, 161.503(d), 161.504(b), 161.506,
161.507(e), 161.512, and 161.513, which provide authorization for the Board
to adopt rules for the program that it considers necessary to implement mortgage
loan financing.
Natural Resources Code, §§161.501 - 161.511, are affected by
this adopted action.
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 December 19, 2001.
TRD-200108128
Larry R. Soward
Chief Clerk, General Land Office
Texas Veterans Land Board
Effective date: January 8, 2002
Proposal publication date: October 26, 2001
For further information, please call: (512) 305-9129