No. 03-14-00716-CV 

_____________________________________ 

In the Third Court of Appeals _____________________________________ 

JANOS FARKAS,

Appellant,

V. 

WELLS FARGO BANK, N.A. AND BRICE, VANDER LINDEN & WERNICK, P.C. 

N/K/A BUCKLEY MADOLE, P.C., 

Appellees.

_____________________________________ 

On Appeal from Cause No. D-1-GN-11-003692 

201st District Court, Travis County, Texas 

Hon. Lora J. Livingston, Judge Presiding 

BRIEF OF APPELLEE WELLS FARGO BANK, N.A. 

 Susan A. Kidwell 

 State Bar No. 24032626 

 skidwell@lockelord.com 

B. David L. Foster 

 State Bar No. 24031555 

 dfoster@lockelord.com

John W. Ellis 

 State Bar No. 24078473 

 jellis@lockelord.com 

LOCKE LORD LLP 

600 Congress Avenue, Suite 2200 

Austin, Texas 78701 

512-305-4700 (Telephone) 

512-305-4800 (Facsimile) 

Robert T. Mowrey 

 State Bar No. 14607500 

 rmowrey@lockelord.com

LOCKE LORD LLP

2200 Ross Avenue, Suite 2200 

Dallas, Texas 75201 

214-740-8000 (Telephone) 

214-740-8800 (Facsimile) 

ATTORNEYS FOR WELLS FARGO BANK, N.A.

ACCEPTED

03-14-00716-CV

4954793

THIRD COURT OF APPEALS

AUSTIN, TEXAS

4/20/2015 2:40:14 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 4/20/2015 2:40:14 PM JEFFREY D. KYLE Clerk
ii

TABLE OF CONTENTS

Page 

Index of Authorities .................................................................................................. iv

Statement of Facts ...................................................................................................... 1

Summary of the Argument ......................................................................................... 4

Argument.................................................................................................................... 6

I. The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s 

Objections to Wells Fargo’s Summary-Judgment Evidence. .......................... 6

A. The trial court did not abuse its discretion in overruling 

objections to the declaration of Michael Dolan. ................................... 7

B. Farkas waived any complaint about the remaining declarations. ....... 11

C. Conclusory assertions cannot establish harm. ..................................... 12

II. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Claim for Violations of the Texas Constitution. ............................. 14

A. The requirements of § 50(a)(6) only apply to “new extensions 

of credit.” ............................................................................................. 14

B. Farkas’s constitutional claims fail, as a matter of law, because 

the alleged “breaches” of the DOT are not alleged 

constitutional violations. ..................................................................... 17

C. The trial court’s judgment may also be affirmed on no-evidence 

grounds. ............................................................................................... 22

III. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Claim for Violations of the Texas Debt Collection Act. ................ 24

IV. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Fraudulent-Lien Claim. ................................................................... 27 
iii

Prayer ....................................................................................................................... 31

Certificate of Compliance ........................................................................................ 33

Certificate of Service ............................................................................................... 33
iv

INDEX OF AUTHORITIES

Page(s) 

CASES

Anderson v. Nat’l City Mortg., 

No. 3:11-CV-1687-N, 2012 WL 612562 (N.D. Tex. Jan. 17, 2012) ................... 8 

Bierwirth v. BAC Home Loans Servicing, L.P., 

No. 03-11-00644-CV, 2012 WL 3793190 (Tex. App.—Austin Aug. 30, 

2012, pet. denied) (mem. op.) ............................................................................. 29 

Cornish v. Washington Mut. Bank, FA, 

No. 02-06-400-CV, 2007 WL 2285478 (Tex. App.—Fort Worth Aug. 9, 

2007, pet. denied) ................................................................................................ 11 

Farkas v. Aurora Loan Servs., LLC, 

No. 05-12-01095-CV, 2013 WL 6198344 (Tex. App.—Dallas Nov. 26, 

2013, pet. denied) .................................................................................................. 9 

First Am. Title Ins. Co. v. Strayhorn, 

169 S.W.3d 298 (Tex. App.—Austin 2005), aff’d 258 S.W. 3d 627 

(Tex. 2008) .......................................................................................................... 22 

Golden v. Wells Fargo Bank, N.A., 

557 Fed. App’x 323 (5th Cir. Feb. 20, 2014) ..................................................... 28 

In re J.P.B., 

180 S.W.3d 570 (Tex. 2005) ................................................................................ 6 

Jaimes v. Fed. Nat’l Mortg. Ass’n,

930 F.Supp.2d 692 (W.D. Tex. 2013) ................................................................ 28 

Jones v. JP Morgan Chase Bank, N.A., 

No. 4:13-CV-456, 2014 WL 2996673 (E.D. Tex. July 3, 2014) ........................ 28 

Kerlin v. Arias, 

274 S.W.3d 666 (Tex. 2008) ............................................................................ 8, 9 

LaSalle Bank Nat’l Ass’n v. White, 

246 S.W.3d 616 (Tex. 2007) ........................................................................ 16, 20
v

Lassberg v. Barrett Daffin Frappier Turner & Engel, L.L.P., 

No. 4:13-CV-577, 2015 WL 123756 (E.D. Tex. Jan. 8, 2015) .......................... 28 

Liberty Mut. Ins. Co. v. Griesing, 

150 S.W.3d 640 (Tex. App.—Austin 2004, pet. dism’d w.o.j.) ......................... 26 

Marsh v. JPMorgan Chase Bank, N.A., 

888 F. Supp. 2d 805 (W.D. Tex. 2012) .............................................................. 30 

Perdomo v. Fed. Nat’l Mortg. Ass’n, 

No. 3:11-CV-734-M, 2013 WL 1123629 (N.D. Tex. Mar. 18, 2013) ............... 28 

Pickett v. Tex. Mut. Ins. Co., 

239 S.W.3d 826 (Tex. App.—Austin 2007, no pet.) .......................................... 22 

Rockwall Commons Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 

331 S.W.3d 500 (Tex. App.—El Paso 2010, no pet.) ........................................ 25 

Seaprints, Inc. v. Cadleway Props., Inc., 

446 S.W.3d 434 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ...................... 11 

Sims v. Carrington Mortg. Servs., L.L.C., 

440 S.W.3d 10 (Tex. 2014)............................................................... 14, 15, 20, 23 

Star-Telegram, Inc. v. Doe, 

915 S.W.2d 471 (Tex. 1995) .............................................................................. 22 

Steptoe v. JPMorgan Chase Bank, N.A., 

No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston 

[1st Dist. Mar. 19, 2015, no pet. h.) ........................................................ 18, 19, 26 

Stringer v. Cendant Mortg. Corp., 

23 S.W.3d 353 (Tex. 2000)........................................................................... 14, 20 

Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd., 

328 S.W.3d 623 (Tex. App.—Eastland 2010, no pet.) ......................................... 8 

Tex. Dep’t of Transp. v. Able, 

35 S.W.3d 608 (Tex. 2000)................................................................................... 7 

Vincent v. Bank of Am., N.A., 

109 S.W.3d 856 (Tex. App.—Dallas 2003, pet. denied) .................................... 16 
vi

Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 

160 S.W.3d 657 (Tex. App.—Austin 2005, no pet.) .............................. 22, 24, 29 

Wells Fargo Bank, N.A. v. Robinson, 

391 S.W.3d 590 (Tex. App.—Dallas 2012, no pet.) .............................. 16, 17, 23

CONSTITUTIONAL PROVISIONS

TEX. CONST. art. XVI, § 50 ...................................................................................... 14 

TEX. CONST. art. XVI, § 50(a)(6) ......................................................................passim 

TEX. CONST. art. XVI, § 50(a)(6)(D) ............................................................. 3, 16, 18 

TEX. CONST. art. XVI, § 50(a)(6)(I) ......................................................................... 16 

TEX. CONST. art. XVI, § 50(a)(6)(Q)(x) ............................................................. 15, 22 

TEX. CONST. art. XVI, § 50(k) ................................................................................. 18

TEX. CONST. ART. XVI, § 50(t) ............................................................................. 2, 18 

STATUTES

TEX. CIV. PRAC. & REM. CODE § 12.001(d) ............................................................. 28 

TEX. CIV. PRAC. & REM. CODE § 12.002 ............................................................ 28, 30 

TEX. CIV. PRAC. & REM. CODE § 12.002(a) ............................................................. 29 

TEX. CIV. PRAC. & REM. CODE § 12.002(a)(2) ........................................................ 30 

TEX. FIN. CODE § 31.002(a)(34) ............................................................................... 15 

TEX. FIN. CODE § 392.001. ....................................................................................... 25 

TEX. FIN. CODE § 392.403(a)(2) ...............................................................................27 
vii

RULES

TEX. R. APP. P. 38.1(i) .............................................................................................. 25 

TEX. R. APP. P. 38.2(1)(B) ......................................................................................... 1 

TEX. R. APP. P. 44.1 ................................................................................................... 7 

Tex. R. Civ. P. 166a(c)......................................................................................... 7, 25 

TEX. R. CIV. P. 166a(f) ....................................................................................... 7, 8, 9 

TEX. R. CIV. P. 735.1 ................................................................................................ 18 

TEX. R. CIV. P. 735.3 ................................................................................................ 18 

TEX. R. CIV. P. 736 ......................................................................................... 3, 18, 26 

TEX. R. CIV. P. 736.11(a) ........................................................................................... 4 

TEX. R. CIV. P. 736.11 (c) .......................................................................................... 4 

TEX. R. EVID. 801(d) .................................................................................................. 7 
TO THE HONORABLE THIRD COURT OF APPEALS: 

After defaulting on a home-equity loan, Appellant Janos Farkas filed the 

underlying lawsuit to prevent Appellee Wells Fargo Bank, N.A., from obtaining an 

expedited court order to foreclose on his property. Although he succeeded in 

delaying foreclosure, he was unable to withstand summary judgment. 

Farkas’s brief essentially repeats his response to Wells Fargo’s motion (and 

his objections to some of Wells Fargo’s summary-judgment evidence). Those 

arguments were properly rejected by the trial court, so they provide no basis for 

relief on appeal. The trial court’s judgment should be affirmed in its entirety. 

STATEMENT OF FACTS

Farkas’s “statement of undisputed facts” is incomplete. It also contains a 

number of inaccurate characterizations about documents in the record. 

Accordingly, Wells Fargo provides its own statement. See TEX. R. APP. P. 

38.2(1)(B). 

On January 11, 2007, Farkas executed an Account Agreement (CR:47-61) 

and a Texas Deed of Trust (CR:70-81) securing a home equity line of credit in the 

principal amount of $103,441.00. The Account Agreement and the Deed of Trust 

will be collectively referred to as the “Loan Documents.” The Loan Documents 

define the “Borrower” as “Janos Farkas” and the “Lender” as “Wells Fargo Bank, 

N.A.” (CR:47, 70.) In accordance with Texas law, the Loan Documents state that 
2 

they relate to “an extension of credit as defined by section 50(a)(6) and 50(t), 

Article XVI of the Texas Constitution.” (Id.) 

The Deed of Trust (“DOT”) securing the loan provides that “Borrower will 

be in default if (1) any payment required by the Debt Instrument or this Security 

instrument is not made when it is due . . . .” (CR:78.) In the event of a default, the 

DOT requires Wells Fargo to provide Farkas with notice before invoking remedies 

of acceleration and foreclosure. (CR:78-79.) The notice must specify: “(a) the 

default; (b) the action required to cure the default; (c) a date, not less than 30 days 

from the date the notice is given to Borrower, by which the default must be cured; 

and (d) that failure to cure the default on or before the date specified in the notice 

will result in acceleration of the sums secured by this Security Instrument and sale 

of the Property.” (CR:79.) In accordance with Texas law, the DOT also states that 

“[t]he lien evidenced by this Security Instrument may be foreclosed upon only by a 

court order.” (Id.) 

On April 21, 2011, Wells Fargo, through its foreclosure counsel (Brice, 

Vander Linden & Wernick, P.C.), sent Farkas a “Notice of Default and Intention to 

Accelerate.” (CR:87.) In accordance with the DOT, the notice states that (a) “the 

loan is in default for failure to make the regular monthly payments required by the 
3 

Note and Deed of Trust”; (b) the amount required to cure the default1 and the 

address to which payment should be made; (c) the default must be cured “within 

thirty (30) days of the date of this notice”; and (d) if the default is not cured by that 

date, “the Note will be accelerated and all sums secured by the Deed of Trust will 

be declared to be immediately due and payable.” (Id.) 

Instead of curing his default, Farkas sent a letter “request[ing] a validation of 

debt under the Fair Debt Collection Practices Act stating the owner of the debt 

(creditor) with its address.” (CR:200.) Wells Fargo provided Farkas with the 

current amount to cure the default ($19,604.23), the current amount to pay off the 

loan ($123,127.31), and the lender’s name and address. (CR:89, 203-04.) Farkas 

did not remit either amount, so on June 23, 2011, Well Fargo’s foreclosure counsel 

sent Farkas notice that the debt was being accelerated. (CR:90.) 

In September 2011, as permitted by the DOT (CR:79) and Rule 736 of the 

Texas Rules of Civil Procedure, Wells Fargo applied for an expedited “court order 

allowing foreclosure of a lien under Tex. Const. Art. XVI, Section 50(a)(6)(D).” 

(See CR:92.) But, before Wells Fargo could obtain an order, Farkas filed the 

underlying lawsuit challenging Wells Fargo’s ability to foreclose. (See CR:3.) 

Farkas’s filing of an independent lawsuit automatically stayed Wells Fargo’s Rule 

 

1

 As of March 22, 2011, the amount was $2,013.30. (CR:87.) However, the notice states that 

“the amount required to cure the default on the day you choose to pay may be greater.” (Id.) 
4 

736 proceeding, which was subsequently dismissed See TEX. R. CIV. P. 736.11(a), 

(c). 

Wells Fargo moved for traditional and no-evidence summary judgment on 

all of Farkas’s claims. (See CR:15.) Brice, Vander Linden & Wernick, P.C. 

(“Brice”), which was also named as a defendant, did the same. (CR:343.) Farkas 

filed his own motion for partial summary judgment, and attached many of the same 

documents filed in support of Wells Fargo’s motion. (See CR:173.) He also 

objected to some of Wells Fargo’s summary-judgment evidence. (CR:505.) 

After considering the motions, the responses, the pleadings, the arguments of 

counsel, and “all other matters properly before the Court,” the trial court granted 

Wells Fargo’s and Brice’s motions, denied Farkas’s motion, overruled Farkas’s 

objections to the evidence, and entered a final judgment that Farkas take nothing 

on his claims. (CR:604-05.) This appeal ensued. (CR:608.) 

SUMMARY OF THE ARGUMENT

1. Objections to Summary-Judgment Evidence: Farkas cannot cite any 

legal authorities to support his contention that the trial court abused its discretion in 

overruling groundless objections to some of Wells Fargo’s summary-judgment 

evidence. So he relies on unsupported assertions that run afoul of the following 

principles: 

 Statements in a business-records affidavit are not “hearsay”; 
5 

 A judgment cannot “turn” on “irrelevant” statements, so complaints 

about them cannot establish reversible error; 

 Statements based on personal knowledge need not be confirmed by 

documentary evidence; 

 “Inconsistencies” between the amounts required to cure a default and the 

amounts required to pay off a loan at different points of time do not require striking 

the evidence; 

 Generalized objections – unsupported by arguments based on legal 

authorities or citations to the record – are insufficient to preserve error; and 

 Conclusory assertions that unproven errors “probably resulted in an 

improper judgment” are also insufficient to preserve error. 

2. The Constitutional Claim: Farkas’s claim that Wells Fargo violated 

Article XIV, § 50(a)(6) of the Texas Constitution is premised on a false theory. 

None of the alleged “violations” relate to any constitutional requirements, so 

Farkas’s claim fails as a matter of law. The trial court’s judgment may also be 

affirmed on no-evidence grounds. 

3. The Texas Debt Collection Act Claim: Farkas failed to negate all 

grounds for summary judgment on his TDCA claim. That, by itself, requires that 

the judgment be affirmed. Farkas also waived any complaint on this issue by 

failing to provide a cognizable legal argument supported by citations to authority 
6 

and the record. Finally, even if considered, Farkas’s argument should be rejected 

as contrary to the record and unsupported by the law. 

4. The Fraudulent Lien Claim: Farkas makes little effort to salvage his 

fraudulent-lien claim. His two-page “argument” contains no citations to the 

record, no legal argument supported by authorities, and fails to negate all grounds 

for summary judgment. His argument also fails on the merits. A notice of default 

is not a “lien,” and Farkas’s hyper-technical complaints about statements in the 

notice neither constitute fraud nor caused any damages. Because his fraudulentlien claim fails as a matter of law, it comes as no surprise that Farkas cannot cite to 

any evidence to support multiple elements that were challenged below. 

In short, the judgment should be affirmed in its entirety as demonstrated 

more fully below: 

ARGUMENT

I. The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s 

Objections to Wells Fargo’s Summary-Judgment Evidence. 

Farkas reveals the weakness of his appeal by leading with an argument that 

the trial court erred in overruling objections to some of Wells Fargo’s summaryjudgment evidence. (See Br. at 9-17.) But, by simply repeating the same 

arguments the trial court rejected, Farkas fails to show how the trial court abused 

its discretion. See In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005) (reviewing 

evidentiary rulings under abuse of discretion standard). Nor do his conclusory 
7 

assertions about harm show how “the judgment turns on the particular evidence 

excluded or admitted,” as required for relief on appeal. See Tex. Dep’t of Transp. 

v. Able, 35 S.W.3d 608, 617 (Tex. 2000); TEX. R. APP. P. 44.1. Farkas’s first 

argument should be summarily rejected. 

A. The trial court did not abuse its discretion in overruling 

objections to the declaration of Michael Dolan. 

In scattershot fashion, Farkas lodges various attacks on the business-records 

declaration of Michael Dolan. (See Br. at 12-15.) None have any merit. 

Farkas first asserts that the Dolan declaration “contains inadmissible 

hearsay.” (Br. at 12.) However, “‘[h]earsay’ is a statement, other than one made 

by the declarant . . . offered in evidence to prove the truth of the matter asserted.” 

TEX. R. EVID. 801(d) (emphasis added). Statements by a declarant in a businessrecords affidavit do not fall within this definition. That is why such affidavits are a 

valid and commonly-used form of summary-judgment proof. See TEX. R. CIV. P. 

166a(c), (f). 

Unable to back up his novel theory of “hearsay” with any citation to 

authority, Farkas’s argument quickly morphs into unsupported assertions about the 

factual accuracy of two isolated statements in the affidavit. (See Br. at 12-13.) He 

first complains that Dolan’s statement that “home equity loan and lines of credit 

were ‘available through Wells Fargo Home Equity Group’ is misleading and 

irrelevant to this proceeding.” (Br. at 13 (emphasis added).) But, because the 
8 

judgment cannot “turn” on an “irrelevant” statement, Farkas’s first complaint does 

not concern reversible error. 

Farkas also asserts that there is “zero documentation”2

 to support Dolan’s 

statement that “‘Wells Fargo Home Equity’ is a division of Wells Fargo Bank, 

N.A.” (Br. at 13.) But Farkas cites no authority requiring statements based on 

personal knowledge to be supported by documentary evidence as well. To the 

contrary, the personal-knowledge requirement is satisfied when, as here, an 

affidavit (i) states that it is based on personal knowledge and the facts in it are true 

and (ii) shows the basis for the affiant’s personal knowledge. See TEX. R. CIV. P.

166a(f); Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008). 

Dolan states that he has “personal knowledge of each of the matters stated 

herein, and they are true and correct.” (CR:43.) In addition, he explains the basis 

for his knowledge: “I am employed as a Research and Mediation Manager for 

Wells Fargo Bank, N.A. (‘Wells Fargo’). I am also the custodian of the records of 

Wells Fargo. I have also personally reviewed Wells Fargo’s records regarding the 

 

2

 The record, in fact, does contain documentation to support Dolan’s statement. A letter from 

“Wells Fargo Bank, N.A. Home Equity Group” states that Farkas contacted “Wells Fargo Home 

Equity regarding [his] account.” (CR:64.) In addition, the Account Agreement identifies the 

account as a “Wells Fargo Home Equity Account.” (CR:47.) That evidence confirms the 

undisputable relationship between Wells Fargo Bank and one of its divisions, the Wells Fargo 

Home Equity Group. “A division of a corporation is not a separate legal entity but the 

corporation itself.” Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd., 328 S.W.3d 

623, 631 (Tex. App.—Eastland 2010, no pet.). Similarly, a lender and a division of the lender 

are “the same entity for all intents and purposes.” Anderson v. Nat’l City Mortg., No. 3:11-CV1687-N, 2012 WL 612562, at *1 n.1 & n.3 (N.D. Tex. Jan. 17, 2012). 
9 

mortgage debt at issue in the above-captioned lawsuit (the ‘Loan’).” (Id.) Dolan 

also states “I am familiar with Wells Fargo’s lending and mortgage servicing 

practices, including the various groups and divisions within Wells Fargo 

through which it carries out those practices.” (CR:45.) These statements 

are plainly sufficient to satisfy the applicable legal standard. See T EX. R. CIV.

P. 166a(f); Kerlin, 274 S.W.3d at 668. 

Farkas reveals nothing but desperation when he tries to question Dolan’s 

credibility. (See Br. at 13.) Dolan’s statement that he has been “employed by 

Wells Fargo and its predecessor institutions” (i.e., banks acquired by Wells Fargo 

through various mergers) for “28 years” (CR:44) is not a claim that he started 

working for Wells Fargo more than 160 years ago, as Farkas tries to suggest. (Br. 

at 13.) Moreover, nothing in Texas law requires a business-records custodian to 

specify the exact number of years he has worked for his employer. See TEX. R.

CIV. P. 166a(f); Kerlin, 274 S.W.3d at 668. Thus, contrary to Farkas’s belief, the 

absence of such information does not cast any doubt on Dolan’s personal 

knowledge. 

The Dallas Court of Appeals recently rejected similar challenges to a similar 

affidavit in a similar appeal filed by Farkas. Farkas v. Aurora Loan Servs., LLC, 

No. 05-12-01095-CV, 2013 WL 6198344, at *3 (Tex. App.—Dallas Nov. 26, 

2013, pet. denied). There, as here, “Farkas d[id] not cite to any evidence in the 
10 

record controverting the appellees’ evidence.” Id. There, as here, his 

“unsupported assertions that [an] affidavit is factually inaccurate [were] 

insufficient” to show reversible error. Id. And there, as here, the trial court 

properly considered the challenged affidavit as summary-judgment evidence. See 

id. 

Farkas demonstrates utter confusion in arguing that Dolan’s declaration 

contains “inconsistencies when compared to . . . other [summary-judgment] 

evidence.” (See Br. at 14 (emphasis added).) The alleged “inconsistencies” are 

simply differences between the “amount required to cure Plaintiff’s default” on 

March 22, 2011 ($2,013.30) versus June 20, 2011 ($19,604.23), and differences 

between those amounts and the amount required to pay off the entire loan

($123,127.31 as of June 20, 2011). (Compare CR:45, with CR:87, 203, 204.) 

Farkas appears to assume that the “amounts owed” should have remained 

constant over time. But he ignores the distinction amounts to cure the default and 

amounts to pay off the loan. He also ignores the impact of interest and other 

expenses (such as property taxes and attorneys’ fees related to foreclosure 

proceedings) that accrue over time. In short, the longer Farkas waited to cure his 

default, the more expensive any available cure became. That Farkas would point 

to these alleged “inconsistencies” as evidence of reversible error only confirms that 

he has no viable grounds to challenge the trial court’s ruling. 
11 

B. Farkas waived any complaint about the remaining declarations. 

Resorting to hyperbole, Farkas transforms the alleged “inconsistencies” into 

“wildly varying accounts as to the amounts allegedly owed.” (Br. at 15.) Then, 

without any citation to the record or supporting legal authorities, he claims that 

“[t]he conflicting portions of all of these declarations should be struck due to 

inconsistencies.” (Id. (emphasis added).3

) This two-sentence “argument” has 

multiple defects, any one of which is fatal: 

First, Farkas’s generalized objection to “all of these declarations” (Br. at 15) 

“fails to identify specific objectionable portions of the [declarations] or explain 

why any particular passages should be disregarded as [conflicting].” See 

Seaprints, Inc. v. Cadleway Props., Inc., 446 S.W.3d 434, 442 (Tex. App.—

Houston [1st Dist.] 2014, no pet.); see also Cornish v. Washington Mut. Bank, FA, 

No. 02-06-400-CV, 2007 WL 2285478, at *3 (Tex. App.—Fort Worth Aug. 9, 

2007, pet. denied) (“the part[y] objecting to an affidavit must identify the specific 

statements in the affidavit that are objectionable and state why they are 

objectionable”). Farkas’s complaints about unidentified but allegedly “conflicting 

portions” of the declarations are “inadequate” and, therefore, insufficient to 

preserve error. See Seaprints, 446 S.W.3d at 442. 

 

3

 This statement appears to be referencing the Declarations of Sammy Hooda (CR:84) and B. 

David L. Foster (CR:150). 
12 

Second, the declarations do not contain any “conflicting” statements. 

Although Farkas complains about “wildly varying accounts as to amounts 

allegedly owed,” neither the Hooda nor the Foster declaration includes any

statement about amounts allegedly owed. (See CR:84-86, 150-51.) Only the 

Dolan declaration contains such statements, so there is not conflict between “all of 

these declarations.” Moreover, the amounts referenced in the Dolan declaration, 

which states that “[t]he amount required to cure Plaintiff’s default on the Loan as 

of March 22, 2011 was $2,013.30” and “[t]he amount required to cure Plaintiff’s 

default on the Loan as of July 25, 2011 was $4,002.64” (CR:45) are consistent with 

documentary evidence in the summary-judgment record. (CR:87&148; CR:69.) 

Third, although the documentary evidence attached to the declarations 

shows variations in the amounts required to cure the default and the amounts 

required to pay off the loan at different times, those variations have already been 

explained. Farkas’s unfounded assumption that the “amounts owed” should have 

remained constant over time is unsupported by the record and defies common 

sense. 

C. Conclusory assertions cannot establish harm. 

Recognizing his burden to show that the alleged error “probably resulted in 

an improper judgment,” Farkas asserts that, “[i]f the Declaration of Michael Dolan 

were struck, Wells_Bank’s MSJ would have to be denied.” (Br. at 15.) But Farkas 
13 

later concedes that the ruling on his objections “is not necessary nor dispositive of 

any ruling on Wells_Bank’s and Brice’s summary judgment motions concerning 

TDCA claims.” (Br. at 27.) And he never explains why the ruling is “necessary 

and dispositive” of his other claims. Nor could he. 

Wells Fargo presented multiple grounds for traditional and no-evidence 

summary judgment. (See CR:19-40.) Obviously, Wells Fargo did not have to 

present any evidence to prevail on its no-evidence grounds. For that reason alone, 

the judgment does not “turn” on the evidentiary rulings and, therefore, Farkas 

cannot show that the trial court’s rulings constitutes reversible error. 

In addition, Farkas cannot show that any of the traditional grounds require 

proof of the allegedly “disputed” (and entirely immaterial) facts over which Farkas 

obsesses. As explained more fully below, they do not. A judgment cannot turn on 

immaterial facts. 

Finally, even if the Dolan affidavit were stricken in its entirety, evidence 

attached to his affidavit is duplicated elsewhere in the record.4

 Because those 

documents are sufficient to support Wells Fargo’s traditional grounds, Farkas 

cannot show that striking the Dolan declaration would have had any effect on the 

outcome. 

 

4

 For example, the Account Agreement appears at CR:116 and CR:272, and documents 

establishing various reinstatement and payoff amounts appear at CR:140-43 and 198-213. 
14 

To sum up: Farkas has not shown that the trial court abused its discretion by 

denying his objections to some of Wells Fargo’s summary-judgment evidence. 

Nor has Farkas shown how the alleged error was harmful. His complaints about 

the trial court’s evidentiary rulings provide no basis for reversal. 

II. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Claim for Violations of the Texas Constitution. 

Farkas’s theory that Wells Fargo violated the Constitution by breaching 

terms in the Loan Documents (Br. at 17-23) is pure fiction. The alleged 

“violations” do not involve conduct that is regulated by the Constitution, so they 

could never support a constitutional claim. Nor is there any evidence to support 

Farkas’s repeated assertions that Wells Fargo failed to comply with the Loan 

Documents. False assertions about imaginary “violations” cast no doubt on the 

trial court’s judgment. 

A. The requirements of § 50(a)(6) only apply to “new extensions of 

credit.” 

“[H]ome equity loans are subject to the requirements of Article XVI, Section 

50 of the Texas Constitution.” Sims v. Carrington Mortg. Servs., L.L.C., 440 

S.W.3d 10, 11 (Tex. 2014). “Section 50(a)(6), in its totality, establishes the terms 

and conditions a home-equity lender must satisfy to make a valid loan.” Stringer 

v. Cendant Mortg. Corp., 23 S.W.3d 353, 356 (Tex. 2000). The detailed 
15 

constitutional requirements, however, only apply to “new extension[s] of credit.” 

Sims, 440 S.W.3d at 17. 

The term “extension of credit” refers to “‘direct or indirect advances of 

money . . . to a person that are conditioned on the obligation of the person to repay 

. . . .’” Id. at 16 n.22 (quoting TEX. FIN. CODE § 31.002(a)(34)). If a transaction 

does “not involve the satisfaction or replacement of the original note, an 

advancement of new funds, or an increase in the obligations created by the original 

note,” then “it is not a new extension of credit that must meet the requirements of 

Section 50.” Id. at 17. 

If, in making a new extension of credit, a lender fails to comply with section 

50, it has 60 days to cure its failure by taking specified actions that include 

returning any overcharges paid by the owner, sending written confirmation that the 

loan terms (e.g., interest rates) are only valid to the extent they comply with 

constitutional requirements, or modifying the loan agreement to comply with 

constitutional requirements. See TEX. CONST. art. XVI, § 50(a)(6)(Q)(x). Because 

the constitutional requirements only relate to new extensions of credit, the methods 

of cure necessarily involve taking actions to ensure that the extension of credit at 

issue, i.e., the initial loan agreement, complies with the law. See id. If a lender 

“fails to correct [its] failure to comply not later than the 60th day after the date the 

lender or holder is notified by the borrower of the lender’s failure to comply,” then 
16 

the lender or holder “shall forfeit all principal and interest of the extension of 

credit.” Id. 

For example, § 50(a)(6)(I) “prohibits home-equity loans from being ‘secured 

by homestead property designated for agricultural use.’” LaSalle Bank Nat’l Ass’n 

v. White, 246 S.W.3d 616, 619 (Tex. 2007) (quoting TEX. CONST. art. XVI, § 

50(a)(6)(I)). Thus, a home-equity loan secured by property designated for 

agricultural use violates the Constitution and is subject to forfeiture. Id. 

The Constitution also “requires that a home equity note be secured by a lien 

that may only be foreclosed by court order.” Wells Fargo Bank, N.A. v. Robinson, 

391 S.W.3d 590, 595 (Tex. App.—Dallas 2012, no pet.) (discussing TEX. CONST. 

art. XVI, § 50(a)(6)(D)). However, as long as a deed of trust requires a court order 

for foreclosure, it complies with constitutional requirements. Id. In cases 

involving complaints about how foreclosure was conducted, the constitutional 

remedy of forfeiture is not appropriate. See id. 

In short, “forfeiture is only available for violations of constitutionally 

mandated provisions of the loan documents.” Vincent v. Bank of Am., N.A., 109 

S.W.3d 856, 862 (Tex. App.—Dallas 2003, pet. denied). “A borrower’s recourse 

for a lender’s failure to abide by the terms of his loan agreement is to assert 

traditional tort and breach of contract causes of action,” not claims for violations of 

Article XVI, § 50(a)(6) of the Texas Constitution. Robinson, 391 S.W.3d at 595. 
17 

B. Farkas’s constitutional claims fail, as a matter of law, because the 

alleged “breaches” of the DOT are not alleged constitutional

violations. 

The fatal problem that condemns Farkas’s constitutional claim is that Farkas 

does not complain about any alleged violations of constitutional requirements. 

Instead, he repeatedly asserts that Wells Fargo violated the DOT. (See Br. at 17-

21.) However, as a matter of law, alleged breaches of contract are not actionable 

under the Constitution. See Robinson, 391 S.W.3d at 595. Moreover, Farkas’s 

hyper-technical complaints about statements in a notice of default do not violate 

any terms in the DOT, much less rise to the level of a constitutional violation. 

1. Farkas has not alleged any constitutional violation. 

Farkas has never challenged the validity of the Loan Documents. Nor has he 

ever taken the position that Wells Fargo failed to satisfy any of the constitutional 

requirements to make a valid loan. Instead, he bases his “constitutional” claim on 

allegations that the notice of default refers to a “wrong” loan number, mentions 

“non-judicial foreclosure,” and demands that Farkas cure his default “within 30 

days” of the notice rather than “not less than 30 days” from the notice. (Br. at 19-

20.) There are two fundamental problems: 

(i) Farkas’s complaints are groundless.

The loan number: Farkas repeatedly asserts that the notice references the 

“wrong” loan number. However, the summary-judgment evidence shows that the 
18 

“Loan Number” on the notice of default (0999617061) is an “internal reference 

number” used by Wells Fargo and Brice for their own, internal purposes. (CR:46, 

86.) The undisputed fact that the notice of default makes no reference to either the 

“Account Number” (650-650-4349999-1XXX) or the “reference Number” 

(20063367500009) shown on the DOT is immaterial, because neither the 

Constitution nor the DOT require a notice of default to include any reference to a 

loan number. 

The reference to “non-judicial foreclosure”: The Texas Constitution 

requires a lien on a home-equity loan to “be foreclosed upon only be a court 

order.” TEX. CONST. art. XVI, § 50(a)(6)(D) (emphasis added). From that 

language, Farkas assumes that the reference to a “court order” means a lender is 

required to pursue a “judicial foreclosure.” His assumption is false. 

“Rule 736 [of the Texas Rules of Civil Procedure] provides the procedure 

for obtaining a court order, when required, to allow foreclosure of a lien containing 

a power of sale in the security instrument . . . securing . . . a home equity loan, 

reverse mortgage, or home equity line of credit under article XVI, sections 

50(a)(6), 50(k), and 50(t) of the Texas Constitution.” TEX. R. CIV. P. 735.1. A 

Rule 736 court order permitting a non-judicial foreclosure is not a judicial 

foreclosure. See TEX. R. CIV. P. 735.3; see also Steptoe v. JPMorgan Chase Bank, 

N.A., No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston [1st 
19 

Dist.] Mar. 19, 2015, no pet. h.) (recognizing distinction between judicial 

foreclosure and Rule 736 proceeding to obtain court order “to proceed with a nonjudicial foreclosure”). When, as here,5

 the “home-equity lender has contracted for 

the right of non-judicial foreclosure under a power of sale provision, [it] may 

choose to pursue the special procedure found in Rule 736 to obtain an order 

allowing it to proceed with a non-judicial foreclosure under the Texas Property 

Code.” See Steptoe, 2015 WL 1263128, at *3. That is exactly what Wells Fargo 

did when it initiated a Rule 736 proceeding to obtain the requisite court order 

permitting non-judicial foreclosure. (See CR:92.) But Farkas obstructed Wells 

Fargo’s efforts by filing this lawsuit and complaining about non-existent 

constitutional “violations.” (See CR:3.) 

The deadline: Farkas’s hyper-technical suggestion that requiring payment 

within 30 days violates the DOT provision requiring payment “not less than 30 

days” from notice is semantic nonsense. (See Br. at 20.) Because a 30-day 

deadline is both “within” 30 days of notice and “not less than” 30 days of notice, it 

complies with the DOT as a matter of law. 

 

5

 The DOT provides: “The lien evidence by this Security Instrument may be foreclosed upon 

only by a court order. Lender may, at its option, follow any rules of civil procedure promulgated 

by the Texas Supreme Court for expedited foreclosure proceedings related to the foreclosure of 

liens under Section 50(a)(6), Article XVI of the Texas Constitution . . . .” (CR:79.) 
20 

(ii) Farkas’s complaints are not actionable under the 

Constitution. 

As explained, the Constitution focuses on the terms of the initial loan 

agreement, not the manner in which a lender may enforce that agreement in the 

event of a borrower’s default. See TEX. CONST. art. XVI, § 50(a)(6); Sims, 440 

S.W.3d at 16 n.22. Thus, there is no language in § 50(a)(6) that pertains to notices 

of default, much less any language that: 

 requires a lender to include any particular type of “loan number” on the 

notice (or prohibits foreclosure counsel from including its own internal 

reference number on the notice); 

 requires a lender to specify the type of foreclosure remedy that will be 

conducted (or prohibits a lender from stating that it was asked to pursue a 

“non-judicial foreclosure in accordance with the terms of the Note and 

the Deed of Trust and applicable law”); or 

 requires a lender to demand payment “not less than 30 days from the date 

notice [of default] is given” (or prohibits a lender from demanding 

payment “within 30 days of the date of this notice”). 

(Contra Br. at 19-22.) 

“When interpreting the Texas Constitution,” the Texas Supreme Court 

“‘rel[ies] heavily on its literal text and must give effect to its plain language.’” 

LaSalle Bank, 246 S.W.3d at 619 (quoting Stringer, 23 S.W.3d at 355). Applying 

that principle, the Court “decline[s] to engraft [unwritten] prohibition[s] onto the 

constitutional language.” Id. This Court should do the same. Because nothing in 

the Constitution prohibited Wells Fargo from referencing an internal loan number, 
21 

pursuing non-judicial foreclosure, or demanding payment within 30 days, Farkas’s 

complaints about the notice of default cannot support a constitutional claim. 

2. Farkas has not even alleged facts that would support a 

claim for breach of contract. 

Unable to identify any constitutional requirement that was potentially 

violated, Farkas asserts that Wells Fargo failed to comply with the DOT. (See Br. 

at 17-21.) That unpleaded claim is not at issue. In any event, the notice of default 

establishes – on its face – that it includes all information required by the DOT. 

(Compare CR:79 (DOT requirements), with CR:87 (notice).) Contrary to Farkas’s 

apparent belief, nothing in the DOT: 

 required Wells Fargo to include any particular type of “loan number” on 

its notice of default (or prohibited foreclosure counsel from including its 

own internal reference number on the notice); 

 required Wells Fargo to specify the type of foreclosure remedy that 

would be conducted (or prohibited foreclosure counsel from making a 

reference to a “non-judicial foreclosure in accordance with the terms of 

the Note and the Deed of Trust and applicable law”); or 

 required Wells Fargo to demand payment “not less than 30 days from 

the date notice [of default] is given” (or prohibited foreclosure counsel 

from demanding payment “within 30 days” of the date the notice of 

default was given. 

Consequently, Wells Fargo (through foreclosure counsel) could not have 

“breached” the DOT by referring to an internal loan number, stating that it had 

been “requested to pursue a non-judicial foreclosure,” or demanding payment 

“within 30 days.” (CR:87.) As the trial court correctly concluded, Farkas’s faulty 
22 

constitutional theory and groundless allegations are insufficient to survive 

summary judgment. 

C. The trial court’s judgment may also be affirmed on no-evidence 

grounds. 

Implicitly recognizing his burden to negate all grounds for summary 

judgment,6

 Farkas falsely contends that “Wells-Bank fails to challenge specific 

element of complaint regarding liability under TEX. CONST. ART. XVI, 

§50(a)(6)(Q)(x).” (Br. at 23.) But again, Farkas fails to support his “argument” 

with any citation to legal authorities or the record. And again, his “argument” is 

premised on an invalid theory of liability. 

Section 50(a)(6)(Q)(x) is the provision that specifies methods to cure a 

failure to comply with requirements applicable to new extensions of credit. None 

of those methods have any application here, because Farkas has never complained 

that the initial extension of credit violated section 50. Although he contends that 

“there is no support” for an argument that “the constitutional obligation to fulfill 

the terms of extension of credit” only applies to “origination of the extension of 

credit” (see Br. at 22), he ignores the Texas Supreme Court’s recent decision in 

 

6

 This Court has repeatedly recognized that, “[w]hen the trial court does not specify the basis for 

its summary judgment, the appealing party must show it is error to base it on any ground asserted 

in the motion.” Pickett v. Tex. Mut. Ins. Co., 239 S.W.3d 826, 840 (Tex. App.—Austin 2007, no 

pet.) (citing Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995)); accord First Am. 

Title Ins. Co. v. Strayhorn, 169 S.W.3d 298, 303 (Tex. App.—Austin 2005), aff’d 258 S.W.3d 

627 (Tex. 2008); Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 160 S.W.3d 

657, 671 (Tex. App.—Austin 2005, no pet.). If the appellant fails to meet this burden, “the 

summary judgment must be affirmed.” Voice of the Cornerstone, 160 S.W.3d at 671. 
23 

Sims, 440 S.W.3d at 17. That decision makes it amply clear that the requirements 

in section 50 only apply to “new extensions of credit.” Id. Farkas thus spins in 

circles when he asserts that “Wells_Bank had ample opportunity to cure” but 

“chose not to cure.” (See Br. at 21.) Absent a violation, there is nothing to cure. 

Farkas is also wrong in asserting that Wells Fargo did not allege specific noevidence grounds relating to his faulty constitutional theory. In its motion for 

summary judgment, Wells Fargo argued: 

Plaintiff has no evidence that the loan was invalid at the time of 

origination or somehow later became invalid. Moreover, Plaintiff has 

no evidence that any alleged violation was not cured, as no nonjudicial foreclosure sale occurred. 

(CR:37.) 

Farkas cannot overcome his failure to allege and present evidence of a 

constitutional violation by asserting that Wells Fargo failed to cure an imaginary 

violation. Farkas presented no evidence of violation in response to Wells Fargo’s 

motion in the trial court, and he cites none on appeal. For this additional reason, 

the trial court’s summary judgment on the constitutional claim should be affirmed. 

To sum up: Farkas has never identified any constitutional requirement that 

was allegedly violated. When, as here, the terms of the original extension of credit 

comply with the Constitution, there is no constitutional violation. See Sims, 440 

S.W.3d at 17; Robinson, 391 S.W.3d at 595. As the trial court correctly concluded, 

Farkas’s “constitutional” claim fails as a matter of law. (See CR:604-05.) 
24 

III. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Claim for Violations of the Texas Debt Collection Act. 

Farkas’s four-page issue on his Texas Debt Collection Act claim wrongly 

assumes that the only dispute is “over whether Wells_Bank’s actions were 

wrongful.” (See Br. at 24.) To the contrary, Wells Fargo moved for traditional 

summary judgment on two grounds: (i) the “factual allegations” on which Plaintiff 

bases his TDCA claim are conclusively disproven by the summary judgment 

evidence and, therefore, “fail as a matter of law”; and (ii) “Plaintiff’s TDCA claim 

is barred by the economic loss rule.” (CR:28-29.) In addition, Wells Fargo 

moved for no-evidence summary judgment on multiple grounds, including two that 

are particularly relevant on appeal: (i) “Plaintiff has no evidence that Wells Fargo 

threatened to take action prohibited by law”; and (ii) “Plaintiff has no evidence that 

the alleged violations of the TDCA caused him damages.” (CR:37-38.) 

Farkas attempts to show “error” by relying on conclusory assertions that 

Wells Fargo “threatened an act prohibited by law.” (Br. at 24.) He also contends 

that there is “ample evidence of the conduct actionable under [the TDCA].” (Br. at 

25.) But there are multiple, fatal problems with his approach. 

First, when, as here, the appellant fails to negate all grounds for summary 

judgment, “the summary judgment must be affirmed.” Voice of the Cornerstone, 

160 S.W.3d at 671. 
25 

Second, Rule 38.1(i) of the Texas Rules of Appellate Procedure requires an 

appellant’s brief to “contain a clear and concise argument for the contentions 

made, with appropriate citations to authorities and to the record.” TEX. R. APP. P.

38.1(i). Farkas’s “argument” on the TDCA claim contains no citations to the 

record – and no meaningful citations to any legal authorities.7

 When, as here, a 

brief fails to comply with the requirements of Rule 38.1(i), a party waives the 

appellate points intended for the court’s consideration. Rockwall Commons 

Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 331 S.W.3d 500, 509 (Tex. App.—El 

Paso 2010, no pet.). 

Third, Farkas’s conclusory “argument” is contradicted by the record and the 

law. His TDCA claim appears to be premised on the same unsupported allegations 

he used in trying to salvage his constitutional claim – allegations that (i) “Wells 

Fargo Bank, N.A.” “misrepresent[ed]” itself as “Wells Fargo Home Equity 

Group”; (ii) Wells Fargo “misrepresented” the amount of Farkas’s debt; and (iii) 

Wells Fargo “threatened non-judicial foreclosure of the property.” (See Br. at 26.) 

The first two allegations are contradicted by the record, which may be why Farkas 

omits any citations to it: 

 

7

 He does make generic references to “Tex. R. Civ. P. 166a(c)” and “TEX. FIN. CODE § 392.001, 

et seq.” (See Br. at 25.) 
26 

(i) “‘Wells Fargo Home Equity’ is a division of ‘Wells Fargo Bank, N.A.’ 

and is not a separate legal entity.” (CR:45; see also CR:64 (letter from “Wells 

Fargo Bank, N.A.; Home Equity Group”).) There is no competent evidence to the 

contrary. Unsupported assertions are insufficient for relief on appeal. Liberty Mut. 

Ins. Co. v. Griesing, 150 S.W.3d 640, 648 (Tex. App.—Austin 2004, pet. dism’d 

w.o.j.). 

(ii) The variations in “the amount of debt” reflect differences between the 

amounts required to cure Farkas’s default versus the amounts requires to pay off 

Farkas’s entire loan. (See, e.g., CR:45, 62-63, 87, 203-06.) These differing 

amounts also varied over time. (See id.) There is no evidence to show support 

Farkas’s theory that these variations somehow amount to “misrepresentations.” 

As explained (supra at 18-19), Texas law expressly permits a lender “who 

has contracted for the right of non-judicial foreclosure under a power of sale 

provision [to] choose to pursue the special procedure found in Rule 736 to obtain 

an order allowing it to proceed with a non-judicial foreclosure . . . .” See Steptoe, 

2015 WL 1263128, at *3. Thus, the statement that foreclosure counsel “has been 

requested to pursue non-judicial foreclosure process in accordance with the terms 

of the Note and Deed of Trust and applicable law” (CR:87 (emphasis added)) is, as 

a matter of law, not a threat to do something in violation of the law. 
27 

Fourth, because the “threatened” foreclosure never occurred, Farkas cannot 

cite any evidence showing that he sustained actual damages as a result of the 

alleged violation, as required to recover on a TDCA claim. See TEX. FIN. CODE § 

392.403(a)(2). 

For any or all of these reasons, the trial court’s summary judgment that 

Farkas take nothing on his TDCA claim should be affirmed. 

IV. The Trial Court Did Not Err in Granting Summary Judgment on 

Farkas’s Fraudulent-Lien Claim. 

Farkas’s final argument is largely pasted from his response to Wells Fargo’s 

motion for summary judgment. (Compare Br. at 29, with CR:555.) As a result, it 

suffers from some of the same fatal defects that plague his other arguments: it 

contains no citations to the record, and it contains no argument, supported by 

citations to legal authorities, negating all grounds for summary judgment. Those 

defects, alone, are enough to condemn his point. But there are additional 

problems, the most fundamental of which is that Farkas’s argument is premised on 

another false theory. In short, he assumes that any document relating to a homeequity loan (e.g., a notice of default) is a “lien” and, therefore, any alleged 

“misrepresentation” in the “lien” (e.g., a reference to the “wrong” loan number) 

makes the lien “fraudulent.” It is hardly surprising that he cites no legal authority 

to support this remarkable proposition. 
28 

Under Chapter 12 of the Texas Civil Practice and Remedies Code, a “‘[l]ien’ 

means a claim in property for the payment of a debt and includes a security 

interest.” TEX. CIV. PRAC. & REM. CODE § 12.001(d). In the mortgage context, a 

deed of trust is a lien; a notice that a borrower is in default is not. See Lassberg v. 

Barrett Daffin Frappier Turner & Engel, L.L.P., No. 4:13-CV-577, 2015 WL 

123756, at *5 (E.D. Tex. Jan. 8, 2015); Jaimes v. Fed. Nat’l Mortg. Ass’n, 930 

F.Supp.2d 692, 697 (W.D. Tex. 2013)); see also Jones v. JP Morgan Chase Bank, 

N.A., No. 4:13-CV-456, 2014 WL 2996673, at *8 (E.D. Tex. July 3, 2014) 

(agreeing that “the assignment, appointment of substitute trustee, and foreclosure 

notices are not liens, and section 12.002 is not applicable to this case.”); Perdomo 

v. Fed. Nat’l Mortg. Ass’n, No. 3:11-CV-734-M, 2013 WL 1123629, at *5 (N.D. 

Tex. Mar. 18, 2013) (collecting cases holding that an a lender’s use of an 

assignment, notice of foreclosure, or substitute trustee’s deed are not actionable 

under Chapter 12); but see Golden v. Wells Fargo Bank, N.A., 557 Fed. App’x 323, 

327 (5th Cir. Feb. 20, 2014) (unpublished) (recognizing a split in authority as to 

“whether a document assigning a deed of trust constitutes a ‘lien or claim’ under 

Section 12.002,” and noting that the “majority of federal district courts have held 

that a document assigning a deed of trust does not qualify as a ‘lien or claim’ under 

Section 12.002”) (citations omitted).8

 

 

8

 As this Court has recognized: “Federal authority is persuasive here because a great amount of 
29 

The statute further provides, in relevant part, that: 

A person may not make, present, or use a document or other record 

with: 

(1) knowledge that the document or other record is a fraudulent court 

record or a fraudulent lien or claim against real or personal property or 

an interest in real or personal property; 

(2) intent that the document or other record be given the same legal 

effect as a court record or document . . . evidencing a valid lien or 

claim against real or personal property or an interest in real or 

personal property; and 

(3) intent to cause another person to suffer . . . financial injury . . . . 

Id., § 12.002(a). 

Without any citation to the record, Farkas accuses Wells Fargo of 

“shirk[ing]” its “obligation to disprove an element” of Farkas’s claim. (See Br. at 

29.) But Wells Fargo’s motion set forth several reasons – all supported by 

citations to legal authorities – why Farkas’s fraudulent-lien claim fails as a matter 

of law. (See CR:30-34.) Any one of those grounds is a sufficient basis upon 

which to uphold the judgment. Farkas negates none, and that is fatal. See Voice of 

the Cornerstone, 160 S.W.3d at 671. 

As in the trial court, Farkas has no answer to Wells Fargo’s arguments that, 

as a matter of law, complaints about documents used to foreclose on a lien are not 

 

home-mortgage litigation in Texas is tried in its federal courts, applying Texas foreclosure law.” 

Bierwirth v. BAC Home Loans Servicing, L.P., No. 03-11-00644-CV, 2012 WL 3793190, at *1 

n.3 (Tex. App.—Austin Aug. 30, 2012, pet. denied) (mem. op.). 
30 

actionable under Chapter 12 if the underlying note and deed of trust are valid. (See

CR:555 (citing authorities).) So he attempts to divert the Court’s attention with 

assertions that “the statute does not require recordation of a document but rather 

merely making, presenting, or using the document,” and that “[e]ven a lis pendens 

is actionable under TEX. CIV. PRAC. & REM. CODE § 12.002.” (Br. at 29.) But 

those assertions are meaningless when, as here, the documents that allegedly 

provide the basis for a Chapter 12 claim do not falsely “evidenc[e] a valid lien or 

claim against real or personal property.” See TEX. CIV. PRAC. & REM. CODE

§ 12.002(a)(2). Because Farkas does not contest the validity of the underlying note 

or DOT, his Chapter 12 claim fails as a matter of law. Marsh v. JPMorgan Chase 

Bank, N.A., 888 F. Supp. 2d 805, 813 (W.D. Tex. 2012). 

Farkas also fails to negate Wells Fargo’s no-evidence grounds for summary 

judgment. Assertions about burden-shifting are no substitutes for evidence. And, 

as in the trial court, Farkas cannot cite any evidence that even remotely suggests: 

 “a fraudulent lien or claim [was] made, presented, or used by Defendant”; 

 “Defendant had knowledge that a lien or claim made, presented, or used 

was fraudulent”; 

 “Defendant made, presented, or used a fraudulent lien or claim with 

intent that it be given the same legal effect as a valid lien or claim”; or 
31 

 “Defendant made, presented, or used a fraudulent lien or claim with 

intent to cause Plaintiff injury.” 

(CR:38-39.) 

There is no such evidence because Farkas’s fraudulent-lien claim is 

premised on a false theory. For any or all of the above reasons, the trial court’s 

summary judgment on the fraudulent-lien claim should be affirmed. 

PRAYER

For these reasons, Appellee Wells Fargo Bank, N.A. prays that the trial 

court’s take-nothing judgment be affirmed in its entirety. Wells Fargo also prays 

for any additional relief to which it may be entitled. 

Respectfully submitted, 

LOCKE LORD LLP 

By: /s/ Susan A. Kidwell 

Susan A. Kidwell 

 State Bar No. 24032626 

 skidwell@lockelord.com 

B. David L. Foster 

 State Bar No. 24031555 

 dfoster@lockelord.com

John W. Ellis 

 State Bar No. 24078473 

 jellis@lockelord.com

LOCKE LORD LLP 

600 Congress Avenue, Suite 2200 

Austin, Texas 78701 

Telephone: (512) 305-4700 

Facsimile: (512) 305-4800 
32 

Robert T. Mowrey 

 State Bar No. 14607500 

 rmowrey@lockelord.com

LOCKE LORD LLP 

2200 Ross Avenue, Suite 2200 

Dallas, Texas 75201 

Telephone: (214) 740-8000 

Facsimile: (214) 740-8800 

COUNSEL FOR APPELLEE WELLS FARGO 

BANK, N.A. 
33 

CERTIFICATE OF COMPLIANCE

I certify that the foregoing Brief of Appellee Wells Fargo Bank, N.A. 

contains 7, 265 words (excluding the sections excepted under Texas Rule of 

Appellate Procedure 9.4(i)(1)). 

 /s/ Susan A. Kidwell 

 Susan A. Kidwell 

CERTIFICATE OF SERVICE

I certify that on April 20, 2015 a true and correct copy of the foregoing was 

served by EfileTx.gov upon the following: 

Mr. William D. Davis 

bdavis@capital-ip.com

DAVIS & ASSOCIATES

P. O. Box 1093 

Dripping Springs, Texas 78620 

Counsel for Appellant Janos 

Farkas 

Mr. Luke Madole 

luke.madole@buckleymadole.com

BUCKLEY MADOLE, P.C. 

14841 Dallas Parkway, Suite 425 

Dallas, Texas 75254 

Counsel for Appellee Brice, Vander 

Linden & Wernick, P.C. (n/k/a Buckley 

Madole, P.C. 

 /s/ Susan A. Kidwell 

Susan A. Kidwell
HYPERLINKED MATERIAL
43

CAUSE NO. D-1-GN-11-003692 

JANOS FARKAS, 

Plaintiff, 

§ 

§ 

§ 

§ 

IN THE DISTRICT COURT OF 

V. TRAVIS COUNTY, TEXAS 

§ 

WELLS FARGO BANK, N.A. AND BRICE, § 

VANDER LINDEN & WERNICK, P.C., § 

Defendants. § 201 ST JUDICIAL DISTRICT 

DECLARATION OF MICHAEL DOLAN 

STATE OF CALIFORNIA § 

§ 

COUNTY OF LOS ANGELES § 

I, Michael Dolan, hereby declare the following: 

1. "I am of sound mind, over the age of twenty-one (21) years, and capable of 

making this Declaration. I am fully competent to testify to the matters stated herein. I have 

personal knowledge of each of the matters stated herein, and they are true and correct. 

2. I am employed as a Research and Mediation Manager for Wells Fargo Bank, N.A. 

("Wells Fargo"). I am also a custodian of the records of Wells Fargo. I have also personally 

reviewed Wells Fargo's records regarding the mortgage debt at issue in the above-captioned 

lawsuit (the "Loan"). 

3. The Loan Records attached hereto are kept by Wells Fargo in the regular course 

of business, and it was the regular course of business of Wells Fargo for an employee or 

representative of Wells Fargo, with knowledge of the act, event, condition, opinion, or diagnosis 

recorded to make the records or to transmit information thereof to be included in such records; 

and the records were made at or near the time or reasonably soon thereafter. 

EXHIBIT 

1 PAGEl OF4 

AUS:0567447 /00358:551946v2 

DECLARATION OF MICHAEL DOLAN 
44

4. Attached hereto and incorporated by reference, are true and correct copies of the 

following records. 

• Exhibit 1-A is a true and correct copy of the Wells Fargo Home Equity Account 

Agreement and Disclosure Statement executed on or about January 11, 2007 by Janos 

Farkas. 

• Exhibit 1-B is a true and correct copy of the Reinstatement Quote for the Loan at 

issue in this suit that is good through November 1, 2013. 

• Exhibit 1-C is a true and correct copy of the Payoff Statement for the Loan at issue 

in this suit that is good through November 1, 2013. 

• Exhibit 1-D is a true and correct copy of a letter dated February 7, 2011, sent to 

Plaintiff Janos Farkas concerning the Loan at issue in this suit. 

• Exhibit 1-E is a true and correct copy of relevant portions of Wells Fargo's internal 

loan notes concerning the Loan at issue in this dispute. 

5. The attached records are the originals or exact duplicates of the originals. 

6. As a Research and Mediation Manager for Wells Fargo Bank, N.A., part of my 

job responsibilities include researching the facts of mortgage loans associated with litigation for 

which Wells Fargo acts or acted as the mortgagee and/or mortgage servicer. I have gained 

personal knowledge of the facts stated herein through my experience in the mortgage industry, 

my job duties and responsibilities, my personal investigation, and my review of the Loan 

Records. Prior to serving as a Research and Mediation Manager for Wells Fargo, I have been 

employed by Wells Fargo and its predecessor institutions and held various positions, including 

the position of vice president in charge of portfolio retention and operations analyst. During my 

tenure as vice president of the portfolio and retention group, I managed a team that included all 

of the loan servicing functions of the company. During my 33 years of experience in the 

mortgage industry, including 28 years as an employee of Wells Fargo and its predecessor 

institutions, I have created, reviewed, and analyzed hundreds of loan records, including 

DECLARATION OF MICHAEL DOLAN PAGE20F4 

AUS:0567447/00358:551946v2 
45

amortization schedules to determine total principal and interest payments owed based on the 

terms of the loan. I am familiar with Wells Fargo's lending and mortgage servicing practices, 

including the various groups and divisions within Wells Fargo through which it carries out those 

practices. I am also familiar with Wells Fargo's accounting systems and methods of calculating 

and loan payoff and reinstatement quotes. I am familiar with Wells Fargo's record keeping 

system. I have had access to and reviewed various corporate and business records of Wells 

Fargo, and have had the opportunity to review the business records and account information 

related specifically to the Loan at issue in this case. All statements made herein are true and 

correct and based upon my personal knowledge. 

7. The Loan Records reflect that Wells Fargo Bank, N.A. began acting as the Loan's 

mortgage servicer on or around January 11, 2007 and continues to be the mortgage servicer. 

8. "Wells Fargo Home Equity" is a division of"Wells Fargo Bank, N.A." and is not 

a separate legal entity. Home equity loans and lines of credit were available through Wells 

Fargo Home Equity Group. Wells Fargo Home Equity assisted with the account management of 

the Loan at issue in this dispute. 

9. Plaintiff has not made a payment on the Loan since August 2010. 

10. The amount required to cure Plaintiffs default on the Loan as of March 22, 2011 

was $2,013.30. 

11. The amount required to cure Plaintiffs default on the Loan as of July 25, 2011 

was $4,002.64. 

12. Because of Plaintiffs default on the Loan, Wells Fargo, through its foreclosure 

counsel, filed an Application for Court Order Allowing Foreclosure of Lien Under Tex. Const. 

DECLARATION OF MICHAEL DOLAN 

AUS:0567447/00358:551946v2 

PAGE30F4 
47

WeDs fargo Banlc, N.A, 

- AGREEMENT DATE: OI-11-2Cill7 

ACCOUNT#: 650..~1998 h ~ 

REFERENCE##; 20063367500009 t'\.j ' I.... ptt\811' 1 

Wells Fargo Home Equity Account Agreement lbt-__ and Disclosure Statement (the "Agreement") l 

- THIS IS AN EXTENSION OF CREDIT AS DI!PJNED BY SECTION SO(a)(6) and (t), ARTICLE XVI OF THE 

TEXAS CONSTITUTION. 

Borrower NU~e: 1ANOS FARKAS 

Pnper&y Addrus: 6315 FARMDALE .LN, AUSTIN, TEXAS 78749 

MaiUag Addretl for BUIIna Purposet (If different): PO BOX 180383, AUSTIN, TX 787t8 

Credit Line Lfmlt1 103.441.00 

SECfiON J: MY ACCOUNT AGREEM£NT 

!n thit Agreement, lhe words. "1,'' "me," "my," and "Borrower" (which also means "we," "us," "our," and 

'Borrowers," if more than one customer signs flolow) rofet to eacb person who sipa this Aa-ment. Tho words 

"you," ''your," "Lender," and "the Bank" rercr to Wo1l11 Fargo Bantc. N.A. and any successor or assign or subsequent holder of this Aareemenl. This Agreement governs my Wd/& F11'1q HolM Epi(V .4cuurtt (the 

"Account'') with lire Bank. If moro chan OIMI person lllp1 Ibis Aafeement, we arejolatly aacl individually bound 

by its cenns. We ue separately llable co lhtt Bank for the entire a1D011nl owed on Cbc AAx:ount. We are each 

liable as a principal and 1101 merely as a auaranror, even if one or more: ofudoea 1101 use the Aoc:ounL . This Agreement is made whhout r«~ co olher asscr.s of any owoer ofdre property securing this Agreement or any owner• a spouae, unless dte owner or ownet'8 spouse oblatneclllte loan evidenced by thit Agreement by 

a~uaJ fraud. lfl or any person or enlily acting on my direction or will! my lcllowlcdge or oonseat commits ac1ua1 

ftaud in oonneclion wllh lho loan appllcatioo procas or die documents executed In co!Diection wilb lhis 

A,reement, I will be lblly and personally liable under lhi& Agreement. · · 

SECfiON 3: SECURITY INTEREST 

This Agreement is inteuded 10 evidei!Ge en "Exlension of Ctcdit" as lhat term Is defined by Section SO(al(6) and 

(t). Articlo XVI oftbe Texas Constihllion, and is sec:ured by a deed of trust including all modlftcacions, addellda 

and amendments thereto (tho "Seourity Jnmumcnt''), signed the same date as lhi.s Agreement. The Security 

IIJslnlment pves you a security intcmt In my homeslcad located atlhe address abown abow (the "Propmy"). 

SECfiON 3: MY WBLLS FARGO BOMB HIJUITY ACCOCINT 

My Account ls a revolving account. My credit limit fs shown above and will be displayed oo each of my billing 

statements. During !he Draw PCII'iod {del(;n"bcd below}, my available credf& will be my Clfoclit limit minus the 

sum of all W198id AdvantcS posted to my AecounL During the Draw Period. as I Rpllf the principal balance J 

owe on my Account, my available c:redic will be replenished. (~not to request an Advance Chllt would oause 

1/15 ~entt~OI-09~7,13:44:53 

50118221 

. 
48

my balance to exceed my credit limiL If at any time lhe balance of my Account. exceeds MY CRdit limit,! agree to 

immediately repay the amount lhat exceed. my credit Umil. 

SECTION 4: MY ACCOUNT DURING THE DRAW PERIOD 

DBA'Y PERIOD 

My Account has a Dtaw Period of 10 ytat& and one month from the date of this Agreement during which I may ~est Advance.,. At the end of tbe Dnsw Period, I may requostlhaf the Bank renew the Draw Period for an 

addilionalJO year& and one month. The Bank may, at lts option, approve my request ro extond the Draw Period. 

I may not obtain Advances after tho Draw Period ends. 

Whon the Draw Period ends, the OUUialldln& unpaid Una of Credit Advances will convert to a Final Fi~ted Rate 

Advance as detailed below in Section S, MY ACCOUNT DURING THE REPA YMI!NT PP.R.IOD. 

ADVANCES DQBJNG DIE DRAW PIRIOD 

Tbere are ltypas oC Advances on my Account: 

• UneofCm!itAdwnees 

• Fixed Rato Advances 

Tho Bank must llonor my request for Line of Credit Aclveccs aod FjKecJ Rate Advances (collec:tlvely, 

''Advances .. ) • Ions as I am Ill compliance with alltenns or thi.~ Agreeruent, including all modit1c:allons, 

addenda and amendmentsiO 11, and the Seourity lnalnlmel\t. 

As I liSe my Aceo1111t, my a\llilable oredit will be rny credit limit millu the sum of all unpaid AdvanC811. As I ~ th~ principii balance J owe on my Account, my available credit will be Rplenished. I will not request an 

Advance 1hat would lliiUse lhe balance in ruy. Account 10 eJCoeed my credit limit, or which would violate the 

terms oftfds Apeen1ent or any law. If J do CKceed my credit limit, lasree to immediately repay tho amount that e~eceeda my credit limit. 

I understand that the Baok may refuse to allow any Advance if the Advanca does not comply with eveey 

requirement or thi.o: Agreement. The Bank may choose at its solo discretion to make an Advance Chat does not 

comply. The Bank may allow any Advances in any sequence convenient 10 the Bank. 

The Bank is authorized to make en Advance &om my Account when it receives a request pvoa by any person 

who hu signed this Asreement. If there are conflicting dcmaruls made by any ofua who signed lbi$ A.pcment, 

die Bank lias tho option to Rlbse to make any Advance lbal has not been reqlltMed by all of u togelber. The 

Bank will not be liable for any loss, expe~~R, or c:osl arising out of any telephone request, including any 

fi'auduleat or lllllllthorizcd telepftone te~tuest, when the Bank acts upon such matructloJIB believing tbem to be 

genuine. 

Section 50(t), Arfiele XVI or tile Texas Constitution Omits rhe maximum principal a1110unt oqtstandlog 

and debits and ad¥anetJ apbast tile Account aader ctrt .. n tk&!UD!Stamlft. I anderstand that the Baok 

may rel\tse co aRow any Advantt If th• Asb'•nse dog not tSJI!PIY with §esdon 9ft), ArJislt XVI of the 

Texa' <:oll!tltp!lsn. 

LINE OF CUPIT AQVANCE§ 

Each Lfnet of Credit AdV811Ce I roq,uest will be In the amount of$4,000.00 or greater. 

LINE OF CUDf[ ADVMCJMETWJD§ 

Wbire my Account is not in default. closed, or siiSpcnded, I may obtain a Line of Credit Advance by: Req~atlng a Line of Credit Advance In person at any Bank bnmoh 

Req~~et~ti118 a Line ofcredit Ad~ by phone 

Tfansfc:nins fimcfs by uslns We& Fareo Online"" • In other wayx the Bank authorizes ftom time to time, and BS permitted by§ SO(t) Article XVI, of the 1 exas 

Coastitucion. 

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Docamcllls Proossed 01..09·2007. 13:~;53 
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LINE Of WDrr AIWAJilCIS PERIQDlC 'INANC§ CHABCIS 

Finance clla'les begin to accme on Uno of C~it Advances immediately when fUnds an~ advanced. The 

periodic FINANCE CHARGE for a billiJig ~:ycle is the sum of the poriqdic FINANCE CHARGE for each day 

in dae bDiiDg cy.. l'o determine the periodic FINANCE CHARGE for a day in the blUing t;yclc, multiply the 

Daily Periodic Rite by tha daily balnlce for Une of Credit Mvances (including current lriDsaclions) each day. 

To dctennlne the daily balance, take the Line of Cn:clit Advanaes balance at abe beJillllina of each day 

(excluding any unpaid FJNA'NCE CHARGES or olhor c1u1rp1c provided for aDder this Apeement), add any new Uno of Cmlit Advab~:CJ~~, and subtract any paymeJIIs or oredilll that apply to the repayment of Line of 

Cm!it Advances. Tile J'e8Ult i& the daBy balaneo. 

The Daily Periodic Raro for Line or Cfedit Advances is equal to t/365 (1/366 durin& leap years) of an tndex 

plue a Marain. The Index is the hipat Prime Rale as published iJIIho Western Edicion of 'llle Wall SJretJI 

Jout7Ull ''Money Rates" table. ~e Marafn, the fnltfal Daily Periodic Rato, and tho initial ANNUAL 

PERCENTAGE RATE, are cacb disclosed below. Tbo Margla wiD lncrcaso if the Alllomatic Payment feature 

described m Seclfon 6 below is tennllllted for lillY msoJt. Tho ANNUAL PERCENTAGE-RATE dOe$ not 

include costs other than intOJeSI. 

The Daily Periodic Rate 4Rd eomspond,ina ANNUAL PERCSNTAGE RATE on my Line of Credit Advances 

will be acUuatcd on the ftmt day of every billing cyofe, a sin& the lase Index Yatue publithecl darina the precedins 

billiDJ cycle. Therefbrc. the Daily Periodic: Rate for Lino of Credit Advances may cbanp (increase or decRase) • often aa once each billing cycle bwd on change~ in fltc Index. llllllfenlland that any Jmreuo may clluae me to make larger monthly pa)'Ments. 

W!mME RATE CAP FOR Y~E or cu;mT APYANC£S 

DaUy Periodic Rate for Line ofCredit AdYIIt\teS wBiuever exceed 0.049315% (correspondblg ANNUAL 

PBRCENTAG8 RATE of J 8.00%). Thia is lhe Llfotimo Rato Cap for Uno of Credit Advances. 

LIFETIME llA'rt; fLOOR FOR LINE OF CUPIT .ADVANCE$ 

The Daiay Periodic Rate for Line of Credit Advances wiU never fall below O.OJ1616% (conespondiq 

ANNUAL P.BRCENTAG£ RA TEof 4.240%). This is the Llfi:timc: Rate Floor for Line ofCnldit Advances. 

MY INWAL ftAD !OR LINI OF QEDITADVANCf.S 

As diSClUued abo~. my Dally Periodic Rate is based on the: value of the lmfeJ~ plus a Maraln. Tile lolrial Index 

value thai appttea ao my Ai:cowu will be tlte value of the Index oa the day I open my Accouat. The JVUowlng 

disclosures ate based on Clio value ofthe Index In e«ect on 01..(19-2007. I UlldemaruJ that ifl open my Acoounc 

after this dace, my act~~allndex value, Dally Periodic Rate aud conapondlng ANNUAL PERCENT AGE RATE 

may be hialler or lower tllan the£~'" dlaclosed below. · 

My Margin for Une ofCmiit Advances Is equal to NEGAnVE FIVE HUNDRED TEN THOUSANO'lliS Of 

ONE PERCENT AGE POINT percentage points (-O.SJO%). As &IUIIlt, unleas the Lif'olime Race Cap for Line of 

CredltAdvanees or Lifetime Race Floor for Line of Credit Advances require. the Bant to apply a different rate to 

my Acoouot, my Initial Dally Periodic Rate 1&0.021205% (cozmpondiiiJ ANNUAL PERCENTAGE KATE of 

7.740%). 

JdNE OP CBJDIT ADVANCE$ MINIMyM MONTULY PAYMENT 

During the Draw Periocl, my Minimum Monthly Payment for Une ofCreclit Advances shall be equal to: 

Tbe twm of all accmedand unpaid periodic FINANCE CHAROES on Line of Credit Advances, plus credit 

iM\11111\Co premiums, If any. 

£1XEQ MD ARV,ANCIS DURJNGTHE I)MW PERIOD 

I haw lhe oplion 111 convert outstanding 1111J1aid Line of Credit Actv.nces to Fixed Rate Advances during the Dra!' 

Period based on cmlic limit availability. The minimum Fl~ted Rate' Advance during tbf) Draw" Period .IS 

S 10,000.00. I may ~ueat up co 2 FiXed Rate Advallce& esch year. For~ of this nd~. tho. ftiSt )'ear" wtll 

beain on the <late of tbfs Apemellt. Subsequent~ will begin on each aunlvcreary date ofthiJ Agree111ent. I 

may .bave no more than 3 Fixed RatoAdva!K:C$ oiiiStanamg at any one lime. I must sctcot the repaymen' tenn for 

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lhct Fixed Rate Advance at tbe time J ~uest the Fixed Rate AdviiiiCe. 

1Dtel'flt·ODI9 Paymtat Option: 

If I seteotlhe lntatst-only pa~elll optloa fOI' a fixed Rate Advance during tha Draw P~od (see the Reclion 

below titled "fiXfiD RAT£ ADVANCF.S MINIMUM MQNTHLY PAYMENT PYIUNG T1B DRAW 

PEBIOJ"), tha repayment term must be at lea&l ono year and not more than the lesser ot J 0 yean; or 1he 

remainihl tenn otthe Draw Period miRlls one monlh. At the etUI oflhe term, the balance will convert co a Line 

of Credit Advance. 

Full)' A1110rtizlna PaJntent Optfon: 

If I Hlcct the fUlly amortizing payment option for a Fixed Rate Advan~ durinJ the Draw Period (sec tbe secllon 

below lftled "EIIIiiR BAD ADVANCf.S MINJMPM MONIJU,X PAYMENT DURING THE DBAW 

RBJQJl"), tbct RPII)'mllll term must bt at leas& one year and not more tban the IC~Sfer of 10 years or the 

remaining term oftbe Draw Period minus one month. 

FIXED BATE ADV MJCE METHODS DUBJNGTIIE DBt\W PgiOD 

While my Acc:ountlll not In dcfllult,closed, or saspencled, I may obtain a Fixed Rate Advance by: • R.equutlna a Fixed Rate AdVIInoe In penon at any Bank branch. 

·Requesting a Fixed Rate Advance by phone. 

fiXED BAD A~I!S PERIQDIC fiNANCti CQARQIS DYBING THE PBAW PEBIOD 

fixed Rare AdVIRm will acc:ruo periodic FINANCE CHARGES beglnnl111 co the: day lhlt the Bank convens any 

Uae of Credit Advances to a Fixed Rate Advance. I will bo charged a periodic FINANCE CHARGE on all 

ouls1Mdina unpaid Fixed Rate Advances eacb day al a fixed Daily Periodic Rate. To determine lhe periodic 

fiNANCE CHARGE for a day In the bOling c~le, mullip!y thtl Dally Periodic Rare by the dally balance for the 

Filed Race Ad\IIJIIle (includlq current transactions) each day. To dctennl~ the dally balallce for die fixed 

Rete Advance. take the F'IXed Rate Advance balance at the bcginnina of each day (oxoludin& any llnJNiid 

FINANCE CIIARGEs·or other dllrges provided for undor Ibis Agreement), and :lllblriiOt any payments or 

credi1& that apply co the repaymeat of the Fixed Rate Advance. The ralllt i• tbeclaily balanca. 

The Dally Periodic Rate for Fixed Race Advanoes is C4ual to 1136S (11366 dlllina leap ytartl) or an Index plus a Marsin. The lndu Is the highest Prime Rate as published fo tbe Western Edition of The Wall Sttwl Journal 

.. MOM)' Rates" table. The Bank will use the valw or the lndox in efttc:t on the last bus IMP clay prec:edin& the day 

tbe Bank n:ceivee my request for a Fixed Rate Advuce. The Margba for Fixed Rate Advancte I& eight 

poroemase points (8.000%). The Bank may, In its sole dlscmion. apply a Jowor Meq:in. The GOJRSPI)nding 

ANNUAL PERCENTAGE RATE for Fixed Rate Advances will ucver be mote thaa the Ufetimo Rate Cap for 

Fixed Rate Advances shown below. The ANNUAL PERCENTAGE RATE does 110t include costs other than 

interest. • 

The Mar&in for any oxi&ling Fixed Rare Advai1Ce$ will iucrease by onu quarter of one percentage poilll (0.25%) 

if tbe Automatic Payment feature ralmninaled, as described ill SecliOA 6, below. Therefore. tbe Daily Periodic 

Rate for Fixed Rate Advances may also increiiK 11 lease o~~ee during the Aocount based en an incroese in dto 

Margin wben the Automatic Paymeol fe~ture is tenninated. Any euah increase wfJI RSUit in an increase in the 

then outstandlna Fixed Rate Adv•nce Minimum Montllly Payments. If I selected the intmlst-only paymont 

optlcn f'or a Fixed Rate Advame, the Fixed Rate Advance Minimum Monthly Payment for that AdvaJU:o will 

equal Ole sum of all acc:nu:d and unpaid periodic FINANCE CHARO.ES on the remaining blllmce of the ~ed 

Rate Advance at the Increased COJmpandina ANNUAL PERCENTAGE RATE. If I selected thct fUlly 

amortizing payment opefon for a Fixed Rate Advance, tha Fixed Rate Advance Minimum MonthlY Payment for 

that Advance will be nset at an amount suffieientto repay the remainina balance of the applicable Fixed Rate 

Advance widlln its applicable term In $UbstantiaDy equal, fidly amoJtizing monthly payments at its increased 

corraspon41ng ANNUAL PERCENTAGE RATE. 

YEIJ'IME RATECAf FOR fiXED RATE ADVANCES PURINGTBij pRAW PIRJOD 

The Dally Periodic: Rite for Fixed Jt.te Advances wiU oot excad 0.049315% (corresponding ANNUAL 

PERCENT AGE RATE of 18.000%). This is the Lifetime Rate Cap for Fixed Rate Advances. 

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51

II'JXEp RA1] ADVANCE AT ACCOUNT OP£NING 

I have requested anlnJdal fixed Rale Advance at Account oponlng in the amount ofS 103,441.00, and for a tenn 

of 120 mot'ltbs. My Dally Periodic Rate on tllis initial Fixed Rate Advance Is 0.0198% (<:One.qponding 

ANNUAL PERCENTAGE RATE of7.Z40'.4). lllave selected the fully am011lzing paymmt option. 

fiXED BAD APYNlQS MINIMUM MQNTHLX PAYMENT DYRINGTHEDMW PERIOJ! 

I may select one of lhe following minimum payment options whm I reqUCSJ a F"IXcd Rate Advance duriJig the 

Draw Period: 

lnterett.Oaly Payment Option: If I select lhls option, my Minimum Monlhly Payment for lbe Fixed Rate 

Advance during the Dtaw Period wUI be equal to the sum of all llCCJIIed and unpaid periodic FINANCE 

CHARGES on tho Fixed Rate Advance. 

· Fully Amortizing Payment Opt!Dn& If 1 solect Ibis option. my Minimum Monthly Payment for the Fixed 

Rete Advance will be equal co the amount of principal plus periodic FINANCE CHARGE suiJ'iciom to repay 

Che Fixed Rate AdvaiiGo within fiS apJJioabfe tcnn in substantially equal, ftllly amonlzing monthly payments 

at the applicable corresponding ANNUAL PERCENTAGE RATE. Thill usumea lhat all pa.y.monts Will be 

made on their due dltCt, wbich will be lhe same at tbe due dates for my Une of Credit Advances Minimum 

Monthly Payment described above. If my paymcn1s Ql'e not conslstenUy macto when due, lhe fixed Rate 

Advance: Minimum Monthly Payment may not fUlly repay the Fixed Ralet Advance over its term 1111d my final 

pa)'lllcml may be hJp. 

Durin& the: Dtaw Period, my avallablocredit for new Line of Credit Advance& will be repklnished by tho amount or prineipal 1 repay on my Fixed Rate Advanoet. 

~l{ TOTAL PA VMBNf Dl,lE Dt!RING THE DRAW PERIOD Will receive monthlY. bllllnJ statements from lhe Bank. J must pay at least the amount of the Total Payment 

Due by tile Date Due, u sllown on each montbfy billitla sllltemcnt. 

The "Total Payment Due" durint the Draw Period eoJUJisiS of my l.lne of Credit Advances Minimum Monthly 

Payment plus my Fi~~tod Rate Adllllnce Minimum Monthly Payment(&) togotbcr With all past due amount.'! and 

overlimll amounts and aU 01hc:r charaes clue. 

SECTION 5: MY ACCOUNTDVRING THE REPAYMENT P.ERIOD 

BJPAYMEN1 rHJ.Q» 

I understand tbat I may not receive new Advances after the Draw Period ends. At that lime. r wiU br.gin the 

Repayment Period, wblch wiU continue until tJ. Maturity Date de~cribed below, but in no event moftl Chan 30 

years. 

aEl"AfMENIQf EJNAL fiXED WE ADVANCE 

Al the end of the Draw Period, lhe ouiStanding unpaid Line of Credit .Adv1111ces balance will be eonverted into a Final Fixed Rate Advance. The Final Fixed Rare Aclvanco will have a renn of J S years if my total Final fixed 

Rate Advance balance is less than S20,00D, or 30 years if my FinaJ F"llled Rate Advance balance ia $20,000 or 

more. 

The Final Fixed Rate Ad"anec Minimum Mondlly Payment will be the pater of S 100 or an amo11n.t sufficient 

to repay the Fi111l Fixed Rate .Advance balanc" by tbe end of the scbeduted cenn in ~tantially equal, fii.RY 

amortizing monthly pa)IMellts of principal and periodic FINANCE CHARGE at the applacabtc corresponcbng 

ANNUAL PERCENT AOE RATE.. If my payments are not consistendy made wheo due. the Final Fixed Rate 

Advanco Minimum Monthly Payment may not fully rep~~y tile Final Fixed Rate Advanoe over Its ~ and my fin., paymClll fbr the Final Fixed Rate Advauoo may be lllsJ!er. The Bllllk will notify mo In advance of any 

obanges to my Tolal Paymmt Due as a result of !he Final Fixed Rato Aci91111Ce Minimum Monthly Payment. · 

PERIODIC F~giARGJON fiNAL fiXED RATEADYANC£ B,y,ANC£ Periodic FINANCE CHARGES on my Fimal fixed Rate Advance balance Will begin to accrue on lite first day or 

Wells FIIJO tfome Equily A«oollll Agceemenl 

-· 

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lhe Repayment Period. 1 will be charged a periodic FINANCE CHARGE based on the unpaid Final fixed Rate 

AdVIIICo baladce at tbc end of each day 11 a fixed Daily Periodic Rate. 

The Daily Periodic Rate for lhe Final Fixed Rate Advance ls equal to ti36S (Jilfi6 durioaleap years) of an l'adex 

plus a Margin. Tho Index is lhe highest Primo Rate u publl&hed in the Wmem Edition or The Wall St~et Journal 

"Money RileS" table. 1bo Bank will use \he Index value publi.lfle4 on the lasl busiti0$S day duritis tile Draw 

Period. 1'he Margin for the final Fixed Rate Advance is ei&ht pen:entage points (8.000%). The Bank may, in its 

10le discretion, apply a lower Mar&in. The corresponding ANNUAL PERCENT AGE RATE on my Final Fixed 

Rate Advance will never be m~ than the Lifetime Race Cap for my final fixed Rate Advance shoWD &elow. 

The ANNUAL PERCENT AOE RATE does not include costs otbtr than IIUerest. 

The Margin lbr 1116 Final Fixed Rate Advance will incre~~Se by one quarter or one percentage point (0.25%) if the 

Aucomalfc Payment feature is terminated, as deM!ibed in Section 6, below, duriiiJ tho Repayme~~l Period. 

Therefore, lhe D11ily Periodic Rate Cor the final Fixed Rate Advance may also increase at least o~ durins the 

Repa)'Jilent Period based on an iiiCIUSC in lhe Margin when the Automatic Payment feature fs temdnated. Any 

such fncrease will result in an increase fn the then outstanding Final Fixed Rate Advance Minimum Monthly 

Pa)'lnCIIt, which will bo reset at lito woater of$100 or the amount sufliaicnt to repay the rcmalnins balance of the 

Final Fi1C.ed Rate Advance witmn fts applicable tenn in substantially equa~ fully amqJtizing monthly paymenta at 

it& applicable coneapondlug ANNUAL PERCENT AGE RATE. 

LlfUWE 8AD C«\f FOR. MY ITI~AL FIXED MATE ADVANCE 

The Dally Periodic Rate for my Final FIIICd Rate Advance will not exceed 0.049315% (COJre8$10Uding 

ANNUAL PERCENTAGE RATE of 18.00G%). This is the Lifetime Rate Cap fbr my Final Fixed Rate 

Advance. 

MY TOTAL PA\'MENJ QUE DURINQ THE R§PAVMENT PERIOD 

1 mu&t pay at least the an•ount of tho TOtal Payment Due by the Date Duo, as shoWII on each monthly biDing lltatcment. 

The "Total Pa)'ftlenr Due" during the Repayment Period ir the Final Fixed Rate Advance Minimum Monthly 

Payment as described above. together with all past due amounts and overJimil amounts and all other cllarees clue. 

MAJtJBITY QATE 

Tbe Mahlrity Date on my Account shall be lhe maturity date of the f'inall'lxed Rate Advance, &ut in no ewnt more chan 30 years from the end oflho Draw Period. At !hat lime, any remaining balucc must bo paid in full. 

SECTION 6: AUTOMATIC PAYMENT DISCOUNT 

I have cltosen to make Aucomatic Paytnents as specified in lhc Aulhorizaclon for Automatic Transfer. I Jlave 

receive4 11'4 illtereac rate: di«<ounr for makina this choice. I unllers1alld that tho ANNUAL PERCENTAGE 

RATE and dlo Margin clult apply to my Line ot Credit Advanoes, as desmbed in Section 4 above. reflect a discount you aave me for ellis Authorization fOr Automatic T.amrcr. Jftho Automatic Payments are tctml~ted 

for any J'C8$01\ at any time during 1M Draw Period by anyone, lite Marsin that applies to my Une of ~dit 

AdviiiCea, as set fbl1h in Soction 4 above, wiii.IJsBu by ono q~~a~Wr of one percentage point (0.2S%) emouve the day cbc Automatic Payments are terminated. If l!le Margin increases, the Dally Periodic Race and 

corresponding ANNUAL PERCENTAGE RATE applicable to my Line or Credit Advances, and my Line of 

Cn~dit Advances Minimum Monthly Paymcnt, may also incrcuc. My monthly billing Slalemcnt wm show me 

my new Daily Periodic Rate. comspondiDJ ANNUAL PERCENTAGE RATE and Line of Credit Aclvances 

Minimum Monthly Payment as aJllllicable. 

SECTION 7: OTHER FINANCE CHAltCES 

In addition ro paying periodic FINANCE CHARGES, as described In Sections 4 and 5 above, J also agree to pay 

the followiA8 addili011al fees. eacb of which Is a FINANCE CHARGE: 

6/JS 

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NIA 

SECfiON 8: CLOSING COSTS 

I asrcc to pay to the Bank the (ollowing closing COSIS at lhc opening of my Account: 

NfA 

• This amount Is an eslimate. The actual recording/tiling fee is shown on lh& HUD Settl~ent Statement that is 

atcached to and incorporated into tllis AgreemcnL 

The folloWins closing costs are .lllNANCE CHARGES: 

N/A 

SECTION 9: ADDMONAL FEES, COSTS AND CHARGES 

lo addidon co the FINANCE CHARGES and etoaing costa desoribed abo\'0. 1 agt'ee to pay lhe following non· reftlnlfablc feBS, c:osta and charaes, wbiob w1U be owccl once obarged to my AccounL 

LATE CHARGE§ 

Durin& the Draw Period, I will pay alate charge equal to the greater of five dollm ($5.00) or rrve perc;ent ($~) 

of the Une ofCrcdil Minimum Monthly Payment if my payment i$ mo~ than 10 days J)88t due. 

DurJns the Repayment Period, I win pay a late charge equal to lhe greater of five dollars ($5.00) or five percent 

(5%) of' the sum of all Fixed Rate Advam:e Mfnllllllm MoDthly Payme.~~tll If~ payment is more than 10 days 

past duo. 

PRJPA\'MENT FEI 

There is no prepay.mmt fee on my Accoun1. 

OTQER WARGJiS . .. . 

To lbe extent allowed by law, I ape to pay tbu following fees ifll'e4Uest or aulhorize theae additional services: 

(a) ll!..fu: Tho Bank will charge a tax fee In die amount of$10 ifl request or aulltorize Other$ to request any 

document or letter to be b'all&milted by facsimile (fax) machin~J. 

(b) Regarslt Fee end Pllotpmpy fee: The Bak wiJI c:Jtargc a mearcbfpbotocopy ree In the amount ofSS per 

pbotoaopy if I n~q~~~~at or autllorizo oth~ to request that tJte Batik RSCIIII2h my Aocount or provide 

photocopieB of Aocollftt dooWnents tor any P1J1PO$e o1bcr than a billing error inquiry, 

(o) Reconycygu or S!!lsfastlpP rus Tlle Bank wiU charge reconveyance and satisfaction fees as 411owcd 

by applicable law. 

(d) Slop PfW!IJCDl Fu: The Bank will ch;nae a stop payment fco in the amount of$25 lfl m~uest or authorize 

otbels to rtqllOSltbat the Bank Slop payment on a draft 1 have used to requost a Uae ofCmlit Advm:o. 

(c) Betom Qmkfu: ·The Bank will obaEJc a return clteck fee In Ike amount of$25 if I m1b a payment with 

a check Chat Ia dishonond for any reason. 

(I) OVerlmlt ru: The Bllllk will charae an overfimit fc:e In the amount of$25 fbr each billia& oycle in which 

I hvc ox~ my credit limit or have nquested an Advance thai would l!ave caused me to exceed my 

credit limit. 

(&) Reapq t\dnnst CfJU' Fee &wmcltnt ru•ds): The Bllllk will e~~Jrae a ~etum advance check lee in the 

amount of S:l' for each ~~1: or draft ultd 10 fC4lUOSI a Line of Credit Advance C11at is retumed unpaid 

(dishonored) by lhe Bank due to lbr: Rquested Advance11ot mccllna all requhemeuta of this Asreement. 

SECTION 10: COLLECTION COSTS AND ATTORNEY'S FEES 

If I am in default. I will pay lha Bank's collectio.a CO!Ilt, attomey's rccs ancl o1bet expenses of enforelng the 

Baok's ri&hts under this AgRement and the Security Ins11'11Dlent, uulcss probibltcd by applicable law. 

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SECTION 11: METHOD OF PAYMENT 

The Bank will provfdc me with a monthly billiag statement and auromat~ly charge my qualified 4cposlt accolllll 

(UDder the terms of a separate Wlillell AuthorizatiOn for Alllomalic Tmnsfer) for the T01al Paya~em Due. If I owe 0\hcr charges (other than cmfillnsUIIIIICc: promiums and annual fees), I must pay lhem separately. If I owe past due 

amounts on my Account, the Bank wm 1101 collect thw; amo1111ts by using u Automatic Pa)'Dtent, and I JJlllllt pay 

litem sepuatoly. 

SECTION 12: SCHEDVLEDPAYMENTDUEDATE 

My monthly payment due dale f'or my Total Payment Due Is the 15TH day or each and every month d1arillt both 

the Draw and Repayment Periods. 

SECTION 13: MY PROMISE TO PAY 

I promise to pay lo the order of the Banlc the total of all Advances which I rGCeive or which I authorize to bo 

mado from my AccoUD.t. t promise to pay the total of any FINANCE CHARGE, plus all amounts past due, 

overlimit amounts, and any late cbiiJICS, fees, other chatBes and olber obligations charatll to my Aceount under 

thiR Aareemenl or the Securiry lllstnlment. All payments made under this Apment wiD be made In u.s. Dollan~. I will not mall any casb payments to the Baftk, I may not usc .Adv.uu:e request checks 10 make 

paymenrs 011 my Acc:ount. 

The Bank may. at its diaorctlon, withhold a ponlon or the IWallable credit on my A<:count up to tlte amount or any payment duo in order to assute that my check or olher paymentlnstnlment is 1t011ored. 

I will make payments at 1he Bank'$ adcltess fbr receiving a f!llymenl, as indicated on my payment coupon and 

billbag atalement, unless another payment melbod Is authorillCd by the Banlc. Each aon-electro.nic payment I 

maltc will be accomp~~~~led by the nmiltanco portion of my billing statement. 

I unclersrand tbal pa)'llmlts I make by mail to the address indicated on my bOling statement or payment coupon 

will be ~mtited to my ,A(:90unt .as of the date ,!'CCejvcd (inC~Ildilll Saturday-. Stlllda)l$, and bolida,p) If the Baslk 

receives the payment prior to 5 p.m. local limo for the paymmttaddtut. 

J>aymoaus I make ftom a qualified account ("Automatic Payments'? pursuant to an Authorization for Automatic 

Transfer will bo c:rcdllecl to my Account on the date received (inctudfna Saturdays, Sundays. and holidays). 

Payments 111111b at o Bank b~h and rocei"Wd prior to established cur-offtimos wiD be credited to my Account oc the busint$11 day tho paynumt'is ~by the Bank. For puxposes of chis rulo, a business day includea any 

day other than Saturdays, Suaclays,lllllf Ballk observed holidays. Payments made at a Banlc branch rec:dved on a Saturday, Sunday, or Bank obilltVed holiday or after estabHshed cut-orr rimes will be credited as of lho next 

btL'Ilness day. 

PaymcnfS I maJce online, by ATM, by telephone, or by any other means the Bank may make available to me an_d 

receiVed prior to atabllshed cut-oiT times will be credited to my ~nl on the bu6iness day the paymmt as received by th• Bank. For pvtposes of this rule, a bu$1ncas day includes any day other lban Sahlrdays, Sundays, 

and federal holidays. Payments made online. by ATM. by telepbOae, or by any other means Che Bank may lllaJce 

available to me received on a Saturday, Sunday, or fedend holiday or after eatablislted cut-ofT times Will be 

credited a11 of the na~t business day. 

I wilt not make payment or autbonze olbms to make payment for me by means of a slnaJo annspted payment. 

which includes paymenfS for this AIXO\IIll and any other ac:eount(s), uaJcss tho payment is made In comp1iance 

with the Bank's requlramCiliS for multiple account payments. 

The Bank may ~~ Jate payments, partial payments, post-dated Qhed<$, or any fQnn of payment c:oneafni~JS a restrictive endofl!Cment wlthout losing any of the Bank's righiS under Ibis ~eat. The Bank•• acceptance 

of checks or money orders labeled "payment In full," or words ro that effect. will not couslitute an accord and 

8115 

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satisfaction nor a walvor of any ri&bts lito Bank has to receive full payment. JrJ intend to condition a payment, 

pay 1M Account fa filii with less !han lito total amount owed, or give payment insb'IIC1lons, I will clearly set out 

such intenliOD, conditions enlf fmtructloas in a ~~~to leiter accompanylna my payment, and mail bolh to 

Wells Fargo Bank, N.A., P.O. Box 2993, Portland, OR 97208. 

SECFION 14: TAX DEDUCTmiLITY 

J undcratand that I should COIISUit a cax advlsouegarding the d~uctibllityofintettst and obar&eS Ullder my 

Account. 

SI:Cl'ION 1St REEVALUATION OF CREDIT QUALIFICATIONS AND CRI:DIT REPORTS 

My slpalure on Ibis ABR41ment authorizes dte Bank to obtain credit information about me. including credit 

bureau reports, at any tim11. SUch credit bun:au reports may b$ requested or used in connection with (a) renewal or extention of this Aareemont. (b) review or my Acaoont, {c) llklna any collection actlolt, or (d) any other 

legitimate pUI'JIOSU associated wllh my Account. 1 qn:e to aubmil cunent financfallnfonnation to the Bank 

upon U.e Bank'll request. Tba Bank may reexamine and reevaluate my credit qualifioatiOfiS at any time. The 

Bank may rcpon .lea experience with me and my Account 10 odlers. to lite extent allowed by Jaw. 

SECJ'ION 16: PAYOFF BALANCE INFORMATION 

The Bank will toll me lha balanee required on any aiven day to pay oft' my Account in filii, If I so requesl If 

euck requcat ia made on my behalf by an *row holw. settlement agent or other drird 'Party on my bellalf 

during tho Draw Period, th8 Bank may Immediately freeze my Account. I ap that the rtantc•• meipt of such a tqt~ost &om an 010r0w holder, se~~tcmenc qent or ollter third party on my ()eJtalf will be consldtR:d to be a request by me to suspend cre4it privileges on my Account. While my Account is tro.n. I cannot receive 1I4W 

Advances and tbe Banlc will return unpaid uy Advance reqiiCIII chclclclltlill Bank receives and will refllae to 

ltoaor any odJer Advance: req~~est made on my Account. This payolr licoJ.o will be lifted and my Account 

reopened If lite mauest for payoD' balance infOrmation is withdrawn, lo which event the Bank may require 

written ccmfinnatlon from the escrow bolder, senfement agent or other lhlrd party on my behalf that the escrow or odJer settlement has been cancelled. . · . · . · · . 

SECTION 17: DEFAULT 

I will be In default if(a) 1 fail to meet 1M repayment 141M!$ of this A&fCelllOrlt for any 0\liSlandlng bala1lw, or (b) 

there is fi'aud or material misrepreselltation by me in eonnection with lhfs Agreement. or (c) any action or 

inaction hy me Adversely ~'' lhe Bank' t security in dte Propeny, lncludlna WiU.oul limitation. trariSfer of the 

Property without the Bank's c01111ent, filllure to maintain required iMurance or pay requlml taxes, revocation or t«mination or any '-VOCable trusttltat i., an owner of the Property, or the death or aD)' peliOn who hu signed 

this Aammtent. or (d) Jam an.cxccutlveofficerofcbc Bank1111d federal law govt:mlng credit extended b)• a bank 

to its exec:utille officer, including withoul llmltadon Seelfon21S.S(d)(4) of federal Res~ Regulation 0 (12 

CPR f 2JS.S(d)(4)), permits or requires Immediate payment of my entire Ac:cowll balance. 

If I am in defilul~ tlle Bank, aubjectco applicable law, may cJo 1111)1 or all of the ronowlna: (a) dole my Account 

immedlarcly. wllhoutnotice; (b) ~m liiiP•id any outstanding Advance request dlecks drawn on my AOCOilnt 

and refUse tD honor any other Advance request ltlliM on my Accollllt; and (c) require Immediate pa)lmenl of lhe 

entire balanco of my Aecount. and, If I flail to pay, exercise the Bank's rights under tho Security lnslmment. 

wbkh may n:sult in the loss or lho Property. l waive my c:omiDOD law rigbtl 10 n:clrivo llOike or the Bank•s 

intent to accelente tho sum& 1 owe under lhis Agreement and aotfce of aec:eleration. If I am in defa-ult. t~e 

melbod of clotennblina U.O Daily Periodic Ra1e tllld cosresponding ANNUAL PERCENT AGE RATE wm remam 

as doecribed Jn this Agreement. 

11le Blmk amtl agree thatnoiWithstandina any other provision of tbis Agrecme~nt or the Security Tmtn»ment, tbe 

Bank will have dle right to tenninate or suspend my ACGount u, dto Cllltont permitted by applicable law. 

SECfJON 18: CLOSURE OR SUSPENSION OF ACCOUNT, REDUCfiON OF CREDIT 

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LIMIT; REINSTATEMENT OF CREDIT 

Q.OSIJBIOISUSPEN§ION Ot ACCOWf. REDUCTION Of CREPJT LIMIT By BORROWER 

Any one Bonower can close the Aceount by paying in ftd1 and satdilll a signed li:Uer 10 lhc BIJlk at abe address 

indicated on my monthly billing sratement ~uesllnalhat the Accoum be closed. Any one Borrower may 

terminate lhe Advanc:e feature, at any time durlna tile Draw Period, by seadhs& a sianed lcuer to the Bank at lhe 

addRss indicated on m,y monlhly billing statement fCC(UCSthtg lhc tennlnadon of die Advaac:e roature. To 

reactivate Ch& Ad1111nce fe.ttun on the Account durin& tile Draw Period, the Bank will require all Borrowers to 

sign a written request~nd malt to the address indicated 011 my mcmthly billing statement. 

CL9SilBI OR SJJSPEN810N OFACCOWL ppUCTIQN OF CB£D1T LIMIT BY BANK . I wall receive a written notfee if tbe B~nk ausperuls 01 &ee1.es m)' Account or reduces my crecHt limit as reqwe4 

under applicable law. The nolice will Include the reason(s) for such accfoa(a). 'Thereafter, irJ wish 10 reinslate 

my Account or increaflb my credit limit, I agree to send a Millen MqUest to the B81Jk at the ecldre.ss specified on m)' montht)' billina sta!Jiment, algnc4 by all of1lto Bonower&, along wllh satisfactory evidence to·the Bank lbat lhe 

reuon(s) for susp0118lon or RCI~tlon or my Account no longer exlsl(s). I abo agree 10 provide the Bank 

promptly with IIU' addlti()l)al information necessary to wppm m)' 1equeat. 

The Bank may suspend the use of my Account and ~emporarily problbit ftlturc Mvanoos during the Draw 

Period, or the Bank may !educe my credit limit, ror anyreascm ponnilled by applicable law, Including without 

Umltation, (a) If the annualized Dally Perioclio Rate cqueb or exceeds the Ufillime Rate Cap ll18ted herein, (b) 

there is any material cbanae in my fmaoefal circumllaace& thai tile Bank reasbnably believes will make me unablc to fulfill my repayment obll&atlons under this Asreement, (c) the value of the Property declines 

significantly below ils origiualiiPPI81sed 'Y81118, as ftletmined by lito Bank, (d) my .-nuro to comply with any 

material obligaUon unctcr tills Agreement or the SeQUdty JnsiTOment, (o) a fOiUlalOJY 81Hboriry has notified lhe 

Bank 1hat continued Advances would eonsritute an unsafe and unsound business practice, (f) I am in deflllalt 

under Seotfon 17 above. or (I) government action prevenls the Bank &om lmpoafna tho ANNUAL P~RCENTA.GE RATE provided for in Ibis A&reetnent or impairs the Bank's security interest ia tho Property, 

such that the value of the security interest is less tllan 120 pen\ent of the em! it limit. 

Jn the event of a suspension of my Account. the Bank ill authorized to ·Oblain ncb Jftformation aR may be 

required by lite Bank, including without limitation, credit reports and appraisals of the Property. to evaluate any 

request by me to RJinstale the AccoUJit, To the extent flC'I'I'IIittcd by applicable law. I agree to pay to the Bank the 

cost of obtaining such addilionallnfonnatlon. 

If my Account is closed or suspancled for any R:ason. lhc Bank may Altum unpaid any outstanding Advance 

requeet checks drawn on my AOI:OIIllt and refUse to honor any other Acl\lllltCe requesl macle on my Account. I 

will continue to be r~onslble for full payment of the balance or my ACCOIIIlt as well as all other Account 

obliaations, ac:cordln& to lbe terms or tbls Aareemcnt. 

SECTION 19: FURTHER ASSURANCES 

I a~ tllat J will take any sleps,lacludlng but notllmiled to, signing, filing or recording any cfocumcals. which are necessary or wllicll the Bank deems appropriate. co be sure tbat my obligations 10 the Bank under this 

Apccmenl become and continue to be secured by tbe Securily Jnstrumeqt. 

SECTION Zfl: CHANGE IN RESIDENCE OR OWNERSHIP OF THE PROPERTY 

J aarce to notifY the Bank immediately if (a) the Property I$ my primary realdenae and I ~~~ to live In the 

Property as my primary Rlliidoncc, or (b) lherc Is any change in tho ownCI8bip of the Ptoperty; or (c) I have 

declared the Property my Texas Homostead u clefhled by Chapter 41 of ille Texas Propert)' Code, and lhe 

Proporty or any pare of the Property ceases to be used as Hontestead property or I declare other propertY I own to 

bo my Texas Homes1ead.. 1 aaroe that Ill)' Account shall he closed and that the enUre outstanding balance of my 

Account shall be due and payable immediately on anyaalc or otlter IIQR$fer of the Property, unliiSS prohibited by 

applicable law. rn this reprd, I undeetand dtat my A.tlCOunt i.~ acuml by a Security 1nsuument c:ontainins tbt: 

following or a sulJstanUally similar provision: 

1011$ 

DlloumcniS Pmcxucd Ot.0!.\.2007. 13>44:53 
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If all or any pan of the Propeny or any Interest in the Property L~ sold or uansferred (or ifBonower Is 

not a llldural person and a benefiCial intereat In Bonower is sold or ln!Mferred) witlloutl.endcr"a prior 

wriUen con~en1, Lencfer may require Immediate paym~l In filii of all sums secured by this Security 

lll."lnlment. Howwer, this option shall not bo ex~ised by Lender If such exerc:ise is prohibited by 

Applicable Law. 

If Lender exorcises this option, Lender sball give Borrower notice or aecelenttion. The nolic:o shall 

provide a period of not Jess than 30 days from tbe date the notice Is given In acc:ordance wilh Section 13 

within which Borrower mll$1 pay all sums .uml by this Security lnS\IIIIIIllnt lrBorrower faDs to pay 

these swns prior to the expiration or this period, Lender may invoke any ~medics permitted by this 

Security Instrument witb0111 filnher notice or demand on Borrower. 

SECTION 21: CHANGE IN TERMS 

To the extent allowed by law, I aaRC tbat the Bank may make cenain olumJCS to the temas of this Apeemont at 

speelfted times or vpon tho oc:cunem::e of S)leolfted events. Tha Bank may make in.,itpdftcant cbanaes, such as challgos ill tho address for payments, bllllna cycle dates, p&YmMI due dates, day of the month on which Index 

values an: dctonnincd, lndelt or intete$t rat~ rounding rules, and balance computation method (if the change produc~ an insisnillcant differenco in tile lntereat or FINANCE CHARGE I am required r.o pay). The Btmk 

may also make c:hanJO$ tllal will benefit me, such as addltl01181 opllons or a lempatary reduction in rates or fees. 

In aucordanoo with federal law. the Bank may also c:hiiRJO tho Index and Margin used to determine the ANNUAL 

PERCENTAGE RATE(S) that apr.ly to my Line of Credit Advances andfor Fixed Rate Advances if the original 

Index Ia no longer available. The Bank may make any of lhe chaoges discu.'llled above without my con.qont, 

unless applicable law provides otherwise. Tho Bank will give me any notice or clt!mae tbat is required by Jaw. I 

may also agree lo cbanges in wrilina. 

So long atlhe Property SC(;urill(l this Asrcemenl is my Texas hometlead n defmed by Chapter 41 of the Texas 

Propeny Code, lhe Bank may not, in any ci~umslanco. unlraterally amend the terms or this AgJeement. 

SECTION 12: WAIVERS· · 

BOBltQWQ'S WAIVERS 

I waive my riahttl to wquire the Bank co do certain things. Those things are: (a) to demand payment or amounls due (known as "presentment"); (b) to Jive notice lhat amounts due have not been paid (known as "notice of dishonor'')> (c) to obtain an omciaJ cmnu:atlon of nonpayment (lmown as "protesl"). 

lANK'S NON•WAIV£R • 

The Bank may fall to make use or any of ils riJhiS under this Agreement or the Securi&y Jnstnamcnt or under 

appllcablo law on one or more oocaslom, or dc:Jay or partially exercise such rights, wlthaut waiving any of its 

riJ)ds or amending any of my obligations. Tho Bank may r.n to mab use or any of iL<~ righL~> or delay or 

partially exen:lso such righrs against one party, without waiving ally of its rights against any other party to this 

Asrecmet~~. 

SECTION 23: GOVERNING LAW; SEVERABILITY 

All interest., fees and other amounta charged or accruing in connection with this Apeement wbiob are considered 

"interest" wilhin tho meanina ofS~tion 8S of tho National Bank Act (12 USC §BS; 12 CFR 7.4001(a)) sball be 

governed by and interpreted under South Dakola law. In all other teSpects, this Agreement and all ~lated 

document!!, as well as the righfS, remedies, and duties of the Bank and the Borrower(s). shall be governed and 

interpreted by federal law 'With respect to nalionel banks and, lo the extent not preempted by federal law, the 

laws of the state In which the Property is located, except that Texas Finance Code Chapter 346 (which re&111ates 

certain revolvin& credit accounts) does not apply to thi$ Ap:emenl. • 

If any provision of this Agreement or the Security Jnstm~nent is detennlned to be invalid or unenforc:eablc by a coun or competent jurisdiction, che Rj$t of this Agreement will mnllin in tUU fon:e and efreet and enforceable 

acconling to its tc:nn!i. All menmce~~ln this Agreemllnt to lhe singular shall include 1M plurallllld vice versa. 11115 

DOCUIDCIIIS 1"ru!ICS$Cd 0t.Q9•2007 t 13:44:53 
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SECTION 14: LOST OR STOLEN ADVANCE REQUEST CHECKS; BILLING ERRORS 

LOST OR 8J'OLEN APXANC£ REOUIST CRECQ fWUER£ AVAJyBLI): RQJ.ING IRRQRS 

I Will immediately contact the Bank at tha phone number oo my monthly billing lllatement 111d confinn by leiter 

if any or my Advance request cheeks arc ever lost or stolen, if tberc arc lillY enors in my monthlY billing statement. or iff suspect any 'IIJI8Uihotized use of my Ac:eount. 

The Bank will not rctum to me my canteUed Advance~~ checks or other AdVIII!ce request Jnstnunonts after ~)'iftg tham. The Ban}( wlll make available photocopies of my Advance RlqUCSl chEcks and other Advallee request 

msuuments upon request. I will ewnille mY AceoUIII atatemeniS promptly ift order to ldeatll)r any Improper or UllaU1horlzed entries, In coaaideralloa ror t1te Bank's pa)'IIICIIt of each Advance request check, I lllf" that even thouah I will110t JCCeive the original Advance Rqucst cheeks, all time periods llllder tho UnifOrm Commercial 

Code (UCC) for examinlna my mOIIthly billina statement and ~Jting lmpropor entries, inoludlng tbe UCC's 

statutes of limltalfOD with respect co fbrged, unllUihOrizecf, or missing signatures or endorsements, will begin 

fi'om the time my Ac:c:ount statement is first sent or made available to me. 

IJNAUTHQ.RIZED TRAN$ACTjON$ 

I will notity the Bank if someone baa b'anaferred, or may tranarcr IIIOl\e)' liom my A.ceo'lml wilbout my 

pennlssfon, or If I suspect any &audulent activity on my Accolml. I can call the Wells Fargo Pllont: Bank at the 

telephone number on my monthly blllint statement, anytime. 24 hours a day, 7 days a week. or advise my local 

Bank branch omce. l may al5o 5el1d written notice to the Bank at tho addrees incllcated on my billing statement. 

BW!nt lUgh!!- Ketp Dl1 Notlq Fqr Future UH 

This notice contain• lmpoJtanllnt'onnation about my rights and the Bank's responRibililies under the 'Fair Cnldlt 

Billing Act. 

Notify Tbe Bllpk In Case OfiJ'tm Or Ouutlont Abont My BID 

If t think my billing statement Is wrong. or if I need more illformation about a aran.•tion on my billing 

statement. J will &end a Iotter on a separate pqe co tho Dank, a$ soon as possible, at the acldr~ listed on my 

·billing sratemmt. ·ne Bank must heat &om me nc. later tban 60 days ·after dte Balllc mn me the first billing 

statement on which the &II$JJec:ted error or problem appears. I can telephone the Bank, but doing liO will not 

preserve my rishts. 

In my Jetter.l will proYide the Bank wilh tbo foDowina illfbrmation: 

• My namo. Ac:c:ouat llllnlber and cfaylimc phone number, and 

• Tho dollar amount of the &UI~ted error, and 

• A closcripllon or tltc error and OJtPianaclon, If possible. as ro why 1 believe thoro is an error. If I need mont 

information, I will describe the Item I am not sure about. 

If 1 have authOrized the Bank to pay my minimum monthly payment automaticaUy ftom my ohecldng acooulll at 

the Bank, I ean stop the paymont of any scheduled automatic payment if I believe a biDing error has oec&~rrcd. 

To atop chc payment, my letter must reaoh lho Blink at tcasr tfiiH businees da,ys before tho automatic payment ia 

scheduled lo occur. 

My lU!hta ADd The Bank's ft.tHIO!l!!!!iiWU After kdol Of fdY }Yrit&p Nallu • • The Bank must acknowledge my leiter within 30 day:~, uDleas the Bank ha$ coneoted tho error by then. W.ithm 

90 days. lhe Bank must either COI!Ult tho error or explain why 1M Bank believes the bmlng statement was 

concct. 

After the Bank rec:oives my letter, the Bank CIDIIOC 11y to collecl any amouat I question, or report me as 

delinquent. Tho Bank Gan continue to biD me for tho amount I queetlon. includina financ:e chmgcs, and the Bank can apply anY Wlp&id amoun1 against my credit limit. I 4o not llave to pay IUIY qucstaoned QIUO\Ull while the 

Bank Is researching my Ac:c:ount, but J am still obligated to pay tho parts of my bill thai are not in question. 

ll/15 

Doc:umenrs Pmc:essod 01.()9.2:007, 13:44:53 
59

lt the Bank fmds that a mistake was made on my billing stalelllent, I will not have to pay any ftnanee charges 

related to lhe questioned amount. lflhe Bank didn't mako a mistake, I will have to pay finaMC charges. and 1 

will have lo make up any missed payaJcn~s on lhe questlomd amount. In eilller case, the Bank will send me a $tatemtlllt of the amom~t I owe and the dalO chat payment is due. 

If 1 filii to pay the amount that the Bank dotennines I owe, the Bank may report me as delinquent. However, if 

the Bank's explanation docs not satiJfy me and I write to the Bank within ten daya tellina tbe Bank that l still 

refuse to pay, the Bank muat ten anyone the Bank repons me to lhatl have a quesclon about my biD. And. the 

Bank must tell me the name or anyona the Bank APOI1S me to. When the matter has been souled between the 

Bank and me, •II• Bank mllll tell anyone the Bank repc11ts mo to that tile matter has been setllcd. 

If die Bank does not follow the above rules, the Bank c:annot collect the fltst $50 of the questioned amoum, even it my billina statement waa corrc:c:c. 

SECTION 25: NOTICES 

Unless appllaabla law requires a ditTercnt method, any notice that must be pven to me or to anyone el$e who 

sips,a.mranteea or endoi'SOfllhis Aareement may be glwn by 11111ilina it to my addres& as aet forth abo-ve in Ibis 

Ap:emont, or to a different address If I have properly notified the Balik of tbat different adns. Any notice 

that I may send to the Bank must be afven by maill.q it to the Bank 111 lhe address provided on my billing 

statement, unless the aype of notice ls more specifically addreued in this Asreoment alld a different address is 

provided herein. 

If I contact YOII by phone. I acknowledge that telephone calls between me and the Bank or any of the Bank's 

amliaces may be monitored and recorded by the Bank or the Bank•s affiliaccs to ensure that my inquiries aro bandied prompdy, COIIrtiiOUSiy and ac<:~~raiCiy. 

I aaree that the Bank may c:ontact me by telephono. I qree to accept c:aJis &om the Bank at any telephone 

number that I provide to tile Bank. 

I aare«1 to aoeopt wls fi'om the Bank or the Bank's c;leslgnated rllllrest:ntatives which bqin with a verbal 

statement or tabbed messllJO IdentifYing the call as a business oan tiom tbe Bank. I ackllowledge and understand 

that some of the telephono Galls between me and tho Bank may be monitored and recorded to onsure that abe 

Bank handle& these calls courteou.,ly and ac:curately. 

SECTION 26: ADDENDA 

I agree to llt11 foJiowil\g attached addencla, rnodificalioM or an~elldmente: 

NIA ' 

SECTION 27; STATE DISCLOSURES 

N/A 

THIS AGREEMENT, mE SECURITY INSTRUMENT AND THE CLOSING DOCUMENTS EXECUTED 

HEREWITH CONSTITlJ'I'E A WRITIEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL 

AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRJO:R., 

CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS Or THE PARTIES. THERE ARE NO 

'UNWRITIEN ORAL AGREEMENTS BETWEENntE PARTIES RELAnNG TO THIS AGREEMENT. 

SECTION 28: PERSONAL LIABILITY (Texaa BGmestead PropertyOaly) 

I intend to comply with an provitioos and conditions of the Equity Law in orcJer toROI!Ie tbis Aatetment with a valid lien upon the Property. 1 will exc\lllte any document nccess&IY ro comply wilh all provisions and 

conditions of the Equ.lty Law in older to securo this Asreement with a valid lien IIJIOD die Property. If, for any 

reason the Property descn"bed in the Security Instrument Is not homesteSd property. due lo mistake,. ~r or misrepresentation by me or anyone else alping this AgreemeiU, then lite parties intaul and •pe that thas l•ne of 

l31U 

Docu!IIUIS Proctssed 01.09-2007. 13:44:53 
60

credit Is not an eqllity line or credir made under the Equity Law, the non-recourse provisions of lhe Equity law arc nor applicable:, and lbe: Security Instrument remain$ a wlid lien on the Property. 

SECTION ·19: FORFEITlJRE OF PRINCIPAL AND INTEREST; CURE OF VIOLATION 

11le Bank sball comply with any of it& obliptlons under sections SO(a)(6), SO(e)-(i), or !O(t) Anicle XVI, Texas 

ConslitudOD or olher provisions ofthis Aammcot and related loan documencs (colleclively. the "Obligations'1 

within 60 days after the Bank receives 110tlce of tile failure to comply, ullless 1he Bank remedies Chat failllle as provided in Texas COnstitution Art. XVI, Section SO(a)(6)(Q)(x). AAy 1101iec of non-compliance wJih any 

portion of !he Obliptions must b~ In wrili1J8, mailed poatage PJePaid by first eh1sa mall to: 

Wells FOJSo Bank Bxet111tive omce 

MACP60.5).016 

POBox4233 

Portland, Oteaon 97208 

or to a differeDt address If 1 am given notice pursuam to this Agreement of that different address. M a precondition to taking any action promised on tile fiilure of tile Bank to comply, I will cooperate in reasonable 

efforts to eft'ecluate any compliance. 

NOTICE TO THE BORROWER 

DO NOT SIGN THIS AGREEMENT IF IT CONTAINS BLANK SPACES. ALL SPACES SHOULP BE 

COMPLETED BEFORE THIS AGREEMENT IS SIGNED. READ THIS AGREEMENT BEFORE 

SIGNINGIT, . 

ACKNOWLEDGMENT 

I have reeelved. read aad ntalaed a copy or lhlir w~lls Ftugo Hom• Et•ily Acco11nt Aareement $ad 

Ditclosure Staa.ment (tilt "Atmmtat"), tile Security Jnstr11111ent, the Aareement to Provide Insurance, 

and the HOD Settlement Statement provided to- me at the closinJ, all of wlllcb I agree to by ttanlna tbiJ 

Aareement. The HlJD Stttlemen& Shtement is fDtorporated fnto and made a part or tllis Agmment. I 

aclmowltcJ&e receipt or tlae Wells Fmp HtH111 Bqulty Aaeollllt Important Terms dlttlosllre end lbe bome 

equity broC!hQre 'Wiata I applied for this Aceouat. In addltloll, I hereby qree tltllt the term• of thlt 

Alfeement replace tlte ttrms of any prior oral or written aanemeaD betweea the Bank and me abo~at tbls 

AcCGunt. lncludllla. for tumple. any and all commitment letters and pre-approwl leiters bemeea the 

B~ank and me abo~Mt. 

_ ~ <suo 0C- 1(-t:> 'f. :B-::::OF-RO~w==E~R~-~..::;..:::.....---------..w~~~~~o~ DATESlGNED 

JANOS F'ARKAS 

BORROWER 

BORROWER 

BORR.OWER 

WeJI5FarpHo-~~= Acc:ount Aa-t •••••• 

(Set\) 

DATE SIGNED 

DATE SIGNED 

DATE SIGNED 

14/lS 

Oocullltll1$1'roc<:$SGIOI.09-2007.13:44:Sl 
61

I 

BORROWER !§SAil 

fSeall 

BORROWER 

BORROWER Uiall 

BORROWER (~tall 

I 

DATE SIGNED 

DATE SIGNED 

DATE SIGNED 

DATE SIGNED 

&SitS 

OocumeniC Poousscd 01-4»-2.007. U:#:Sl 
70

.. 

After Recording Mail to: 

Wells Farg() Bank, N.A. 

Attn: Document Mgt. 

P.O.Box31557 

MAC 86908-012 

Billings, MT 59107-9900 

This Instrument Prepared by: 

Wells Fargo Bank, N.A. 

2202 W ROSE GARDEN LN 

PHOENIX, ARIZONA 8S027 

14 PGS III~IIIIIJIIMIIII!IImfll~~llltiiiiiii~IIOOIII DT 

Account Number: 650-650-4349999-lXXX j i \ ~ (_;! Reference Number: l0063367SOOO!t9 

THIS SECURITY INSTRUMENT SECURES AN EX1'ENSION OF CREDIT AS DEFINED BY SECTION 

5D(a)(6} AND 50(t), ARTICLE XVI OF THE TEXAS CONSTITUTION. 

DEFINITIONS 

TEXAS DEED OF TRUST 

(Securing Future Advances) 

Words used in multiple sections of this document are defined below and other words are defined elsewhere in this 

document. Certain rules regarding the usage of words ll~ed in this document are also provided in Section l4. 

(A) "Security Instrument" means this document, which is dated JANUARY 11, 2007, together with all Riders to 

Ibis ducwnent. 

(B) ''Borrower" is JANOS FARKAS, AN UNMARRIED PERSON. Borrower is the grantor under this Security 

Instrument. Borrower's Address is 6315 FARl\-IDALE, AUSTIN, TEXAS 78749. 

(C) "l..ender" is .Wells Fargo Rank, N.A .. Lender is a National Bank organized and existing under the laws of the 

United States. Lender's address is 101 North Phillips Avenue, Sioux Falls, SD 57104. Lender includes any holder 

of the Debt Instnnnent who is entitled to receive payment~ under the Debt Instrument. Lender is the beneficiary 

under this Security Instrument. 

(D) ''Trustee" is Stephen F. Marquart. 

Trustee's address is 4406 Piedras Drive West, Suite llO, San Antonio, TX 78228. 

(E) "Debt Instrument" means the Joan agreement or other credit instrument signed by Borrower and d&ted 

.JANUARY II, 2007. The Debt Instrument states that Borrower owes Lender, or may owe Lender, an amount that 

may vary from time to time up to a maximum principal sum outstanding at any one time of, ONE HUNDRED 

THREE THOUSAND FOUR HUNDRED FORTY-ONF: AND 00/lOOTHS DollarS (U.S. $ 103,441.00) plus 

interest. Borrower has promised to pay this debt in Periodic Payments and to pay the debt in full not later than 

January 11,2047. 

(F) "Property.., means the property that is described below under the heading "Transfer of Rights in the Property." 

(G) "Extension of Credit" means the debt evidenced by the Debt Instrument, as defined by Sedion 50(a)(6) and 

50( c), Article XVJ of the Texas Constirotion and all the documents executed in connection with the debt. 

(H) "Riders" means all Riders to this Security Instrument that are executed by Borrower. The following Riders are 

to be executed by Borrower [check box as applicable}: 

tf 

~ Leasehold Rider 

~ Trust Rider 

EXHIBIT 

IN1AI Other(s) [specify] 

TEXAS-·OPEN-ENP SECURITY INSTRUMENT 

liliiiillll111111111111111111 

~ Rcncw!ll and ExtensioiJ Rider 

N/A I 

{page I of' 14 pug~s} 

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~ 
71

(0 "Applicable Law" means all control\ing applicable federal law and, to the extent not preempted by federal law, 

state and local statutes, regulations, ordinances and administrative mles and orders (that have the effect of law) as 

well as all applicable final, non-appealable judicial opinions. 

(J) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges 

that may be impo~d on Borrowt:r or the Property by a condominium association, homeo"WneTS association or similar 

organization. 

(K) .. Electronic Funds Transfer" means any transfer of funds, other than a transaction originated by check, draft, 

or similar paper instrument, which is initiated through an electronic tenninal, telephonic in'l.trument, computer, or 

magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an accoWit. Such tenn 

includes, but is not limited to, point-of-sale transfers, automated teller machine transactions, transfers initiated by 

telephoae, wire tri111Sfers, and automated clearinghouse transfers. 

(L) "MisceUaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any 

third party (other than insurance proceeds paid under the coverages described in Section 4) for: condemnation or 

other taking of all or any part of the Property or conveyance in Jieu of condemnation. 

(M) "Periodic Payment, means the amounts as they become due for principal, interest and other charges as 

provided for in the Debt Instrument. 

(N) "Successor in Interest of Borrower" meall8 any party that has taken title to the Property, whether or not that 

party has assumed Borrower's obligation!! under the Debt Instrument and/or this Security Instrument 

TRAJ\iSFER OF RJGIITS IN THE PROPERTY 

This Security Instrument secures to Lender: (i) the repayment of the Extension of Credit, and all future advances, 

renewals. extensions and modifications of me Debt Instrument, including any future advances made at a time when 

no indebtedness is currently secured by this Security Instrument; and (ii) the performMce of Borrower's covenants 

and agreements under this Security Instrument and the Debt Instrument. For this purpose, Dorrower irrevocably 

grants and conveys to Trustee, in trust, with power of sale, the following described property located in the 

County of TRAVIS 

[Type of Recording Jurisdiction j [Name of Recording Jurisdiction] 

327357 

LOT 18, BLOCK 5, OF VILLAGE AT WESTERN OAKS SECTION 14, A SUBDIVISION IN TRAVIS 

COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT OF RECORD IN YOLL'ME 86, PAGES 80B81A, OF THE PLAT RECORDS OF TR.o\ VIS COUNTY, TEXAS. 

which currently has the address of 6315 FARMDALE LN --------------------~~~~~~~~~--------------------

---------'A""U-:=-::-ST-=-1::-:N-'------• Texas 

[City] 

[Street} 

78749 

[Zip Code] 

("Property Address"): 

TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, 

appurtenances. and fixtures now or hereafter a part of the property. All replacements and additions shall also he 

covered by this Security Tnstmmenl. 

All of the foregoing is referred to in this Security instrument as the "Property"; provided however, that the 

Property is limited to homestead property in accordance with Section 50(a)(6)(H), Article XVI of the Texas 

Constitution. The Property shall also include any additional property described in Section 20. 

BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the 

right to gran£ and convey tbe Property and that the Property is unencumbered. except for encumbrances of record as 

of the execution date of this Security Instrument. Borrower warrants and win defend generally the title to the 

Property against all clain1s and demands, subject to any encumbrances of record. 

TEXAS-OPEN-END SECURITY INSTRUMI!:NT 

HC#l62v7 (2/3/05) 

111111111111111111111111111 

fpag(' 2 ~( 14 pages; 

Documents ProccS$0d 0 1-0Q-2007, 13:44:5.1 

() . 

. 

. 

:n . . 
72

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 

1. Payment of Principal, Interest, Prepayment and Other Charges. Borrower shall pay when due the 

principal of, and interest on, the debt evidenced by the Debt Insl.nlment and any prepayment charges, late charges 

and other charges due under the Debt Instrument. Payments due under the Debt Instrument and this Security 

Instrument shall be made in U.S. currency. However, if any check or other instrument received by Lender as 

payment under the Debt Instrument or !.his Security Instrument is returned to Lender unpaid, Lender may require that 

any or all subsequent payments due under the Debt Instrument and this Security Instnuncnt be made in one or more 

of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's 

check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a 

federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer. 

Payments are deemed received by Lender when received at the location designated in (or in accordance 

with) the Debt Instrument or at such other location as may be designated by Lender in accordance with the notice 

provisions in Section 13. Subject to Applicable Law, Lender may return any payment or partial payment if the 

payment or partial payments are insufficient to bring the Extension of Credit current. Lender may accept any 

payment or partial payment insufficient to bring the Extension of Credit current, without waiver of any rights 

hereunder or prejudice to its rights to refuse such payment or partial payments in the future. 

2. Application of Payments or Proceeds. Unless other procedures are set forth in the Debt Instrument 

cr Applicable Law, Lender may apply payments in any order that Lender deems appropriate. 

Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under the 

Debt Instrument shall not extend or postpone the due date, or change the amount, of the Periodic Payments. 

3. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions attributable 

to the Property which can attain priority over rhis Security Instrument, leasehold payments or ground rents on the 

Property, if any, and Community Association Dues, Fees, and Assessments, if any. 

Borrower shall promptly discharge any lien which has priority over this Security Instrument unless 

Borrower: (a) has disclosed such lien to Lender at application for the Extension of Credit or agrees in writing to the 

payment of the obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is 

performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal 

proceedings which in Lender's opinion operate to prevent the enforcement of the lien while those proceedings are 

pending. but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement 

satisfactory to Lender subordinating the lien to this Security Instrument. If Lender detern~inM thai any part of the 

Property is subject to a lit:n that can attain priority over this Security Instrument and which was not disclosed on the 

application for the Extension of Credit that Borrower provided to Lender, Lender may give Borrower a notice 

identifying the lien. Within l 0 days of the date on which that notice is given, Borrower shall satisfY the lien or tnkc 

one or more of the actions satisfactory to Lender set forth above in this Section 3. 

Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or reporting 

service used by Lender in connection with this Extension of Credit. 

4. Property Insuranc~. Borrower shall keep tho: improvements now existing or hereafter erected on the 

Property insured against loss by fire, hazards included within !he tenn "extended coverage," and any other hazards 

including, but not limited to, earthquakes and floods, for which Lender requires insurance. This insurance shall be 

maintained in the amounts (including deductible levels) and for the periods that Lender requires. What Lender 

requires pursuant to the preceding sentences can change during the tern~ of the Extension of Credit. The insurance 

carrier providing the insurance shall be chosen by Borrower subject to Lender's right to disapprove Borrower's 

choice, which right shall not be exercised unrc:asonably. Lender may require Borrower to pay, in connection with 

this Extension of Credit, either: {a) a one-time charge for flood zone detennination, certification and tracking 

services~ or (b) a one-time charge tor flood zone detennination and certification services and subsequent charges 

each time remappings or similar changes occur which reasonably might affect such determination or certification. 

Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management 

Agency in connection with the review of any flood zone detennination resuJring from an objection by Borrower. 

If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage, 

at Lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount 

of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrowt:r's 

equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater 

or lesser coverage than was previously in effect. Borrower acknowledges that the cost of the insurance coverage so 

obtained might significantly exceed the cost of insurance that Borrower could have obtained. Any amounts 

disbursed by Lender under this Section 4 shall become additional debt of Borrower secured by this Security 

TEXAS-OPEN-END SECURITY INSTRUMENT 

HC#162v7 (2/3/05) 

11111111111111111111111.1111 

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Documcnls Pr\Jce~ecl 01-M-2007. 13:44:51 

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73

Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time to time, from 

the date of disbursement and shall be payable, with such interest, upon notice from Lender to Harrower requesting 

pa;;.ment. 

All insurance policies required by Lender and renewals of such policies shall be subject lo Lender's right to 

disapprove such policies, shaU include a standard mortgage clause, and shall name Lender as mortgagee and/or as an 

additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of 

the Debt Instrument up to the amount of the outstanding loan balance_ Upon Lender's re!juest. Borrower shall 

promptly give to lender copies of all policies, renewal certificate.<~, receipts of paid premiums and renewal notices. 

If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for damage to, or destruction 

of, the Property, such policy shall include a standard mongage clause and shall name Lender as mortgagee and/or as 

an additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of 

the Debt Instrument up to the amount of the outstanding loan balance. 

In the event of loss and subject to the rights of any lienholder with rights to insurance proceeds that are 

superior 10 Lender's rights, the following provision_s in this Section 4 shall apply_ Borrower shal1 give prompt notice 

to the insmance canier and Lender. Lender may make proof of loss if not made promptly by Borrower. Unless 

Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or noc the underlying insurance 

was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is 

economically feasible and Lender's se<:wily is not lessened. During such repair and restoration period, Lender shall 

have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property ro ensure 

the work has been completed to Lender's satisfaction, provided that such inspection shall be undertaken promptly. 

Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments 

as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on 

such insurance proceeds, Lender shall not be required to pay Borrower any interest or earnings on such proceeds. 

Fees for public adjusters, or other third parties, retained by Borrower shall not be paid out of the insurance proceeds 

and shall be the sole obligation of Borrower_ If the restoration or repair is not economically feasible or Lender's 

security would be lessened. the insurance proceeds shall be applied to the sums secured by this Security Instrument, 

whether or noc then due, with the excess, if any, paid to Borrower. Such insurance proceeds shall be applied in the 

order provided for in Section 2. 

If Borrower abandons the Propeny, Lender may file, negotiate and settle any available insurance claim anll 

related matters. If Borrower does not respond within 30 days to a notice from Lender that the insurance cattier has 

offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day period will begin when the 

notice is given_ In either event, or if Lender acquires the Property under Section 21 or otherwise, Borrower hereby 

assigns to Lender (a) Borrower·s rights to any insurance proceeds in an amount not to exceed the amounts Wlpaid 

under the Debt lut;trument or this Security Instrument, and (b) any other of Borrower's rights (other than the right to 

any refund of unearned premiums pl!id by Borrower) under all insurance policies covering the Property, insofar as 

such rights are applicable to the coverage of the Property. Lender may usc the insurance proceeds either to repair or 

restore the Property or to pay amounts unpaid undet the Debt Instrument or this Security Instrument, whether or not 

then due, subject to the rights of any lienholder with rights to insurance proceeds that are superior to Lender's rights. 

5. Occupancy. Borrower now occupies and uses the Property as BorTOwer's Texas homestead and shall 

continue to occupy the Property as Borrower's Texas homestead for at least one year after the date of this Security 

Instrumr.:nt, unless Lender otherwise agrees in '1\-riting, which consent shall not be unreasonably withheld, or unless 

extenuating circumstances exist which are beyond Borrower's control_ 

6. Prcscrvationt Maintenance and Protection of the Property; Inspections. Borrower shall not 

destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property. Whether 

or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property 

from deteriorating or decreasing in value due to its condition_ Unless it is detennined pursuant tu St:ction 4 thai. 

repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged to avoid 

further deterioration or damage. If insurance or cond~mnation proceeds a1e paid in connection with damage to, or 

rhe taking of, the Property, Borrower shall he responsible for repairing or restoring the Property only if Lender has 

released proceeds for such putposes_ Lender may disburse proceeds for the repairs and restoration in a single 

payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds 

are not sufficient to repair or restore the Property, Horrower is not relieved of Borrower's obligation tor the 

completion of such repair or restoration. 

TEXAS-OPEN-END SEClJRITV INSTRUMENT 

HCIII62vi (2/3105) 

11111111111111111111111111111 

(page 4 ol U pa_ges) 

Documenls Prue=""ll Ol-0~-2007, \3:44:5) 
74

Lender or its agent may make reasonable entries upon and inspections of the Property. If it has reasonable 

cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at 

the time of or prior to such an interior inspection specifying such reasonable cause. 

1. Borrower's Loan Application. Borrower's actions shall constitute acrual fraud under Section 

50{a)(6)(c), Article XVI of the Texas Constitution and Borrower shall be in default and may be held personally 

liable for the debt evidenced by the Note and this Security Instrument if, during the Extension of Credit, Borrower or 

any persons or entities acting at the direction of Borrower or with Borrower's knowledge or consent gave materially 

false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material 

information} in connection with the Extension of Credit or any other action or inaction that is detennined to be actual 

fraud. Material representations include. but are not limited to, representations concerning Borrower's occupancy of 

the Property as a Texas homestead, the representations and warranties contained in the Texas Home Equity 

Extension of Credit Agreement and Acknowledgement of Fair Market Value Affidavit as described in Section 27. 

8. Protcctioa of Lender's Interest in the Property and Rights Under this Security Instrument. If (a) 

Borrower fails to perform the covenants and agreements contained in this Security Instrument or any obligation that 

is secured by a lien that is superior to this Security Instrument, (b) there is a legal proceeding that might significantly 

affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in 

bankruptcy, probate, for condemnation or forfeiture, for enforcement of any lien which may attain priority over this 

Security Instrument or tu tmforoe laws or n:gulations), or (c) Borrower has abandoned the Property, then lender may 

do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this 

Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing 

the Property. Lender's actions can include, but are not limited to: (a) paying any sum!i secured by a lien which ha<; 

priority over this Security lnsnument; (b) appearing in court; and (c) paying reasonable auomeys' fees to protect its 

interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy 

proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change 

locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or 

dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 8, 

Lender does not have to do so and is not Wlder any duty or obligation to do so. It is agreed that Lender incurs no 

liability for not taking any or all actions authorized under this Section 8. 

Any amounts disbursed by Lender under this Section 8 shan become additional debt of Borrower secured 

by this Security Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time 

to time, from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower 

requesting payment. 

If this Security Instrument i!i on a leasehold, Borrower shall comply with all the provisions of the lease. If 

Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Lender agrees to the 

merger in writing. 

!). Assignment of Miscellaneous Proceeds; Forfeiture. All Miscellaneous Proceeds are hereby assigned 

to and shall be paid to Lender, !iubject to the rights of any lienholder with rights to MisceJlaneous Proceeds that are 

superior to Lender's rights. 

If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the 

Property, if the restoration or repair is economically feasible and Lender's security is not lessened. During such 

repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until Lender has had 

an opportunity to inspect such Property to ensure tht: work has been completed to Lender's satisfaction, provided 

that such inspection shall be undertaken promptly. Lender may pay for the repairs and restoration in a single 

disbursement or in a series of progress payment<~ a'> the work is completed. Unless an agreement is made in writing 

or Applicable Law requires interest to be paid on such Miscellaneous Proceeds, Lender shall not be required to pay 

Borrower at1y interest or earnings on such MisceUaneous Proceeds. Subject to the rights of any lienholder with 

rights to Miscellaneous Proceeds that are superior to Lender's rights, if the restoration or repair is not economical1y 

feasible or Lender's security would be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by 

this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such Misccllaneou~ 

Proceeds shall be applied in the order provided for in Section 2. 

Subject to the rights of any lienholder with rights to Miscellaneous Proceeds that are superior to Lender's 

rights, in the event of a total taking, destmction, or loss in value of the Property, the Miscellaneous Proceeds shall be 

applied to the sums secured by this Security Instrument, whether or not then due, wi1h the excess, if any, paid to 

Borrower. 

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In the event of a partial taking, destruction. or loss in value of the Property ir. which the fair market value of 

the Property immediately before the partial taking, destruction, or loss in value is equal to or greater than the amount 

of the sums secured by this Security Instrument immediately before the panial taking, destruction, or toss in value, 

unless Borrower and Lender otherwise agree in writing, the swns securt:d by this Security Instrument shall be 

reduced by the amount of the Miscellaneous Proceeds multiplied by the following fraction: (a) the total amount of 

the sums secured immediately before the partial taking, destruction, or loss in value divided by (b) tbe fair market 

value of the Property immediately before the partial taking, destruction, or loss in value. Subject to the rights of any 

lienholder with rights to Miscellaneous Proceeds that are superior to Lender's rights, any balance shall be paid to 

Borrower. 

In the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of 

the Property immediately before the partial taking, destruction, or loss in value is less than the amount of the sums 

secured immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise 

agree in writing, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument 

whether or not the sum.'l are then due, subject to the rights of any lienholder with rights to Miscellaneous Proceeds 

that are superior ro Lender's rights. 

If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that the Opposing Party 

(as defined in the next sentence) offers to make an award to settle a claim for damages, Borrower fails to respond to 

Lender within 30 days after the date the notice is given, Lender is authorized to collect and apply the Miscellaneous 

Proceeds either to restoration or repair of the Property or to the sums secured by this Security Instrument, whether or 

not then due, subject to the rights of any lienholder with rights to Miscellaneous Proceeds that are superior to 

Lender's rights. "Opposing Party"' means the third party that owes Borrower Miscellaneous Proceeds or the party 

against whom Borrower has a right of action in regard to Miscellaneous Proceeds. 

Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that, in Lender's 

judgment, could result in forfeiture of the Property or other material impairment of Lender's interest in the Property 

or rights under this Security Instrument. Borrower can cure such a default by causing the action or proceeding to be 

dismissed with a ruling that, in Lender'!! judgment, precludes forfeiture ofthe Property or other material impainnent 

of Lender's interest in the Property or rights under this Security Imtrwnent. The proceeds of any award or claim for 

damages that are attributable to lhe impairment of Lender's interest in the Property are hereby assigned and shall be 

paid to Lender. 

All Miscellaneous Proceeds that are not applied to restoration or repair of the Property shall be applied in 

the order provided for in Section 2, subject to the right'! of any lienholder with rights to Miscellaneous Proceeds that 

are superior to Lender's rights. 

10. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time for payment 

or modification of amortization of the sums secured by this Security Instrument granted by Lender to Borrower or 

any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any Successors in 

Interest of Borrower. Lender shaH not be required to conunence proceedings against any Successor in Interest of 

Borrower or to refhse to extend time for payment or otherwise modify amortization of the sums secured by this 

Security Instrument by reason of any demand made by the original Borrower or any Successors in Interest of 

Borro~r. Any forbearance by Lender in exercising any right or remedy including, without limitation, I .ender's 

acceptance of payments from third person~. entities or Successors in Interest of Borrower or in amounts less than the 

amount then due, shall not be a waiver of ~r preclude the exercise of any right or remedy. 

11. Joint and Several Liability; Co-trustors; Successors and Assigns Bound. llorrower covenants and 

agrees that Borrower's obligations and liability shall be joint and several, however, for any extension of credit 

subject to Tex. Canst. Art. XVI § 50(a)(6), no O\\'IIer of the Property or spouse of the owner of the Property will be 

held personally liable for the amount due under the Deht Instrument, unle~s the owner or the spouse of the owner 

obtained the extension of credit under the Debt Instrument by actual fraud. Any Borrower who signs this Security 

Instrument but does not execute the Debt Instrument (a "co-trustor''): (a} is signing this Security Instrument only to 

mortgage, grant and convey the co--trustor's interest in the Property under the terms of this Security Instrument; (b) is 

not personally ob1igated to pay the sums secured by this Security Instrument; and {c) agrees that Lender and nny 

other Borrower can agree to extend, modifY, forbear or make any accommodations with regard to the terms of this 

Security Instrument or the Debt Instrument without the co-trustor's consent. 

Borrower's obligations are not assumable. The covenants and agreements of this Security Instrument shall 

bind (except as provided in Section 17) and benefit the successors and assigns of Lender. 

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12. Loan Charges. Lender may charge Borrower fees for services perfonned in connection with 

Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security 

Instrument. including, but not limited to. auomeys· fees. property inspection and valuation fees. In regard to any 

other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not 

be construed as a prohibition. on the charging of such fee. Lender may not charge fees that arc expressly prohibited 

by this Security Instrument or by Applicable Law. 

If the Extension of Credit is subject to a law which sets maximum Joan charges, and that law is finally 

interpreted so that the interest or other loan charges collected or to be collected in connection with the Extension of 

Credit exceed the permitted limits. then: (a) any such loan charge shall be reduced by the amount necessary to reduce 

the charge to the pem1ilted limit; and (b) any sums already collected from Borrower which exceeded permitted limits 

will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed under the 

Debe Instrument or by making a direct payment to Borrower. lf a refund reduces principa1, the reduction will be 

treated as a partial prepayment without any prepayment charge (whether or not a prepayment charge is provided for 

under the Deht Instrument). Borrower's acceptance of any such refund made by direct payment to l:lormwer will 

constitute a waiver of any right of action Borrower might have arising out of such overcharge. 

13. Noti£es. Unless otherwise described in the Debt Instrument or in another agreement between Borrower 

and Lender, the following provisions regar!ling notices shall apply. All notices given by Borrower or Lender in 

connection with this Security Instrument must be in writing. Any notice to Borrower in connection with this Security 

Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually 

delivered to Borrower's notice address if sent by other means. Notice to any one Borrower shall constitute notice to 

all BorroweiS unless Applicable Law expressly requires otherwise. The notice address shall be the PropeJ1y Address 

unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly notify 

Lender of Borrower's change of address. If ~nder ~pecifies a procedure for reporting Borrower's change of 

address, then Borrower shall only report a change of address through that specified procedure. There may be only 

one designated notice address for Borrower under the Extension of Credit at any one time. Any notice to Lender 

shall be given by delivering it or by mailing it by first class mail to Lender's address stated herein un1ess Lender has 

designated another address by notice to Borrower. Any notice in connection with this Security In.-.trument shall not 

be deemed to have been given to Lender lllltil actuaUy received by Lender. If any notice required by this Security 

Instrument is also required under Applicable Law, the Applicable Law requirement will satisfy the corresponding 

requirement wtder this Security Instrument. 

14. Governing Law; Severability; Rules of Construction. This Security Instrument shall be governed 

by federal law and, to the extent not preempted by federal law, the law of the jurisdiction in which the Property is 

located. Ali rights and obligations contained in this Security Instrument are subject to any requirements and 

limitations of Applicable Law. Applicable Law might ex.plicitly or implicitly allow th~: parti~::s to agree by contract 

or it might be silent, but such silence shall not be construed as a prohibition against agreement by contract. In the 

event that any provision or clause of this Security Instrument or the Debt Instrument conflicts with Applicable Law, 

such conflict shall not affect other provisions of this Security Instrument or the Debt Instrument which can be given 

effect without the cont1icting provision_ 

As used in this Security Instrument: (a) words of the masculine gender shall mean and include 

corresponding neutt:r words or words of the feminine gender; (b) words in the singular shall mean and include the 

plural and vice versa; (c) the word "may" gives sole discretion without any obligation to take any a~tion; and (d) 

headings that appear at the beginning of the sections of this Security Instrument are inserted for the convenience of 

the reader only, shall not be deemed to be a part of this Security Instrument. and shall not limit, extend, or delineate 

the scope or provisions of this Security Instrument. 

15. Borrower's Copy. Borro~ shall be given one copy of the Debt Instrument and of this Security 

Instrument. 

Hi. Transfer of the Property or a Bencficiallntere!lt in Borrower. As used in this Section 16, .. Interest 

in the Property" means any legal or beneficial interest in the Property, including, but not limited to. those beneficial 

interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent 

of which is the transfer of title by Borrower at a future date to a purchaser. 

If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a 

natura! person and a beneficial interest in Borrower is sold or transferred) without Lender's prior written consent. 

Lender may require immediate payment in full of all swns secured by this Security Instrument However, this option 

shall not be exercised by Lender if such exercise is prohibited by Applicable Law. 

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If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide 

a period of not less than 30 days from the date the notice is given in accordance with Section I 3 within which 

Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the 

expiracion of this period, Lender may invoke any remedies permitted by this Security Instrument without further 

notice or demand on Borrower. 

17. Sale of Debt Instrument; Change of Loan Servicer; Notice of Grievance. The Debt Instrument or a 

partial interest in the Debt Instrument {together with this Security Instrument) can be sold one or mme times without 

prior notice to Borrower. A sale might result in a change in the entity (known as the "Loan Servicer") that collects 

Periodic Payments due under the Debt Instrument and this Security Instrument and performs other mortgage loan 

servicing obligationJ; under the Debt Instrument, this Se~:urity Instroment, and Applicable Law. There also might be 

one or more changes of the Loan Servicer unrelated to a sale of the Debt Instrument. If there is a change of the Loan 

Servicer, Borrower will be given written notice of the change as required by Applicable Law. If the Debt Instrument 

is sold and thereafter the Extension of Credit is serviced by a Loan Servicer other than the purchaser of the Debt 

Instrument, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred 

to a successor Loan Servicer and are not assumed by the purchaser of the Debt Instrument unless otherwise provided 

by the purchaser of the Debt Instrument. 

Nt:ither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an 

individual litigant or the member of a class) that arises from the other party's actions pursuant to this Security 

Instrument or that. alleges that the other party has breached any provision of, or any duty owed by reason of, this 

Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in 

compliance with the requirements of Section 13) of such alleged breach and afforded the other party hereto a 

reasonable period after the giving of such notice to take corrective action. If Applicable Law provides a time period 

that must elapse before certain action can be taken, that time period will be deemed to be reasonable for purposes of 

this paragraph. The notice of acceleration and opportunity to cure given to Borrower pursuant to Section 21 and the 

notice of acceleration given to Borrower pursuant to Section 16 shall be deemed to satisfy the notice and opportunity 

to take corrective action provisions of this Section 17. If Borrower and Lender have entered into an agreement to 

arbitrate disputes, the provisions of any such arbitration agreement shall supersede any provision in this Section 17 

that would conflict with the arbitration agreement. 

18. Hazardous Substances. As used in this Section 18: (a) "Hazardous Substances" are those substances 

defined as toxic or hazardous substances, pollutants, or wastes by Environmental Law and the following subst11nces: 

gasoline, kerosene, other flanunable or toxic petroleum products, toxic pesticides and hel'bicides, volatile solvents, 

materials containing asbestos or formaldehyde, mold, and radioactive materials; (h) .. Environmental Law" means 

federal laws and laws of the jurisdiction where the Property is located that relate to health, safety or environmental 

protection; (c) "Environmental Cleanup" includes any response action, remedial action, or removal action, as defmed 

in Envkoruncntal Law; and (d) an ••Environmental Condition" means a condition that can cause, contJ-ibute to, or 

otherwise trigger an Environmental Cleanup. 

Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous 

Substances, or threaten to release any Hazardous Substances, on or in the Property_ Borrower shaU not do, nor allow 

anyone else to do, anything affecting the Property (a) that is in violation of any Environmental Law, (b) which 

create:. an Enviromnental Condition, or (c) whicb, due to the presence, use, or release of a Hazardous Substance, 

creates a condition that adversely affects the value of the Property. The preceding two sentences shall not apply to 

the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally 

recognized to be approprjate to normal residential uses and to maintenance of the Property (including, but not limited 

to, hazardous substances in consumer products}. 

Borrower shall promptly give Lender written notice of(a) any investiga!ion, claim, demand, lawsuit or other 

action by any governmental or regulatory agency or private party involving the Property and any Hazardous 

Substance or Environmental Law of which Borrower has actual knowledge, (b) any Envirorunentat Condition, 

including but not limited to, any spilling, leaking, discharge, release or threat of release of any Hazardous Substance, 

and (c) any condition caused by the presence. use or release of a Hazardous Substance which adversely affects the 

value of the Property. If Borrower learns, or is notified by any governmental or regulatory authority, or any private 

pany. that any removal or other remediarion of any Hazardous Substance affecting the Property is necessary, 

Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. Nothing herein 

shall create any ubligation on Lender for an Environmental Cleanup. 

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19. Condominiums; Planned Unit Developments. Solely 10 the extent permitted by§ 50(a)(6)(H), Anicle 

XVI of the Texas Constitulion, the Property shall include the types of properLy described in this Section 19. If the 

Property is a unit in a condominium project ("Condominium Project"} or is part of a planned unit development 

{"PUD"), Borrower agrees to the following: 

A. Obligations. Borrower shall perfonn all of Borrower's obligation.<~ under the Constituent Documents. 

The "Constituent Documents" are the: (i) Declaration or any other document which creates the Condominium Project 

or Pu"D and any condominiwn association, homeowners association or equivalent entity ("Community 

Association"); (ii} any by-laws or other rules or regulations of the Community Association; and (iii) other equivalent 

documents. Borrower shall promptly pay, when due, all Community Association Dues, Fees, and Assessments. 

B. Property. For units in a Condominium Project, the Property includes the unit in, together 'With an 

undivided interest in the common elements of, the Condominium Project, and Borrower's interest in the Community 

Association and the uses, proceeds and benefil~ ofRorrower's interest. For PUDs, the Property includes, but is not 

limited to, a parcel of land improved with a dwelling, together with other such parcels and certain common areas and 

facilities, as described in the Constituent Documents, and Borrower's interest in the Community Association and the 

uses, benefits and proceeds of Borrower's interest. 

C. Property Insurance. So long as the Community Association maintains, with a generally accepted 

insurance carrier, a "master" or "blanket" policy insuring the Property wltich is satisfactory to Lender and which 

provides insurance coverage in the amounts (including deductible levels), for the periods, and against loss by fire, 

hazards included within the tenu '\:xlended coverage," and any other hazards, including, but nor Hmited to, 

earthquakes and floods, for which Lender requires insurance, then Borrower's obligation under Section 4 to maintain 

property insurance coverage on the Property is deemed satisfied to the extent that the required coverage is provided 

by the Community Association policy. Borrower shall give Lender prompt notice of any lapse in required property 

insurance coverage provided by the master or blanket policy. In the event of a distribution of property insurance 

proceeds in lieu of restoration or repair following a loss to the Property, whether to the unit or to common elements 

of the Condominium Project or to common areas and facilities of the PUD. any proceeds payable to Borrower are 

hereby assigned and shall be paid to Lender for application to the sums secured by chis Security Instrument, whether 

or not then due, with the excess, if any, paid to Borrower, subject to tht: rights of any lienholder with rights to 

insurance proceeds that are superior to Lender's rights. 

D. Public Liability Insurance. Borrower shall take such actions as may be reasonable to insure that the 

Community Association maintains a public liability insurance policy acceptable in form, amount, and extent of 

coverage to Lender. 

E. Condemnation. The proceeds of any award or claim for damages, direct or consequential, payable to 

Borrower in connection with any condemnation or other raking of all or any part of the Property, whether oftbe unit 

or of the common elements of the Condominium Project or the common areas and facilities of the PUD, or for any 

conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender, subject to the rights of any 

lienholder with rights to such proceeds that are superior to Lender's rights. Su(;h proceeds shall be applied by 

Lender to lht:: sums secured by the Security Instmment as provided in Section 9. 

F. Lender's Prior Consent. Borrower shall not, except after notice to Lender and with Lender's prior 

written consent, either partition or subdivide the Property or consent to: (i) the abandonment or termination of the 

Condominium Project or PUD, except for abandonment or termination required by law in the case of substantial 

destruction hy fire or other casualty or in the case of a taking by condemnation or eminent domain; (ii) any 

amendment to any provision of the Constituent Documents if the provision is for the express benefit of Lender; 

(iii) termination of professional management and assumption of self-management of the Community Association; or 

(iv) any action which would have the effect of rendering the public liability insurance coverage maintained by the 

Community Association unacceptable to Lender. 

G. Remedies. If Borrower does not pay Community Associa!ion Dues, Fees, and Assessments when due, 

then Lender may pay them. Any amounts disbursed by Lender under this paragraph G shall become additional debt 

of Borrower secured by this Security Instrument. Unless Borrower and Lender agree to other tenns of payment, 

these amounts shall bear interest al the rate applicable to the Debt Instrument from time to time, from the date of 

disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment. 

20. Acceleration; Remedies. Bon-ower will be in default if (I} any payment required by the Debt 

Instrument or this Security Instrument is not made when it is due; (2) Lender discovers that Borrower or any 

co-applicant has committed fraud or made a material misrepresentation in connedion with the Extension of 

Credit; (3) Borrower takes any action or fails to take any action that adversely affects Lender's rights under 

this Security Instrument, any of Lender's other security for the Debt Instrument, or any right Lender has in 

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the Property; or (4) Borrower is an exe.:utive officer of Lender and federal law permits or requires immediate 

payment ofthe Loan. If a default occurs (other than under Section 16 or under subscdion (4) of this Section 

21, unless Applicable Law provides otherwise), Lender wiJI give Borrower notice specifying: (a) the default; 

(b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to 

Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date 

specified in the notice will result in acceleration of the sums secured by this Security Instrument and sale or 

the Property. The notice shall further inform Borrower of the right to bring a court action to assert the nonexistellee of a default or any other defense of Borrower to acceleration and sale. If the default is not cured on 

or before the date specified in tbe notice, Lender at its option may require immediate payment in full of all 

sums secured by this Security Instrument without further demand and may invoke the power of sale and any 

other remedies permitted by Applinble Law. Insofar as allowed by Section 50(a)(6h Article XVI of the 

Texas Constitution, Lender shall be entitled to collect all expenKs incurred in pursuing the remedies provided 

in this Section 21. including, but not limited to, ~ourt costs, reasonable attorneys• fees and costs of title 

evidence. 

Tbe lien evidenced by this Security Instrument may be foreclosed upon only by a court order. 

Lender may, at its option, follow any rules of civil proeedure promulgated by the Texas Supreme Court for 

expedited foreclosure proceedings related to the foredusure of liens under Sediun 50(a)(6), Article XVI of the 

Tnas Constitution ("Rules"). as amended from lime to time, which are hereby incorporated by reference. 

The power of sale granted herein shall be exercised pursuant to such Rules, and Borrower ••nderstands that 

such power of sale is not a confession of judgment or a power of attorney to confess judgment or to appear 

for Borrower in a judicial proceeding. 

21. Power of Sale. It is the elepress intention of lender and Borrower that Lender shaU have a fully 

enforceable lien on the Property. It is also the express intention of lender and Borrower that Lender's default 

remedies shall include the most expeditious means of foreclosure available by law. Accordingly, Lender and Trustee 

shall have all the powers provided herein except insofar as may be limited by tne Texas Supreme Court. To the 

extent the Rules do not specifY a procedure for the exercise of a power of sale, the following provisions of this 

Section 21 shall apply, if Lender invokes the power of sale. Lender or Trustee shall give notice of the time, place 

and terms of sale by posting and filing the notice at least 21 days prior to sale as provided by Applicable Law. 

Lender shall mail a copy of the notice of sale to Borrower in the manner prescribed by Applicable Law. Sal..: shall 

be made at public venue. The sale must begin at the time stated in the notice of sale or not later than three hours 

after that time and between the hours of I 0 a.m. and 4 p.m. on the first Tuesday of the month. Borrower authori<:es 

Trustee to sell the Property to the highest bidder for cash in one or more parcels and in any order Trustee detennines. 

Lender or its designee may purchase the Property at any sale. In the event of any conflict between such procedure 

and the Rules, the Rules shall prevail, and this provision shall automatically be reformed to the extent necessary to 

comply. 

Trustee shall deliver to the purchaser who acquires title to the Property pursuant to the foreclosure of the 

lien a Trustee's deed conveying indefeasible title to the Property with covenants of general warranty &om Borrower. 

Borrower covenants and agrees to defend generally the purchaser's title to the Property against all claims and 

demand:s. The recitals in the Tl11Stee's deed shall be prima facie evidence of the truth of the statements made therein. 

Trostee shall apply the proceeds of the sale in the following order; (a) to all expenses of the sale, including, but not 

limited to, court costs and reasonable Trustee"s and attorneys' fees; (b) to aU sums seemed by this Security 

Instrument; and {c) any e"-cess to the person or persons legally entitled to it. 

If the Property is sold pursuant to this Section 21, Borrower or any person holding possession of the 

Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale. If 

possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ 

of possession or other court proceeding. 

22. Release. Within a reasonable time after tennina1ion and fuU payment of the Extension of Credit, 

Lender shall cancel and return the Debt Instrument to the oWIJer of the Property and give the owner, in recordable 

fonn, a release of the lien securing the Extension of Credit or a copy of an endorsement of the Debt Instrument and 

assignment of the lien to a lender thar is refinancing the Extension of Credit Owner shall pay only recordation costs. 

OWNER'S ACCEPTANCE OF SUCH RELEASE, OR ENDORSEMENT AND ASSIGNMENT, SHALL 

EXTINGUISH ALL OF LENDER'S OBLIGATIONS UNDER SECTION 50(a)(6), ARTICLE XVI OF THE 

TEXAS CONSTITUTION. 

23. Non-Recourse Liability. Lender sball.be subrogated to any and all rights, superior title, liens aud 

equities owned or claimed by any owner or holder of any liens and debts outstanding immediately prior to execution 

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hereof, regardless of whetb.er said liens or debts are acquired by Lender by assignment or are released by the holder 

thereof upon payment 

Borrower understands that Section 50(a)(6)(C), Article XVI of the Texas Constitution provides that the 

Debt Instrument is given without personal liability against each owner of the Property and against the spouse of each 

owner unless the owner or the spouse of lhe owner obtained this Extension of Credit by actual fraud. This means 

that, absent such actual fraud, Lender can enforee its rights under this Security Instrument solely against the Property 

and not personally against the ov.ner of the Property or the spouse of an owner. 

If this Extension of Credit is obtained by such actual fraud, then, subject to Section I 0, Borrower will be 

personally liable for the payment of any amounts due under the Deht Instrument or this Security Instrument. This 

means that a personal judgment could be obtained against Borrower, if Borrower fails to perfonn Borrower's 

responsibilities under the Debt Instrument or this Security Instrument, including a judgment for any deficiency that 

results from Lender's sale of the Property for an amount less than is owing under the Debt Instrument, thereby 

subjecting Borrower;s other assets to satisfaction of the debt. 

If not prohibited by Section SO(a)(6)(C), Article XVI of the Texas Constitution, this Section 23 shall not 

impair in any way the lien of this Security Instrument or the right of lender to collect all sums due under the Debt 

Instrument and this Security Instrunlent or prejudice the right of Lender as to any covenants or conditions of the Debt 

Instrument and this Security Instrument. 

24. Substitute Trustee; Trustee Liability. All rights, remedies and duties of Trustee under this Security 

Instrument may be exercised or perfonned by one or more trustees acting alone or together. Lender, at its option and 

with or without cause, may from time to time, by power of attorney or otherwise, remove or substitute any trustee, 

add one or more trustees, or appoirlt a successor trustee to any Trustee without. the necessity of any fonnality other 

than a designation by lender in "'Titing. Without any further act or conveyance of the Property the substitute, 

additional or successor trustee shall become vested with the title, righls, remedies, powers and duties conferred upon 

Trustee herein and by Applicable Law. 

Trustee shall not be liable if acting upon any notice, request, consent, demand, statement or other document 

believed by Trustee to be correct. Trustee shall not be liable for any act or omission unless such act or omission is 

willful. 

25. Provisions Related to Section SO(a)(6) and Section SU(t), Article XVI of the Texas Constitution 

(a) Proceeds. Borrower has not been required to apply the proceeds of the Extension of Credit to repay 

another debt except a debt secured by the Property or debt to another lender. 

(b) No Assignment of Wages. Borrower has not assigned wdges as security for lhe E~ tension of Credit. 

(c) Acknowledgment of Fair Market Value. Lender and Borrower have executed a written 

acknowledgment as to the fair market value of Borrower's Property on the date the Extension of Credit is made. 

(d) Acknowledgment of Waiver by Lender of Additional Collateral. Borrower acknowledges that 

Lender waives all tenns in any of Lender's loan documentation (whether existing now or created in the future) which 

(a) create cross default; (b) provide for additional collateral; and'or (c) create personal liability for any Borrower 

(except in the event of actual fraud), for the Extension of Credit. This waiver includes, but is not limited to, any (a) 

guaranty; (b) cross collateralization; (c) future indebtedness; (d) cross default; and/or (e) dragnet provisions 1n any 

loan documentation with Lender. 

BY SIGNING HELOW, Borrower accepts and agrees to the terms and covenants contained in this Security 

Instrument and in any Rider executed by Borrower and recorded with it. 

DO NOT SIGN IF THERE ARE BLANKS LEFT TO BE COMPLETED IN THIS DOCUMENT. THIS 

DOCUMENT MUST BE EXECUTED AT THE OFFICE OF LENDER, AN ATTORNEY AT LAW OR A 

TITLE COMPANY. YOU MUST RECEIVE A COPY OF THIS DOCUMENT AFTER YOI: HAVE 

SIGNED IT. 

YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THIS EXTENSION 

OF CREDIT WITHOUT PENALTY OR CHARGE. 

TEXAS-OPEN-END SECURITY INSTRUMENT (po.ge II (}{ 14 pageJJ 

ilillilillllllllllllllllllll Docum~nls Processed 0 ~·09·2007, 13:44:53 

,_;·2:. ... _XI., .... ....,~ 

l!iL .r:. ,, >. _.rt.'-~· ' ((~ -i·~~ i r;;:!,i ~~~~· ~\ 

. .::.:1~ g~ ·~~ ....... 

' 
81

Printed Name:. __ ':C....::...::c~~~Y.~a'"'.:::..\...-=:,__--'!.~_;C(~v~· ..;.;k=.~~~­ [Please Complele] 

Printed Name: 

[Plea.l'e Complete] 

Printed Name: ______________ _ 

[P/e(lSe Complete] 

Printed Name: _____________ _ 

[Please Complete) 

Printed Name:. ______________ _ 

{Please Complete] 

Printed Name: 

[Please Complete] 

TEXAS-O.I'EN-END SECURITY INSTRUMENT 

HC#I62v7 (21.3/05) 

1111111111111111110111111111 

_J_i-''l-S-(F_-~AR-~KAS-~-~--~--=~~-.---(Seal) 

·- ·t ~~ ~ 

AND - Borrower 

_________________ (Seal) 

-Borrower 

_____________ (Seal) 

-Borrower 

________ (Seal) 

-Borrower 

-~-----------(Seal) -Borrower 

_____________ (Seal) 

-Borrower 

fpage 12 r.f 14 pages) 

Documents Processed 0 1-09-2007, 13:44:53 
87

Brice. Vander Linden & Wernick, P.C Aitomeys 11nd CtMJnseJon 

LEGAL I'RECF.DENT IS NOT Cl.ED AS :ro Wll1!.7'HER THE SENDING OF THIS l.ET1'6lt MAKES lm A 

DEBT COJ.LEC'ItJR. 1'0 THE J!X1StiT JT DOE$, WE AilE PL&fSED 10 AIJnsE 'fOll rHAT TH1&' IS AN 

ATTEMPT TO COLLECT A DEBT. AND ANY JNIIOBMAf'ION OIT.MNED W.U.L BE IJSED FOR THAT PIJRJIO.fE. 

HO.Jf'EJI'BJt, IF YOV ARE IN lUNKRVPTCY Oll HAn£ BEBN liiSCJIAR.CEJ) IN .84NKRlii'R:Y. TRIG LE1'7ER 

13 FOit INRJAMATIONJIL l'Ul!P<JSES ONLT AND 19 NOT INl'EifDED AS AN AT1EMPT TO COUI!Cr A 

IJEBT OR ASAN ACT ro COLlECT, ~ Olt RECOYER AU OR ANY POR'I'ION OF THE DEB1' FROM 

'f(J{J PE~U.Y. 

JANOS fARI<AS 

6)1~ FARMDALE LN 

.AUSTIN, TX 78749 

Aprii21,201J 

J<4!;099961706J ;&31SFARMDAU!LN,Al1811N, lx787.49 

NOTICE OF DEFAVLT AND JNTENTlONTO ACCELERATE 

W~ ltple!ent Wells. Farao "Holnll Equily. vA~oe~tadd.- is 3476 Slatc'l'iiiWBIVd, l'ort Mill. SC 29715 "Ydl~. ffil is 1'101 

t~ Cumnt Martpsae, is IIOiin& as IIlii M011111lgo Scnlc~ 1111d rGprOimllln,g the Cu!Ttlll MOifiiPI' p11111m111 10 a Mllrl~ 

SorvlclniA~ tllllWIIinlllhtNound D9cl oJTrusr \\fUcl! QTe taSOetmcl with tile abow•~ loan ~U~~ber. 

Our .finn bit been ~ues1ed to pu~JU~: ll(lttoj~ ~ proeessingln acconlal:nw!lh IJie laln8 oflha Nolo and 

Docd of'l'l'lllt and applica~li: law. As J prwt~~~isila 10 ~illS: the eon1mo:t\la1 risJ>l$ of !lie 'Note and t)e!ed or'l'nllt, ad 

plll~l'lllo lhe pnwl~o~ofllte Taxa• P~ Code. S«tlon !1.002, 1~ fbllowins 111>tiU$ ansproY!d~ 1o ,101t 

I. Tho IO&YI$ inddbult tJr&ihms ID mdce1ht NqpOior n\11mllly )l~Jeqllirl!d by 1M Noll: and Delld ofTna 

2. The aetion IY!quircd 1o cure 1M de6uk isiZ.~ of' all SIIIN d~~& alldertllo Noll: lll'od DeedOfTP!$1:. 

J. I(~ dc!hlllt i~ IICl wed by:lllcllpl.)lllllolllwitltinllllrty l30)dll)" oflllt cbtcoflbis notice, \viiiiOIIIIIuthernolico or demaniS. 

the nullurily dateof'lbll Ntlle\\'111 bucce{orwcl 111111 allauns ~~eetnd by the Doed of'Trusl ~lfbll declared m N.lmmedi#lely 

due- and payablt. Tlw~u, U b i"tendld lhatll>epmpettybe ~d by ltSubsliN!e Trusleo eu public iorealo.moolltll~. 

4. Alletii.C«<uatmn, IIIOUrillg of Ill~ dmllllllllll ~ oNhr: 10111 will~ p$1!1\ll!ad:priorto tl1'1Ui1111 ot'$G.It by paying ik 

put d~ mBUTIIr mtllllhly JKiyrnents anct other SU111S due olldv ~ Nalllencl Deed ofTrustli!ICI bywmplyins "Wilb 111 terms of' 

n:instoCemenr. 

Accor4ing to~ mRlm!a!icm PIOYidfd lO 115 by01H ~liant, as of Mwcb 2.2, 201 J .!he llllDUIIIIIQuired to e'llle !be default 

is $2,Dil.:l0. Betallil'l ofacfditionaJ iM181lmenlt11•11 mol)'~ dPe lll!d Q!JI!f' eharges N ~ vmy ftOIP 41;ay co d!IY, the 

0111011111 "'(UirCII to CUR>dle de!IIPlr·an~dJyyoudoODio IOptll 111111 bcp:mr. lien~», i1)V8payi~MUIPI1\Iib0Wil~ an 

&djtlslmenl may be nt:Ce$111IY aftet yo11r e!lodc il ~ved ill ...ticb euem we ll'ill intonn you befbre tile cl1eck is cl~ for 

collec&n. 'I' or ftl11flef illf'N>N~oliol!, ..nit us It 8ri'e~~, Vandet Lilldeft 1r. W<!rnii:k, P£,. Fondow~e Dl:pq.11o-nt~oL. 9441 LSJ 

F~, SUi1~2SO, Dallo.s, TI!Xll» 7S243w~11VB81972~. 

Persons •IIIIo ""' nbliS"UUd on lbe debt e\'idenc~ lJy 'lids Note 1111d DMd ot'Tru£1 «\\~otherwise purebascl! a00 howe 

&n irte1e61 in lhe I""J'Cf1Y ~d by II$ De:d orTitl$1 lltC hereb)o given llOik:c nfT!te fi!rqgin&toac'her wilb lba tilllowill& 

additional matrer.s: 

I. Yo1.1 b!l~tbe ril!htt.r>brinsa <:auructimr loa$1Zllllll~non-4:xi51enc:eo!ade~u!1QI'enyothcrdellmst 111111 mayel>ist 

. 2. tr.,sal preoeden! is I10t dear as·IO ~ile!hcr 11\e setxling ar 111illcllcc-l1llllleS 1l$ 8 debt (O!)r:o:~c~r. To llle ~IC!II ildoos. \W: 8/Y! 

pleastcl 10 advise you lha!llli$1e\ter ~antl!et'llpl10 c;ollocl o. debt and any illfonnnliM obl1ll'ltll win b1: IHCd 1brlbat pllfll0$C.. 

J. Yll~tllre Cl1cour:~g.~ 10 .send 10 us~ inlllnnatio11 you have that SU&g851$1119t the lo~m is 1'01 in defAillc cr th:~r the tl'l'IOll111 of 

dcl'aulr is diffi!tenl liom Ill( l1111(Jlln1 lndicabi i1t this ltller. Upcm meiJ)t ofstldt iPfll!mlion, WI: will be pJI!aselJ 10 fo!Vo'iUd 

the-inlbi'WUlliOA to the lender tor""~"' Sind Mill.-~. 

B~. Vlllldcr Linden 11 Wem~, P..C. 

EXHIBIT 

3-Pr 
203

Brice. Vander Linden & Wernick, P.C. 

May24,20II 

Attorneys and Counselors 

9441 LBJ Freeway, Suite 250 

Dallas, Texas 75243 

Office (972) 643-6600 

LEGAL PRECEDENT IS NOT CLEAR AS TO WHETHER THE SENDING OF THIS LETTER MAKES US 

A DEBT COLLECTOR. TO THE EXTENT IT DOES, WE ARE PLEASED TO ADVISE YOU THAT TmS 

IS AN ATTEMPT TO COLLECT A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR 

THAT PURPOSE. HOWEVER, IF YOU ARE IN BANKRUPTCY OR HAVE BEEN DISCHARGED IN 

BANKRUPTCY, THIS LETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT 

INTENDED AS AN ATTEMPT TO COLLECT A DEBT OR AS AN ACT TO COLLECT, ASSESS, OR 

RECOVER ALL OR ANY PORTION OF THE DEBT FROM YOU PERSONALLY. 

JANOS FARKAS 

9600 ESCARPMENT BLVD STE 745-4 

AUSTIN, TX 78749-I982 

Re: 63I5 FARMDALE LN, AUSTIN, TX 78749 

Loan No. 09996I706I 

Our File No. 9508-0790 

Our Case No. VS-09996I7061-FC 

DEFAULT CURE INQUIRY RESPONSE 

In response to your recent inquiry, we are pleased to provide the attached default cure information from your 

lender. We encourage you to read it carefully. The following brief summary is provided as an aid but not an alternative 

to your reading of the attached. 

Default Cure Amount: $19,604.23 

Good Through Date: 06/20/20 I I 

Receipt Deadline: 10:00 A.M. (Central) on II/OI/20II, or the good through date above, whichever is 

earlier. 

Certified Funds Payable To: Wells Fargo Home Equity 

Deliver Payment To: A TrN: FRCL Inquiry Unit 

Brice, Vander Linden & Wernick, P.C. 

9441 LBJ Freeway. Suite 250 

Dallas, Texas 75243 

Foreclosure processing will continue and will not be stopped unless the default cure amount is received in our 

office before the receipt deadline. If the default cure amount is not received by the receipt deadline and the good 

through date expires before the scheduled sale date, you must submit a request for an updated default cure amount. 

The default cure amount reported in the attached may not include amounts incurred or accrued but not 

currently appearing in your lender's records. Your timely tendering of the default cure amount will stop the current 

foreclosure processing; however, you will have to arrange for the timely payment of any additional amounts incurred or 

accrued or your loan may be returned to foreclosure processing. 

The foreclosure fees and costs reported in the attached may include both fees and costs already incurred and 

fees and costs projected to be incurred on/or before the good through date. Upon receipt of your timely payment, we 

will determine the actual fees and costs due to us at that time, invoice that amount to our client, and report the difference, 

if any, to your lender for further handling. 

Should you have any questions concerning the attached information, please do not hesitate to contact us at 

972/643-6600. 

Very truly yours, 

Brice, Vander Linden & Wernick, P.C. 

Selim Taherzadeh 

Attachment 

File: 9508-0790 
204

Brice, Vander Linden & Wernick, P.C. 

May 24,2011 

Attorneys and Counselors 

9441 LBJ Freeway, Suite 250 

Dallas, Texas 75243 

Office (972) 643-6600 

LEGAL PRECEDENT IS NOT CLEAR AS TO WHETHER THE SENDING OF THIS LETTER MAKES US 

A DEBT COLLECTOR. TO THE EXTENT IT DOES9 WE ARE PLEASED TO ADVISE YOU THAT THIS 

IS AN ATTEMPT TO COLLECT A DEBT9 AND ANY INFORMATION OBTAINED WILL BE USED FOR 

THAT PURPOSE. HOWEVE~ IF YOU ARE IN BANKRUPTCY OR HAVE BEEN DISCHARGED IN 

BANKRUPTCY9 THIS LETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT 

INTENDED AS AN ATTEMPT TO COLLECT A DEBT OR AS AN ACT TO COLLECT9 ASSESS9 OR 

RECOVER ALL OR ANY PORTION OF THE DEBT FROM YOU PERSONALLY. 

JANOS FARKAS 

9600 ESCARPMENT BLVD STE 745-4 

AUSTIN, TX 78749-1982 

Re: 

Loan No.: 

Our File No.: 

Our Case No.: 

6315 FARMDALE LN, AUSTIN, TX 78749 

0999617061 

9508-0790 

VS-0999617061-FC 

LOAN PAYOFF INQUIRY RESPONSE 

In response to your recent inquiry, we are pleased to provide the attached payoff information from your lender. We 

encourage you to read it carefully. The following brief summary is provided as an aid but not an alternative to your 

reading of the attached. 

Payoff Amount: 

Good Through Date: 

Receipt Deadline: 

$123,127.31 

06/20/2011 

10:00 A.M. (Central) on 11/01/2011, or the good through date above, whichever is 

earlier. 

Certified Funds Payable To: Wells Fargo Home Equity 

Deliver Payment To: A1TN: FRCL Inquiry Unit 

Brice, Vander Linden & Wernick, P.C. 

9441 LBJ Freeway, Suite 250 

Dallas, Texas 75243 

Foreclosure processing will continue and will not be stopped unless the payoff amount is received in our office 

before the receipt deadline. If the payoff amount is not received by the receipt deadline and the good through date 

expires before the scheduled sale date, you must submit a request for an updated payoff amount. 

The payoff amount reported in the attached may not include amounts incurred or accrued but not currently 

appearing in your lender's records. Your timely tendering of the payoff amount will stop the current foreclosure 

processing; however, you will have to arrange for the timely payment of any additional amounts incurred or accrued or 

your loan may be returned to foreclosure processing. 

The foreclosure fees and costs reported in the attached may include both fees and costs already incurred and 

fees and costs projected to be incurred on/or before the good through date. Upon receipt of your timely payment, we 

will determine the actual fees and costs due to us at that time, invoice that amount to our client, and report the difference, 

if any, to your lender for further handling. 

Should you have any questions concerning the attached information, please do not hesitate to contact us at 

972/643-6600. 

Very truly yours, 

Brice, Vander Linden & Wernick, P.C. 

Selim Taherzadeh 

Attachment 

PAYOFF INQUIRY RESPONSE File: 9508-0790 
604

DC BK14295 PG59 

CAUSE NO. D-1-GN-11-003692 

JANOS FARKAS, 

Plaintiff, 

v. 

§ 

§ 

§ 

§ 

§ 

WELLS FARGO BANK, N.A. AND BRICE, § 

VANDER LINDEN & WERNICK, P.C., § 

n/k/a BUCKLEY MADOLE, P.C. § 

Defendants. § 

IN THE DISTRICT COURT OF 

TRAVIS COUNTY, TEXAS 

201ST ruDICIAL DISTRICT 

FINAL ORDER AND JUDGMENT 

On this day, the Court considered the First Amended Traditional and No-Evidence 

Motion for Summary Judgment and Motion to Sever ("Wells Fargo's Motion") filed by 

Defendant Wells Fargo Bank, N.A.; the Motion for Partial Summary Judgment ("Plaintiffs 

Motion") filed by Plaintiff Janos Farkas; Plaintiffs Objections and Motion to Strike and Exclude 

the Summary Judgment Evidence of Defendant Wells Fargo Bank, N.A. (the ("Objections"); and 

Defendant Brice, Vander Linden & Wernick, P.C. 's Traditional and No-Evidence Motion for 

Summary Judgment ("Brice's Motion"). 

After careful consideration of Wells Fargo's Motion, Plaintiffs Motion, the Objections, 

and Brice's Motion, any timely responses thereto, the competent evidence, all pleadings properly 

before the Court, the arguments of counsel, and all other matters properly before the Court, the 

Court rules as follows: 

Wells Fargo's First Amended Traditional and No-Evidence Motion for Summary 

Judgment is GRANTED and Plaintiff Janos Farkas shall take nothing by his claims against 

Defendant Wells Fargo Bank, N.A. 

Plaintiffs Motion for Partial Summary Judgment is hereby DENIED. 

Plaintiffs Objections are hereby OVERRULED and Plaintiffs motion to strike and 

exclude Defendant Wells Fargo Bank, N.A. 's summary judgment evidence is hereby DENIED. 

ORDER 

PAGE 1 OF 2 

A US:056744 7/003 58 :551442v3 
605

DC BK14295 PG60 

Defendant Brice, Vander Linden & Wernick, P.C.'s Traditional and No-Evidence Motion 

for Summary Judgment is GRANTED and Plaintiff Janos Farkas shall take nothing by his claims 

against Defendant Brice, Vander Linden & Wernick, P.C. 

Defendant Wells Fargo Bank, N.A.'s Motion to Sever is DENIED as moot. 

This judgment finally disposes of all claims by Plaintiff and is appealable. 

n -(~ 

SIGNED this the 

'? 

J day of October, 2014. 

AGREED AS TO FORM: 

William D. Davis 

DAVIS & ASSOCIATES 

P.O. Box 1093 

Dripping Springs, Texas 78620 

Attorneys for Plaintiff 

B. David L. Foster 

John W. Ellis 

LOCKE LORD LLP 

600 Congress Ave., Suite 2200 

Austin, Texas 78701 

Attorneys for Wells Fargo Bank, N.A. 

ORDER 

AUS:0567447/00358:551442v3 

) 

THE HONORA E LORA IVINGSTON 

TRAVIS COUNTY DISTRICT JUDGE 

Sammy Hooda 

Michael Bums 

BUCKLEY MADOLE, P.C. 

9441 LBJ Freeway, Suite 250 

Dallas, Texas 75243 

Attorneys for Brice, Vander Linden & Wernick, 

P.C. nlkla Buckley Madole, P.C. 

PAGE20F2 
Supreme Court of Texas.

Frankie SIMS, on Behalf of Himself and all Others

Similarly Situated; and Patsy Sims, on Behalf of Herself

and all Others Similarly Situated, Appellants,

v.

CARRINGTON MORTGAGE SERVICES, L.L.C., Appellee.

No. 13–0638.

Argued Dec. 4, 2013.

Decided May 16, 2014.

Rehearing Denied Oct. 3, 2014.

Background: Borrowers brought putative class action

against loan servicer for their home equity loans, alleging that parties' post-loan transactions violated Texas

Constitution. The United States District Court for the

Northern District of Texas, John McBryde, J., 889

F.Supp.2d 883, granted servicer's motion to dismiss.

Borrowers appealed. The United States Court of Appeals for the Fifth Circuit, 538 Fed.Appx. 537, affirmed

in part and certified questions to the Texas Supreme

Court.

Holding: The Supreme Court, Hecht, C.J., held that restructuring of home equity loan was not extension of

new credit required to comply with constitutional requirements for new loan.

Questions answered.

West Headnotes

Homestead 202 99

202 Homestead

202I Nature, Acquisition, and Extent

202I(E) Liabilities Enforceable Against

Homestead

202k99 k. Loans and advances. Most Cited

Cases

Mortgages 266 306

266 Mortgages

266VII Payment or Performance of Condition, Release, and Satisfaction

266k306 k. Change in time or mode of payment.

Most Cited Cases

The restructuring of a home equity loan that involved capitalization of past-due amounts owed under

the terms of the initial loan and a lowering of the interest rate and the amount of installment payments, but

did not involve the satisfaction or replacement of the

original note, an advancement of new funds, or an increase in the obligations created by the original note,

was not a new extension of credit that was required to

meet the constitutional requirements for a new loan;

capitalization of past-due amounts was simply a mechanism for deferring payments of obligations already

owed in a way that allowed borrowers to retain their

homes. Vernon's Ann.Texas Const. Art. 16, § 50.

*11 David M. Gottfried, Law Office of David Gottfried,

P.C., Austin, Earl Berry Jr., Hurt & Berry, LLP, Edom,

James Patrick Sutton, The Law Office of J. Patrick Sutton, Austin, Jeffrey W. Hurt, Hurt & Berry LLP, Dallas,

TX, for Appellant.

Amanda Schaeffer, Benjamin David Lee Foster, Daron

L. Janis, Robert T. Mowrey, Thomas G. Yoxall, William Scott Hastings, Locke Lord LLP, Austin, TX, for

Appellee.

Ken Carroll, Carrington Coleman Sloman & Blumenthal, Dallas, TX, for Amicus Curiae Federal National

Mortgage Association.

Karen M. Neeley, Cox Smith Matthews, Inc., Austin,

TX, for Amicus Curiae Independent Bankers Association of Texas.

B. Scott Daugherty, for Amicus Curiae, Texas Bankers

Association.

John C. Fleming, Law Office of John C. Fleming, Austin, TX, for Amicus Curiae Texas Bankers Association.

Page 1

440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588

(Cite as: 440 S.W.3d 10)

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
Chief Justice HECHT delivered the opinion of the

Court.

To avoid foreclosure, homeowners and lenders often try

to restructure underwater home mortgage loans that are

in default by capitalizing past-due amounts as principal,

lowering the interest rate, and reducing monthly payments, thereby easing the burden on the homeowners.

But home equity loans are subject to the requirements

of Article XVI, Section 50 of the Texas Constitution.

The United States Court of Appeals for the Fifth Circuit

has asked whether those requirements apply to such

loan restructuring.FN1 We answer that as long as the

original note is not satisfied and replaced, and there is

no additional extension of credit, as we define it, the restructuring is valid and need not *12 meet the constitutional requirements for a new loan.

FN1. 538 Fed.Appx. 537 (5th Cir.2013) (per

curiam); see TEX. CONST. art. V, § 3–c(a)

(“The supreme court [has] jurisdiction to answer questions of state law certified from a federal appellate court.”).

I

Frankie and Patsy Sims obtained a 30–year home equity

loan in 2003. In 2009, the Simses, behind on their payments, reached what was entitled a “Loan Modification

Agreement” with Carrington Mortgage Services, L.L.C.

The agreements involved capitalizing past-due interest

and other charges, including fees and unpaid taxes and

insurance premiums, and reducing the interest rate and

monthly payments. Two years later, the Simses were

again behind, and this time CMS sought foreclosure.

The Simses resisted, asserting that the 2009 restructuring violated constitutional requirements for home equity

loans. The parties then reached a second “Loan Modification Agreement”, further reducing the interest rate

and payments. The following chart summarizes the loan

data at the outset and after the two restructurings:

Principal Amt. Cap'd New Prin. Rate Payment Appraisal

2003 Loan $76,000.00 — — 9% $611.51 $96,000

2009 Mod. $72,145.50 $2,200.00 $74,345.50 6.5% $511.16 $72,300

2011 Mod. $72,655.61 $7,368.44 $80,023.95 4.75% $492.34 $73,000

The original note required the Simses to pay principal, interest, and late charges.FN2 The security agreement echoed that requirement and added an obligation

for the Simses to make payments for “Escrow Items”,

such as taxes, assessments, and insurance premiums.

FN3 The security agreement also authorized the lender

to “do and pay for whatever is reasonable or appropriate” to protect its interest in the property and its rights

under the agreement and provided that any amount the

lender disbursed to that end “shall become additional

debt of Borrower secured by this Security Instrument.”

The 2009 and 2011 “Loan Modification Agreements”

provided that all the Simses' obligations and all the loan

documents remained unchanged.FN4

FN2. The note signed by the Simses stated: “In

return for a loan that I have received, I promise

to pay U.S. $76,000.00 (this amount is called

‘principal’), plus interest, to the order of the

Lender.” The note also provided for a 5% late

charge on overdue principal and interest.

FN3. The security instrument stated:

“Borrower shall pay to Lender on the day Periodic Payments are due under the Note, until the

Note is paid in full, a sum (the ‘Funds') to

provide for payment of amounts due for: (a)

taxes and assessments and other items which

can attain priority over this Security Instrument

as a lien or encumbrance on the Property; ...

and (c) premiums for any and all insurance required by Lender under Section 5. These items

are called ‘Escrow Items.’ ”

Page 2

440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588

(Cite as: 440 S.W.3d 10)

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
FN4. The 2009 agreement stated: “All covenants, agreements, stipulations, and conditions

in your Note and Mortgage will remain in full

force and effect, except as modified herein, and

none of your obligations or liabilities under

your Note and Mortgage will be diminished or

released by any provisions hereof, nor will this

Agreement in any way impair, diminish, or affect [the] rights under or remedies on your

Note and Mortgage.”

Similarly, the 2011 Agreement stated: “[A]ll

terms and provisions of the Loan Documents,

except as expressly modified by this Agreement, remain in full force and effect; nothing

in this Agreement shall be understood or

construed to be a satisfaction or release in

whole or in part of the obligations contained

in the Loan Documents; and [ ] except as

otherwise specifically provided in, and expressly modified by, this Agreement, the

Lender and you will be bound by, and will

comply with, all of the terms and conditions

of the Loan Documents.”

Two months after the 2011 agreement, the Simses

brought this class action *13 against CMS in the United

States District Court, alleging that CMS's loan modifications for them and other similarly situated borrowers

violated Article XVI, Section 50 of the Texas Constitution. Before considering certification, the court dismissed the case under Federal Rule of Civil Procedure

12(b)(6) for failure to state a cause of action,FN5 and

the Simses appealed. After oral argument, the Fifth Circuit certified the following four questions to us:

FN5. 889 F.Supp.2d 883, 884 (N.D.Tex.2012).

1. After an initial extension of credit, if a home

equity lender enters into a new agreement with the

borrower that capitalizes past-due interest, fees, property taxes, or insurance premiums into the principal of

the loan but neither satisfies nor replaces the original

note, is the transaction a modification or a refinance

for purposes of Section 50 of Article XVI of the

Texas Constitution?

If the transaction is a modification rather than a refinance, the following questions also arise:

2. Does the capitalization of past-due interest, fees,

property taxes, or insurance premiums constitute an

impermissible “advance of additional funds” under

Section 153.14(2)(B) of the Texas Administrative

Code?

3. Must such a modification comply with the requirements of Section 50(a)(6), including subsection

(B), which mandates that a home equity loan have a

maximum loan-to-value ratio of 80%?

4. Do repeated modifications like those in this case

convert a home equity loan into an open-end account

that must comply with Section 50(t)?

II

As we have more fully explained in prior decisions,

because of Texas' strong, historic protection of the

homestead, home equity loans are regulated, not by statute as one might suppose, but by the “elaborate, detailed

provisions” of Article XVI, Section 50 of the Texas

Constitution.

FN6 To provide guidance to lenders, the

Finance Commission and the Credit Union Commission

have been authorized by the Constitution and by statute

to interpret these provisions, subject to judicial review,

FN7 and the Commissions have done so in Chapter 153

of the Texas Administrative Code.FN8 “A lender's compliance with an agency interpretation of Section 50,

even a wrong interpretation, is compliance with Section

50 itself.” FN9 Thus, in answering the certified questions, we look to the constitutional text and the Commissions' interpretations. However, those interpretations

“can do no more than interpret the constitutional text,

just as a court would.” FN10 The issue is not whether a

lending practice or policy is advisable, something the

Commissions would decide in exercising their regulatory functions; the issue is what the Constitution requires.FN11

FN6. Fin. Comm'n of Tex. v. Norwood, 418

S.W.3d 566, 571 (Tex.2013); see also LaSalle

Bank Nat'l Ass'n v. White, 246 S.W.3d 616, 618

(Tex.2007) (per curiam) (“Texas became the

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last state in the nation to permit home-equity

loans when constitutional amendments voted

on by referendum took effect in 1997.”).

FN7. Norwood, 418 S.W.3d at 573; TEX.

CONST. art. XVI, § 50(u).

FN8. 7 TEX. ADMIN. CODE §§ 153.1–.96

FN9. Norwood, 418 S.W.3d at 573.

FN10. Id. at 585.

FN11. Id.

A

The certified questions assume a distinction

between a loan modification and a refinancing that, if

understood in financial *14 circles,FN12 is not clear in

the text of Section 50. Neither concept is defined in

Section 50. The word “refinance” is used eleven times

in Section 50, and “refinancing” once.FN13 In each instance, the reference seems to be to a redone transaction. A form of the word “modify” is used in three

places in Section 50. In one, lenders are authorized to

“modify” previously provided documentation at closing

in exigent circumstances.FN14In the other two, lenders

can correct noncompliance with Section 50 by sending a

borrower “notice modifying any ... amount, percentage,

term, or other provision prohibited by this section”,

FN15 or, if noncompliance cannot be cured under the

other provisions, by offering the borrower a $1,000

credit and “the right to refinance the extension of credit” for the remaining term at no cost “with any modifications necessary to comply” or that the parties agree

will comply.FN16 In these two instances, if not also in

the first, a modification could substantially alter the

loan; indeed, in the last situation, modifications can

shape the refinancing.FN17

FN12. CMS points to the Federal Reserve

Board's definition of a “refinancing” requiring

new Truth In Lending Act disclosures under

Regulation Z when refinancing is undertaken

by the original creditor, or a holder or servicer

of the original obligation. Under this definition,

a refinancing is “a new transaction requiring

new disclosures” that “occurs when an existing

obligation that was subject to [federal ‘closed

end credit’ disclosure requirements] is satisfied

and replaced by a new obligation”. 12 C.F.R. §

226.20(a); 12 C.F.R. pt. 226, supp. 1, cmt.

20(a) (Official Staff Interpretations). Some

transactions, however, will not be treated as a

refinancing under this section, including “[a]

change in the payment schedule or a change in

collateral requirements as a result of the consumer's default or delinquency, unless the rate

is increased, or the new amount financed exceeds the unpaid balance plus earned finance

charge and premiums for continuation insurance....” Id. § 226.20(a)(4). The Federal National Mortgage Association, in an amicus

brief, references the same regulation but does

not otherwise attempt to define a distinction

between refinancings and modifications. An

amicus brief by the Independent Bankers Association of Texas, the Texas Bankers Association, and the Texas Mortgage Bankers Association refers to the distinction but does not attempt to define it. Other federal entities, like

HUD and FDIC, have their own glossaries referring to and defining general terms like

“modification,” “mortgage modification,”

“refinancing,” and “debt restructuring,” but

these agencies, to fulfill their specific missions,

also define and apply more specific classifications or limitations.

FN13. TEX. CONST. art. XVI, § 50(a)(4),

(a)(6)(M)(iii), (a)(6)(Q)(vii), (a)(6)(Q)(x)(f),

(a)(8); § 50(e) and (f).

FN14. Id. § 50(a)(6)(M)(ii).

FN15. Id. § 50(a)(6)(Q)(x)(c).

FN16. Id. § 50(a)(6)(Q)(x)(f).

FN17. Section 153.96(b) of the Commissions'

interpretations contemplates that in order to

comply with constitutional requirements, “the

lender ... and borrower may ... modify the

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equity loan without completing the requirements of a refinance”. 7 TEX. ADMIN.

CODEE § 153.96(b)(2)(A).

The modification-refinancing distinction is one

drawn by the Commissions in interpreting Section

50(a)(6)(M)(iii). The effect of that provision is to prohibit a second home equity loan within a year of the

first, with certain exceptions. As interpreted by the

Commissions, the provision prohibits a “refinancing”

like a “new equity loan” but not a “modification”.FN18

According to the *15 Commissions, a modification does

not involve satisfaction or replacement of the original

note, an “advance of additional funds”, or new terms

that would not have been permitted for the original

“extension of credit”.FN19 Further, the original loan

and a subsequent modification are treated as a single

transaction, including for purposes of the 3% fee cap.

FN20

FN18. “ § 153.14. One Year Prohibition: Section 50(a)(6)(M)(iii)

“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.

“(1) Section 50(a)(6)(M)(iii) prohibits an

owner who has obtained an equity loan from:

“(A) refinancing the equity loan before one

year has elapsed since the loan's closing date;

or

“(B) obtaining a new equity loan on the same

homestead property before one year has

elapsed since the previous equity loan's closing date, regardless of whether the previous

equity loan has been paid in full.

“(2) Section 50(a)(6)(M)(iii) does not prohibit modification of an equity loan before one

year has elapsed since the loan's closing date.

A modification of a home equity loan occurs

when one or more terms of an existing equity

loan is modified, but the note is not satisfied

and replaced. A home equity loan and a subsequent modification will be considered a

single transaction. The home equity requirements of Section 50(a)(6) will be applied to

the original loan and the subsequent modification as a single transaction.

“(A) A modification of an equity loan must

be agreed to in writing by the borrower and

lender, unless otherwise required by law. An

example of a modification that is not required to be in writing is the modification required under the Soldiers' and Sailors' Civil

Relief Act.

“(B) The advance of additional funds to a

borrower is not permitted by modification of

an equity loan.

“(C) A modification of an equity loan may

not provide for new terms that would not

have been permitted by applicable law at the

date of closing of the extension of credit.

“(D) The 3% fee cap required by Section

50(a)(6)(E) applies to the original home

equity loan and any subsequent modification

as a single transaction.”

7. TEX. ADMIN. CODE § 153.14 (emphasis

added).

FN19. Id. § 153.14(2).

FN20. Id. § 153.14(2)(D).

But Section 50(a)(6)(M)(iii) of the Constitution

does not mention refinancing or modification. It states:

(a) The homestead ... is ... protected from forced

sale[ ] for the payment of all debts except for: ...

(6) an extension of credit that: ...

(M) is closed not before: ...

(iii) the first anniversary of the closing date of

any other extension of credit described by SubsecPage 5

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tion (a)(6) of this section secured by the same

homestead property [with certain exceptions]....

FN21

FN21. TEX. CONST. art. XVI, § 50

(a)(6)(M)(iii) (emphasis added).

The applicability of this particular provision, as

well as all of Section 50(a)(6), which governs home

equity loans, depends not on whether the transaction is

a modification or a refinance but on whether it is an

“extension of credit”. If the restructuring of a home

equity loan does not involve a new extension of credit,

the requirements of Section 50(a)(6) do not apply. Thus,

we restate the first certified question as follows:

1. After an initial extension of credit, if a home

equity lender enters into a new agreement with the

borrower that capitalizes past-due interest, fees, property taxes, or insurance premiums into the principal of

the loan but neither satisfies nor replaces the original

note, is the transaction a new extension of credit for

purposes of section 50 of Article XVI of the Texas

Constitution?

B

Neither the Constitution nor the Commissions' interpretations define an “extension of credit”, but its

meaning is clear. Credit is simply the ability to assume

a debt repayable over time, and an extension of credit

affords the right to do so in a *16 particular situation.

FN22

FN22. See, e.g., TEX. FIN.CODE §

31.002(a)(34) (“ ‘Loans and extensions of credit’ means direct or indirect advances of money

... to a person that are conditioned on the obligation of the person to repay....”); id. §

181.002(a)(28) (same); id. § 350.001(a)

(“credit means the right granted to a debtor to

defer payment of debt or to incur debt and defer its payment”); id. § 393.001(4) (“

‘extension of consumer credit’ means the right

to defer payment”); see also 7 TEX. ADMIN.

CODE § 12.3(a)(2) (defining “[l]oans or extensions of credit” for purposes of TEX.

FIN.CODE § 34.201 as including various transactions involving an advance of funds to be repaid over time).

The Simses argue that any increase in the principal

amount of a loan is a new extension of credit within the

meaning of Section 50(a)(6), in effect equating the loan

principal with an extension of credit. The Constitution

contradicts the Simses' argument. Section 50(a)(6)(E)

refers to principal as a component of an extension of

credit, capping fees at “three percent of the original

principal amount of the extension of credit”.FN23 The

extension of credit for purposes of Section 50(a)(6) consists not merely of the creation of a principal debt but

includes all the terms of the loan transaction. Terms requiring the borrower to pay taxes, insurance premiums,

and other such expenses when due protect the lender's

security and are as much a part of the extension of credit as terms requiring timely payments of principal and

interest. The Simses argue that in restructuring a loan to

capitalize past-due amounts, the lender is actually advancing additional funds to itself (past-due interest) or

others (past-due taxes and insurance) to pay those

amounts for the borrower, and that this constitutes a

new extension of credit. But the borrower's obligation

for such amounts, and the lender's right to pay them to

protect its security, were all terms of the original extension of credit. The Simses argue that requiring interest

on capitalized, past-due amounts is really a new loan,

but it is simply a mechanism for deferring payment of

obligations already owed in a way that allows the borrower to retain his home.

FN23. TEX. CONST. art. XVI, § 50(a)(6)(E)

(emphasis added).

The Simses argue that a loan that can be restructured to change the amount of the periodic payments

does not meet the requirement of Section 50(a)(6)(L)(i)

that loans be “scheduled to be repaid ... in substantially

equal successive period installments”.FN24 But the required schedule is not one that, when initially set, can

never be altered. After all, whenever a payment is

missed, the schedule is altered. Further, Section 50(g)

gives the borrower the right to prepay the loan,FN25

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which would alter the initial schedule. Section 50(a)(6)

does not forbid a revision of the initial repayment

schedule that merely adjusts the regular installment

amount.

FN24. Id. § 50(a)(6)(L)(i).

FN25. TEX. CONST. art. XVI, § 50(g).

CMS argues that restructuring a loan does not involve a new extension of credit so long as the borrower's note is not satisfied or replaced and no new money

is extended. We agree that these two conditions are necessary, but we cannot say with assurance that they are

sufficient. For example, a restructuring to make the

homestead lien security for another indebtedness, such

as the borrower's consumer or credit card debt, would

certainly be a new extension of credit. The test should

be whether the secured obligations are those incurred

under the terms of the original loan.

*17 The Simses object that this test provides no effective limit on the size or frequency of additions to

principal. But the terms of the original loan supply the

limit. The Simses' argument is that any change in principal is a new extension of credit, but as we have

shown, their position is inconsistent with Section 50.

The Simses argue that it matters not that, as in their

own situation, restructuring lowers the interest rate and

the amount of installment payments, and makes it possible for borrowers to keep their homes and meet their

obligations. Lenders have two options other than foreclosing on loans in default: further forbearance and forgiveness. Nevertheless, the Simses' argument encourages lenders to foreclose, which is certainly at odds

with the fundamental purpose of Section 50: to protect

the homestead.

To the first certified question, we answer: the restructuring of a home equity loan that, as in the context

from which the question arises, involves capitalization

of past-due amounts owed under the terms of the initial

loan and a lowering of the interest rate and the amount

of installment payments, but does not involve the satisfaction or replacement of the original note, an advancement of new funds, or an increase in the obligations created by the original note, is not a new extension of credit that must meet the requirements of Section 50.

C

Our reasons for answering the first question as we

have largely dictate our answers to the other three certified questions.

Is the capitalization of past-due interest, taxes, insurance premiums, and fees an “advance of additional

funds” under the Commissions' interpretations of Section 50?

FN26 No, if those amounts were among the obligations assumed by the borrower under the terms of

the original loan. And more importantly, such capitalization is not a new extension of credit under Section 50

(a)(6).

FN26. 7 TEX. ADMIN. CODE § 153.14.

Must a restructuring like the Simses' comply with

Section 50(a)(6)? No, because it does not involve a new

extension of credit, for the reasons we have explained.

The Simses argue that any restructuring must satisfy

Section 50(a)(6)(B), which requires a home equity loan

to be

of 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 percent of the fair market value of the homestead on the

date the extension of credit is made.... FN27

FN27. TEX. CONST. art. XVI, § 50(a)(6)(B)

(emphasis added).

The Simses' argument incorrectly assumes that the

restructuring is a new extension of credit.FN28

FN28. The Circuit noted that if the highlighted

phrase modified the word “value” and not the

word “exceed”, the provision would never allow the loan principal, during the life of the

loan, to exceed the amount that was the value

of the property when the loan was closed. 538

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Fed.Appx. 537, 545–546 (5th Cir.2013) (per

curiam). This could happen if the loan-to-value

ratio was very close to the limit at the time the

loan closed, and when the loan was restructured, the amount capitalized caused the total

principal indebtedness to exceed the limit. But

nothing in Section 50 suggests that a loan's

compliance is to be determined at any time other than when it is made.

Finally, would repeated restructuring convert a

home equity loan into an open-*18 end account subject

to Section 50(t)? Section 50(t) applies to a home equity

line of credit—“a form of an open-end account that may

be debited from time to time, under which credit may be

extended from time to time and under which ... the owner requests advances, repays money, and reborrows

money”. The repeat transactions are clearly contemplated from the outset. FN29 This description does not

remotely resemble a loan with a stated principal that is

to be repaid as scheduled from the outset but must be

restructured to avoid foreclosure.

FN29. See also TEX. FIN.CODE §

301.002(a)(14)(A) (“In this subtitle ...

‘Open-end account’ ... means an account under

a written contract between a creditor and an obligor in connection with which: (i) the creditor

reasonably contemplates repeated transactions

and the obligor is authorized to make purchases

or borrow money; (ii) an interest or time price

differential may be charged from time to time

on an outstanding unpaid balance; and (iii) the

amount of credit that may be extended during

the term of the account is generally made available to the extent that any outstanding balance

is repaid....”).

* * * * * *

Fundamentally, the requirements of Article XIV,

Section 50 of the Texas Constitution for extensions of

credit secured by the homestead are designed to protect

the homestead, not endanger it. The Constitution does

not prohibit the restructuring of a home equity loan that

already meets its requirements in order to avoid foreclosure while maintaining the terms of the original extension of credit. We answer the certified questions accordingly.

Tex.,2014.

Sims v. Carrington Mortg. Services, L.L.C.

440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588

END OF DOCUMENT

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THE TEXAS CONSTITUTION

ARTICLE 16. GENERAL PROVISIONS

Sec. 1. OFFICIAL OATH. (a) All elected and appointed officers, 

before they enter upon the duties of their offices, shall take the 

following Oath or Affirmation:

"I, _______________________, do solemnly swear (or affirm), that 

I will faithfully execute the duties of the office of 

___________________ of the State of Texas, and will to the best of my 

ability preserve, protect, and defend the Constitution and laws of the 

United States and of this State, so help me God."

(b) All elected or appointed officers, before taking the Oath 

or Affirmation of office prescribed by this section and entering upon 

the duties of office, shall subscribe to the following statement:

"I, _______________________, do solemnly swear (or affirm) that 

I have not directly or indirectly paid, offered, promised to pay, 

contributed, or promised to contribute any money or thing of value, or 

promised any public office or employment for the giving or withholding 

of a vote at the election at which I was elected or as a reward to 

secure my appointment or confirmation, whichever the case may be, so 

help me God."

(c) Members of the Legislature, the Secretary of State, and all 

other elected and appointed state officers shall file the signed 

statement required by Subsection (b) of this section with the 

Secretary of State before taking the Oath or Affirmation of office 

prescribed by Subsection (a) of this section. All other officers 

shall retain the signed statement required by Subsection (b) of this 

section with the official records of the office. 

(Amended Nov. 8, 1938, and Nov. 6, 1956; Subsecs. (a)-(c) amended and 

(d)-(f) added Nov. 7, 1989; Subsecs. (a) and (b) amended, Subsecs. (c) 

and (d) deleted, and Subsecs. (e) and (f) amended and redesignated as 

Subsec. (c) Nov. 6, 2001.) (TEMPORARY TRANSITION PROVISION for Sec. 

1: See Appendix, Note 3.)

Sec. 2. EXCLUSIONS FROM OFFICE, JURY SERVICE AND RIGHT OF 

SUFFRAGE; PROTECTION OF RIGHT OF SUFFRAGE. Laws shall be made to 

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exclude from office persons who have been convicted of bribery, 

perjury, forgery, or other high crimes. 

(Amended Nov. 6, 2001.) (TEMPORARY TRANSITION PROVISION for Sec. 2: 

See Appendix, Note 3.)

Sec. 3. (Repealed Aug. 5, 1969.)

Sec. 4. (Repealed Aug. 5, 1969.)

Sec. 5. DISQUALIFICATION TO HOLD OFFICE BY GIVING OR OFFERING 

BRIBE. Every person shall be disqualified from holding any office of 

profit, or trust, in this State, who shall have been convicted of 

having given or offered a bribe to procure his election or appointment.

Sec. 6. APPROPRIATIONS FOR PRIVATE PURPOSES; STATE 

PARTICIPATION IN PROGRAMS FINANCED WITH PRIVATE OR FEDERAL FUNDS FOR 

REHABILITATION OF BLIND, CRIPPLED, OR PHYSICALLY OR MENTALLY 

HANDICAPPED PERSONS. (a) No appropriation for private or individual 

purposes shall be made, unless authorized by this Constitution. A 

regular statement, under oath, and an account of the receipts and 

expenditures of all public money shall be published annually, in such 

manner as shall be prescribed by law.

(b) State agencies charged with the responsibility of providing 

services to those who are blind, crippled, or otherwise physically or 

mentally handicapped may accept money from private or federal sources, 

designated by the private or federal source as money to be used in and 

establishing and equipping facilities for assisting those who are 

blind, crippled, or otherwise physically or mentally handicapped in 

becoming gainfully employed, in rehabilitating and restoring the 

handicapped, and in providing other services determined by the state 

agency to be essential for the better care and treatment of the 

handicapped. Money accepted under this subsection is state money. 

State agencies may spend money accepted under this subsection, and no 

other money, for specific programs and projects to be conducted by 

local level or other private, nonsectarian associations, groups, and 

nonprofit organizations, in establishing and equipping facilities for 

assisting those who are blind, crippled, or otherwise physically or 

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mentally handicapped in becoming gainfully employed, in 

rehabilitating and restoring the handicapped, and in providing other 

services determined by the state agency to be essential for the better 

care or treatment of the handicapped.

The state agencies may deposit money accepted under this 

subsection either in the state treasury or in other secure 

depositories. The money may not be expended for any purpose other 

than the purpose for which it was given. Notwithstanding any other 

provision of this Constitution, the state agencies may expend money 

accepted under this subsection without the necessity of an 

appropriation, unless the Legislature, by law, requires that the money 

be expended only on appropriation. The Legislature may prohibit state 

agencies from accepting money under this subsection or may regulate 

the amount of money accepted, the way the acceptance and expenditure 

of the money is administered, and the purposes for which the state 

agencies may expend the money. Money accepted under this subsection 

for a purpose prohibited by the Legislature shall be returned to the 

entity that gave the money.

This subsection does not prohibit state agencies authorized to 

render services to the handicapped from contracting with privatelyowned or local facilities for necessary and essential services, 

subject to such conditions, standards, and procedures as may be 

prescribed by law. 

(Amended Nov. 8, 1966.)

Sec. 7. (Repealed Aug. 5, 1969.)

Sec. 8. (Redesignated as Sec. 14, Art. IX, Nov. 6, 2001.) 

(TEMPORARY TRANSITION PROVISION for Sec. 8: See Appendix, Note 3.)

Sec. 9. FORFEITURE OF RESIDENCE BY ABSENCE ON PUBLIC BUSINESS. 

Absence on business of the State, or of the United States, shall not 

forfeit a residence once obtained, so as to deprive any one of the 

right of suffrage, or of being elected or appointed to any office 

under the exceptions contained in this Constitution.

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Sec. 10. DEDUCTIONS FROM SALARY FOR NEGLECT OF DUTY. The 

Legislature shall provide for deductions from the salaries of public 

officers who may neglect the performance of any duty that may be 

assigned them by law.

Sec. 11. USURY; RATE OF INTEREST IN ABSENCE OF LEGISLATION. 

The Legislature shall have authority to define interest and fix 

maximum rates of interest; provided, however, in the absence of 

legislation fixing maximum rates of interest all contracts for a 

greater rate of interest than ten per centum (10%) per annum shall be 

deemed usurious; provided, further, that in contracts where no rate of 

interest is agreed upon, the rate shall not exceed six per centum (6%) 

per annum. 

(Amended Aug. 11, 1891, Nov. 8, 1960, and Nov. 6, 2001.) (TEMPORARY 

TRANSITION PROVISION for Sec. 11: See Appendix, Note 3.)

Sec. 12. MEMBERS OF CONGRESS; OFFICERS OF UNITED STATES OR 

FOREIGN POWER; INELIGIBILITY TO HOLD OFFICE. No member of Congress, 

nor person holding or exercising any office of profit or trust, under 

the United States, or either of them, or under any foreign power, 

shall be eligible as a member of the Legislature, or hold or exercise 

any office of profit or trust under this State.

Sec. 13. UNOPPOSED CANDIDATE FOR OFFICE. For an office for 

which this constitution requires an election, the legislature may 

provide by general law for a person to take the office without an 

election if the person is the only candidate to qualify in an election 

to be held for that office. 

(Former Sec. 13 repealed Aug. 5, 1969; current Sec. 13 added Sept. 13, 

2003.)

Sec. 13A. UNOPPOSED CANDIDATE FOR OFFICE OF POLITICAL 

SUBDIVISION. For an office of a political subdivision for which this 

constitution requires an election, the legislature may provide by 

general law for a person to assume the office without an election if 

the person is the only candidate to qualify in an election to be held 

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for that office. 

(Added Sept. 13, 2003.)

Sec. 14. CIVIL OFFICERS; RESIDENCE; LOCATION OF OFFICES. All 

civil officers shall reside within the State; and all district or 

county officers within their districts or counties, and shall keep 

their offices at such places as may be required by law; and failure to 

comply with this condition shall vacate the office so held.

Sec. 15. SEPARATE AND COMMUNITY PROPERTY. All property, both 

real and personal, of a spouse owned or claimed before marriage, and 

that acquired afterward by gift, devise or descent, shall be the 

separate property of that spouse; and laws shall be passed more 

clearly defining the rights of the spouses, in relation to separate 

and community property; provided that persons about to marry and 

spouses, without the intention to defraud pre-existing creditors, may 

by written instrument from time to time partition between themselves 

all or part of their property, then existing or to be acquired, or 

exchange between themselves the community interest of one spouse or 

future spouse in any property for the community interest of the other 

spouse or future spouse in other community property then existing or 

to be acquired, whereupon the portion or interest set aside to each 

spouse shall be and constitute a part of the separate property and 

estate of such spouse or future spouse; spouses also may from time to 

time, by written instrument, agree between themselves that the income 

or property from all or part of the separate property then owned or 

which thereafter might be acquired by only one of them, shall be the 

separate property of that spouse; if one spouse makes a gift of 

property to the other that gift is presumed to include all the income 

or property which might arise from that gift of property; spouses may 

agree in writing that all or part of their community property becomes 

the property of the surviving spouse on the death of a spouse; and 

spouses may agree in writing that all or part of the separate property 

owned by either or both of them shall be the spouses' community 

property. 

(Amended Nov. 2, 1948, Nov. 4, 1980, Nov. 3, 1987, and Nov. 2, 1999.)

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Sec. 16. CORPORATIONS WITH BANKING AND DISCOUNTING PRIVILEGES. 

(a) The Legislature shall by general laws, authorize the incorporation 

of state banks and savings and loan associations and shall provide for 

a system of State supervision, regulation and control of such bodies 

which will adequately protect and secure the depositors and creditors 

thereof.

No state bank shall be chartered until all of the authorized 

capital stock has been subscribed and paid in full in cash. Except as 

may be permitted by the Legislature pursuant to Subsections (b), (d), 

and (e) of this Section 16, a state bank shall not be authorized to 

engage in business at more than one place which shall be designated in 

its charter; however, this restriction shall not apply to any other 

type of financial institution chartered under the laws of this state.

No foreign corporation, other than the national banks of the 

United States domiciled in this State, shall be permitted to exercise 

banking or discounting privileges in this State.

(b) If it finds that the convenience of the public will be 

served thereby, the Legislature may authorize State and national banks 

to establish and operate unmanned teller machines within the county or 

city of their domicile. Such machines may perform all banking 

functions. Banks which are domiciled within a city lying in two or 

more counties may be permitted to establish and operate unmanned 

teller machines within both the city and the county of their 

domicile. The Legislature shall provide that a bank shall have the 

right to share in the use of these teller machines, not situated at a 

banking house, which are located within the county or the city of the 

bank's domicile, on a reasonable, nondiscriminatory basis, consistent 

with anti-trust laws. Banks may share the use of such machines within 

the county or city of their domicile with savings and loan 

associations and credit unions which are domiciled in the same county 

or city.

(c) A state bank created by virtue of the power granted by this 

section, notwithstanding any other provision of this section, has the 

same rights and privileges that are or may be granted to national 

banks of the United States domiciled in this State.

(d) The Legislature may authorize a state bank or national bank 

of the United States domiciled in this State to engage in business at 

more than one place if it does so through the purchase and assumption 

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of certain assets and liabilities of a failed state bank or a 

failed national bank of the United States domiciled in this State.

(e) The Legislature shall authorize a state bank or national 

bank of the United States domiciled in this State to establish and 

operate banking facilities at locations within the county or city of 

its domicile, subject to limitations the Legislature imposes. The 

Legislature may permit a bank domiciled within a city located in two 

or more counties to establish and operate branches within both the 

city and the county of its domicile, subject to limitations the 

Legislature imposes.

(f) A bank may not be considered a branch or facility of 

another bank solely because it is owned or controlled by the same 

stockholders as the other bank, has common accounting and 

administrative systems with the other bank, or has a name similar to 

the other bank's or because of a combination of those factors. 

(Amended Nov. 8, 1904, and Aug. 23, 1937; Subsecs. (a) and (b) amended 

Nov. 4, 1980; Subsec. (c) added Nov. 6, 1984; Subsecs. (a) and (c) 

amended and (d)-(f) added Nov. 4, 1986.)

Sec. 17. OFFICERS TO SERVE UNTIL SUCCESSORS QUALIFIED. All 

officers within this State shall continue to perform the duties of 

their offices until their successors shall be duly qualified.

Sec. 18. (Repealed Nov. 2, 1999.) 

(TEMPORARY TRANSITION PROVISIONS for Sec. 18: See Appendix, Note 1.)

Sec. 19. (Repealed Nov. 6, 2001.) 

(TEMPORARY TRANSITION PROVISION for Sec. 19: See Appendix, Note 3.)

Sec. 20. MIXED ALCOHOLIC BEVERAGES; INTOXICATING LIQUORS; 

WINES; REGULATION; LOCAL OPTION. (a) The Legislature shall have the 

power to enact a Mixed Beverage Law regulating the sale of mixed 

alcoholic beverages on a local option election basis. The Legislature 

shall also have the power to regulate the manufacture, sale, 

possession and transportation of intoxicating liquors, including the 

power to establish a State Monopoly on the sale of distilled liquors.

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Should the Legislature enact any enabling laws in anticipation 

of this amendment, no such law shall be void by reason of its 

anticipatory nature.

(b) The Legislature shall enact a law or laws whereby the 

qualified voters of any county, justice's precinct or incorporated 

town or city, may, by a majority vote of those voting, determine from 

time to time whether the sale of intoxicating liquors for beverage 

purposes shall be prohibited or legalized within the prescribed 

limits; and such laws shall contain provisions for voting on the sale 

of intoxicating liquors of various types and various alcoholic content.

(c) In all counties, justice's precincts or incorporated towns 

or cities wherein the sale of intoxicating liquors had been prohibited 

by local option elections held under the laws of the State of Texas 

and in force at the time of the taking effect of Section 20, Article 

XVI of the Constitution of Texas, it shall continue to be unlawful to 

manufacture, sell, barter or exchange in any such county, justice's 

precinct or incorporated town or city, any spirituous, vinous or malt 

liquors or medicated bitters capable of producing intoxication or any 

other intoxicants whatsoever, for beverage purposes, unless and until 

a majority of the qualified voters in such county or political 

subdivision thereof voting in an election held for such purpose shall 

determine such to be lawful; provided that this subsection shall not 

prohibit the sale of alcoholic beverages containing not more than 3.2 

per cent alcohol by weight in cities, counties or political 

subdivisions thereof in which the qualified voters have voted to 

legalize such sale under the provisions of Chapter 116, Acts of the 

Regular Session of the 43rd Legislature.

(d) The legislature may enact laws and direct the Alcoholic 

Beverage Commission or its successor to set policies for all wineries 

in this state, regardless of whether the winery is located in an area 

in which the sale of wine has or has not been authorized by local 

option election, for the manufacturing of wine, including the onpremises selling of wine to the ultimate consumer for consumption on 

or off the winery premises, the buying of wine from or the selling of 

wine to any other person authorized under general law to purchase and 

sell wine in this state, and the dispensing of wine without charge, 

for tasting purposes, for consumption on the winery premises, and for 

any purpose to promote the wine industry in this state.

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(Amended Aug. 11, 1891, May 24, 1919, Aug. 26, 1933, Aug. 24, 1935, 

and Nov. 3, 1970; Subsec. (d) added Sept. 13, 2003.)

Sec. 21. PUBLIC PRINTING AND BINDING; REPAIRS AND FURNISHINGS; 

CONTRACTS. All stationery, printing, fuel used in the legislature and 

departments of the government other than the judicial department, 

printing and binding of the laws, journals, and department reports, 

and all other printing and binding and the repairing and furnishing of 

the halls and rooms used during meetings of the legislature and in 

committees, except proclamations and such products and services as may 

be done by handicapped individuals employed in nonprofit 

rehabilitation facilities providing sheltered employment to the 

handicapped in Texas, shall be performed under contract, to be given 

to the lowest responsible bidder, below such maximum price and under 

such regulations as shall be prescribed by law. No member or officer 

of any department of the government shall in any way have a financial 

interest in such contracts, and all such contracts or programs 

involving the state use of the products and services of handicapped 

individuals shall be subject to such requirements as might be 

established by the legislature. 

(Amended Nov. 7, 1978.)

Sec. 22. (Repealed Nov. 6, 2001.) 

(TEMPORARY TRANSITION PROVISION for Sec. 22: See Appendix, Note 3.)

Sec. 23. REGULATION OF LIVE STOCK; PROTECTION OF STOCK RAISERS; 

INSPECTIONS; BRANDS. The Legislature may pass laws for the regulation 

of live stock and the protection of stock raisers in the stock raising 

portion of the State, and exempt from the operation of such laws other 

portions, sections, or counties; and shall have power to pass general 

and special laws for the inspection of cattle, stock and hides and for 

the regulation of brands; provided, that any local law thus passed 

shall be submitted to the qualified voters of the section to be 

affected thereby, and approved by them, before it shall go into 

effect. 

(Amended Nov. 6, 2001.) (TEMPORARY TRANSITION PROVISION for Sec. 23: 

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See Appendix, Note 3.)

Sec. 24. ROADS AND BRIDGES. The Legislature shall make 

provision for laying out and working public roads, for the building of 

bridges, and for utilizing fines, forfeitures, and convict labor to 

all these purposes.

Sec. 25. DRAWBACKS AND REBATEMENT TO CARRIERS, SHIPPERS, 

MERCHANTS, ETC. That all drawbacks and rebatement of insurance, 

freight, transportation, carriage, wharfage, storage, compressing, 

baling, repairing, or for any other kind of labor or service of, or to 

any cotton, grain, or any other produce or article of commerce in this 

State, paid or allowed or contracted for, to any common carrier, 

shipper, merchant, commission merchant, factor, agent, or middleman of 

any kind, not the true and absolute owner thereof, are forever 

prohibited, and it shall be the duty of the Legislature to pass 

effective laws punishing all persons in this State who pay, receive or 

contract for, or respecting the same.

Sec. 26. HOMICIDE; LIABILITY IN DAMAGES. Every person, 

corporation, or company, that may commit a homicide, through wilful 

act, or omission, or gross neglect, shall be responsible, in exemplary 

damages, to the surviving husband, widow, heirs of his or her body, or 

such of them as there may be, without regard to any criminal 

proceeding that may or may not be had in relation to the homicide.

Sec. 27. VACANCIES FILLED FOR UNEXPIRED TERM. In all elections 

to fill vacancies of office in this State, it shall be to fill the 

unexpired term only.

Sec. 28. GARNISHMENT OF WAGES. No current wages for personal 

service shall ever be subject to garnishment, except for the 

enforcement of court-ordered:

(1) child support payments; or

(2) spousal maintenance. 

(Amended Nov. 8, 1983, and Nov. 2, 1999.)

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Sec. 29. (Repealed Aug. 5, 1969.)

Sec. 30. DURATION OF OFFICES; RAILROAD COMMISSION. (a) The 

duration of all offices not fixed by this Constitution shall never 

exceed two years.

(b) When a Railroad Commission is created by law it shall be 

composed of three Commissioners who shall be elected by the people at 

a general election for State officers, and their terms of office shall 

be six years. And one Railroad Commissioner shall be elected every 

two years. In case of vacancy in said office the Governor of the 

State shall fill said vacancy by appointment until the next general 

election.

(c) The Legislature may provide that members of the governing 

board of a district or authority created by authority of Article III, 

Section 48-e, Article III, Section 52(b)(1) or (2), or Article XVI, 

Section 59, of this Constitution serve terms not to exceed four years.

(d) The Legislature by general or special law may provide that 

members of the governing board of a hospital district serve terms not 

to exceed four years. 

(Amended Nov. 6, 1894, and Nov. 2, 1982; Subsec. (d) added Nov. 7, 

1989; Subsec. (b) amended Nov. 2, 1999; Subsec. (c) amended Nov. 3, 

2009.) (TEMPORARY TRANSITION PROVISIONS for Sec. 30: See Appendix, 

Note 1.)

Sec. 30a. MEMBERS OF BOARDS; TERMS OF OFFICE. The Legislature 

may provide by law that the Board of Regents of the State University 

and boards of trustees or managers of the educational, eleemosynary, 

and penal institutions of the State, and such boards as have been, or 

may hereafter be established by law, may be composed of an odd number 

of three or more members who serve for a term of six (6) years, with 

one-third, or as near as one-third as possible, of the members of such 

boards to be elected or appointed every two (2) years in such manner 

as the Legislature may determine; vacancies in such offices to be 

filled as may be provided by law, and the Legislature shall enact 

suitable laws to give effect to this section. The Legislature may 

provide by law that a board required by this constitution be composed 

of members of any number divisible by three (3) who serve for a term 

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of six (6) years, with one-third of the members elected or 

appointed every two (2) years. 

(Added Nov. 5, 1912; amended Nov. 2, 1999.)

Sec. 30b. CIVIL SERVICE OFFICES; DURATION. Wherever by virtue 

of Statute or charter provisions appointive offices of any 

municipality are placed under the terms and provisions of Civil 

Service and rules are set up governing appointment to and removal from 

such offices, the provisions of Article 16, Section 30, of the Texas 

Constitution limiting the duration of all offices not fixed by the 

Constitution to two (2) years shall not apply, but the duration of 

such offices shall be governed by the provisions of the Civil Service 

law or charter provisions applicable thereto. 

(Added Nov. 5, 1940.)

Sec. 31. PRACTITIONERS OF MEDICINE. The Legislature may pass 

laws prescribing the qualifications of practitioners of medicine in 

this State, and to punish persons for mal-practice, but no preference 

shall ever be given by law to any schools of medicine.

Sec. 32. (Repealed Aug. 5, 1969.)

Sec. 33. SALARY OR COMPENSATION PAYMENTS TO PERSONS HOLDING 

MORE THAN ONE OFFICE. The accounting officers in this State shall 

neither draw nor pay a warrant or check on funds of the State of 

Texas, whether in the treasury or otherwise, to any person for salary 

or compensation who holds at the same time more than one civil office 

of emolument, in violation of Section 40. 

(Amended Nov. 2, 1926, Nov. 8, 1932, Nov. 11, 1967, and Nov. 7, 1972.)

Sec. 34. (Repealed Aug. 5, 1969.)

Sec. 35. (Repealed Aug. 5, 1969.)

Sec. 36. (Repealed Aug. 5, 1969.)

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Sec. 37. LIENS OF MECHANICS, ARTISANS, AND MATERIAL MEN. 

Mechanics, artisans and material men, of every class, shall have a 

lien upon the buildings and articles made or repaired by them for the 

value of their labor done thereon, or material furnished therefor; and 

the Legislature shall provide by law for the speedy and efficient 

enforcement of said liens.

Sec. 38. (Repealed Aug. 5, 1969.)

Sec. 39. APPROPRIATIONS FOR HISTORICAL MEMORIALS. The 

Legislature may, from time to time, make appropriations for preserving 

and perpetuating memorials of the history of Texas, by means of 

monuments, statues, paintings and documents of historical value.

Sec. 40. HOLDING MORE THAN ONE OFFICE; EXCEPTIONS; RIGHT TO 

VOTE. (a) No person shall hold or exercise at the same time, more 

than one civil office of emolument, except that of Justice of the 

Peace, County Commissioner, Notary Public and Postmaster, Officer of 

the National Guard, the National Guard Reserve, and the Officers 

Reserve Corps of the United States and enlisted men of the National 

Guard, the National Guard Reserve, and the Organized Reserves of the 

United States, and retired officers of the United States Army, Air 

Force, Navy, Marine Corps, and Coast Guard, and retired warrant 

officers, and retired enlisted men of the United States Army, Air 

Force, Navy, Marine Corps, and Coast Guard, and officers and enlisted 

members of the Texas State Guard and any other active militia or 

military force organized under state law, and the officers and 

directors of soil and water conservation districts, unless otherwise 

specially provided herein. Provided, that nothing in this Constitution 

shall be construed to prohibit an officer or enlisted man of the 

National Guard, the National Guard Reserve, the Texas State Guard, and 

any other active militia or military force organized under state law, 

or an officer in the Officers Reserve Corps of the United States, or 

an enlisted man in the Organized Reserves of the United States, or 

retired officers of the United States Army, Air Force, Navy, Marine 

Corps, and Coast Guard, and retired warrant officers, and retired 

enlisted men of the United States Army, Air Force, Navy, Marine Corps, 

and Coast Guard, and officers of the State soil and water conservation 

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districts, from holding at the same time any other office or 

position of honor, trust or profit, under this State or the United 

States, or from voting at any election, general, special or primary in 

this State when otherwise qualified.

(b) State employees or other individuals who receive all or 

part of their compensation either directly or indirectly from funds of 

the State of Texas and who are not State officers, shall not be barred 

from serving as members of the governing bodies of school districts, 

cities, towns, or other local governmental districts. Such State 

employees or other individuals may not receive a salary for serving as 

members of such governing bodies, except that:

(1) a schoolteacher, retired schoolteacher, or retired 

school administrator may receive compensation for serving as a member 

of a governing body of a school district, city, town, or local 

governmental district, including a water district created under 

Section 59, Article XVI, or Section 52, Article III; and

(2) a faculty member or retired faculty member of a public 

institution of higher education may receive compensation for serving 

as a member of a governing body of a water district created under 

Section 59 of this article or under Section 52, Article III, of this 

constitution.

(c) It is further provided that a nonelective State officer may 

hold other nonelective offices under the State or the United States, 

if the other office is of benefit to the State of Texas or is required 

by the State or Federal law, and there is no conflict with the 

original office for which he receives salary or compensation.

(d) No member of the Legislature of this State may hold any 

other office or position of profit under this State, or the United 

States, except as a notary public if qualified by law. 

(Amended Nov. 2, 1926, Nov. 8, 1932, Nov. 7, 1972, Nov. 6, 2001, and 

Sept. 13, 2003; Subsec. (a) amended Nov. 3, 2009.)

Sec. 41. BRIBERY AND ACCEPTANCE OF BRIBES. Any person who 

shall, directly or indirectly, offer, give, or promise, any money or 

thing of value, testimonial, privilege or personal advantage, to any 

executive or judicial officer or member of the Legislature to 

influence him in the performance of any of his public or official 

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duties, shall be guilty of bribery, and be punished in such 

manner as shall be provided by law. And any member of the Legislature 

or executive or judicial officer who shall solicit, demand or receive, 

or consent to receive, directly or indirectly, for himself, or for 

another, from any company, corporation or person, any money, 

appointment, employment, testimonial, reward, thing of value or 

employment, or of personal advantage or promise thereof, for his vote 

or official influence, or for withholding the same, or with any 

understanding, expressed or implied, that his vote or official action 

shall be in any way influenced thereby, or who shall solicit, demand 

and receive any such money or other advantage matter or thing 

aforesaid for another, as the consideration of his vote or official 

influence, in consideration of the payment or promise of such money, 

advantage, matter or thing to another, shall be held guilty of 

bribery, within the meaning of the Constitution, and shall incur the 

disabilities provided for said offenses, with a forfeiture of the 

office they may hold, and such other additional punishment as is or 

shall be provided by law.

Sec. 42. (Repealed Aug. 5, 1969.)

Sec. 43. (Repealed Nov. 6, 2001.) 

(TEMPORARY TRANSITION PROVISION for Sec. 43: See Appendix, Note 3.)

Sec. 44. COUNTY TREASURER AND COUNTY SURVEYOR. (a) Except as 

otherwise provided by this section, the Legislature shall prescribe 

the duties and provide for the election by the qualified voters of 

each county in this State, of a County Treasurer and a County 

Surveyor, who shall have an office at the county seat, and hold their 

office for four years, and until their successors are qualified; and 

shall have such compensation as may be provided by law.

(b) The office of County Treasurer or County Surveyor does not 

exist in those counties in which the office has been abolished 

pursuant to constitutional amendment or pursuant to the authority of 

Subsection (c) of this section.

(c) The Commissioners Court of a county may call an election to 

abolish the office of County Surveyor in the county. The office of 

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County Surveyor in the county is abolished if a majority of the 

voters of the county voting on the question at that election approve 

the abolition. If an election is called under this subsection, the 

Commissioners Court shall order the ballot for the election to be 

printed to provide for voting for or against the 

proposition: "Abolishing the office of county surveyor of this 

county." If the office of County Surveyor is abolished under this 

subsection, the maps, field notes, and other records in the custody of 

the County Surveyor are transferred to the county officer or employee 

designated by the Commissioners Court of the county in which the 

office is abolished, and the Commissioners Court may from time to time 

change its designation as it considers appropriate. 

(Amended Nov. 2, 1954; Subsec. (a) amended and (b) and (c) added Nov. 

2, 1982; Subsec. (a) amended and (b)(1) added Nov. 6, 1984; Subsecs. 

(a)-(c) amended and (d)-(f) added Nov. 5, 1985; Subsecs. (c) and (d) 

amended and (f) and (g) added Nov. 3, 1987; Subsec. (f) added Nov. 7, 

1989; Subsec. (e) amended and two Subsecs. (h) added Nov. 2, 1993; 

Subsec. (h), as added by Acts 1993, 73rd Leg., R.S., H.J.R. 21, 

relating to the office of County Surveyor in Jackson County, repealed 

Nov. 4, 1997; Subsec. (b) amended, Subsecs. (c)-(g) deleted, and 

Subsec. (h), as added by Acts 1993, 73rd Leg., R.S., H.J.R. 37, 

relating to abolition of the office of County Surveyor, redesignated 

as Subsec. (c) Nov. 2, 1999.) (TEMPORARY TRANSITION PROVISIONS for 

Sec. 44: See Appendix, Note 1.)

Sec. 45. (Repealed Aug. 5, 1969.)

Sec. 46. (Repealed Aug. 5, 1969.)

Sec. 47. (Repealed Nov. 2, 1999.) 

(TEMPORARY TRANSITION PROVISIONS for Sec. 47: See Appendix, Note 1.)

Sec. 48. EXISTING LAWS TO CONTINUE IN FORCE. All laws and 

parts of laws now in force in the State of Texas, which are not 

repugnant to the Constitution of the United States, or to this 

Constitution, shall continue and remain in force as the laws of this 

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State, until they expire by their own limitation or shall be 

amended or repealed by the Legislature.

Sec. 49. PROTECTION OF PERSONAL PROPERTY FROM FORCED SALE. The 

Legislature shall have power, and it shall be its duty, to protect by 

law from forced sale a certain portion of the personal property of all 

heads of families, and also of unmarried adults, male and female.

Sec. 50. HOMESTEAD; PROTECTION FROM FORCED SALE; MORTGAGES, 

TRUST DEEDS, AND LIENS. (a) The homestead of a family, or of a single 

adult person, shall be, and is hereby protected from forced sale, for 

the payment of all debts except for:

(1) the purchase money thereof, or a part of such purchase 

money;

(2) the taxes due thereon;

(3) an owelty of partition imposed against the entirety of 

the property by a court order or by a written agreement of the parties 

to the partition, including a debt of one spouse in favor of the other 

spouse resulting from a division or an award of a family homestead in 

a divorce proceeding;

(4) the refinance of a lien against a homestead, including 

a federal tax lien resulting from the tax debt of both spouses, if the 

homestead is a family homestead, or from the tax debt of the owner;

(5) work and material used in constructing new 

improvements thereon, if contracted for in writing, or work and 

material used to repair or renovate existing improvements thereon if:

(A) the work and material are contracted for in 

writing, with the consent of both spouses, in the case of a family 

homestead, given in the same manner as is required in making a sale 

and conveyance of the homestead;

(B) the contract for the work and material is not 

executed by the owner or the owner's spouse before the fifth day after 

the owner makes written application for any extension of credit for 

the work and material, unless the work and material are necessary to 

complete immediate repairs to conditions on the homestead property 

that materially affect the health or safety of the owner or person 

residing in the homestead and the owner of the homestead acknowledges 

such in writing;

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(C) the contract for the work and material expressly 

provides that the owner may rescind the contract without penalty or 

charge within three days after the execution of the contract by all 

parties, unless the work and material are necessary to complete 

immediate repairs to conditions on the homestead property that 

materially affect the health or safety of the owner or person residing 

in the homestead and the owner of the homestead acknowledges such in 

writing; and

(D) the contract for the work and material is 

executed by the owner and the owner's spouse only at the office of a 

third-party lender making an extension of credit for the work and 

material, an attorney at law, or a title company;

(6) an extension of credit that:

(A) is secured by a voluntary lien on the homestead 

created under a written agreement with the consent of each owner and 

each owner's spouse;

(B) is of 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 percent of the fair market value of the 

homestead on the date the extension of credit is made;

(C) is without recourse for personal liability 

against each owner and the spouse of each owner, unless the owner or 

spouse obtained the extension of credit by actual fraud;

(D) is secured by a lien that may be foreclosed upon 

only by a court order;

(E) does 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, three percent 

of the original principal amount of the extension of credit;

(F) is not a form of open-end account that may be 

debited from time to time or under which credit may be extended from 

time to time unless the open-end account is a home equity line of 

credit;

(G) is payable in advance without penalty or other 

charge;

(H) is not secured by any additional real or personal 

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property other than the homestead;

(I) is not secured by homestead property that on the 

date of closing is designated for agricultural use as provided by 

statutes governing property tax, unless such homestead property is 

used primarily for the production of milk;

(J) may not be accelerated because of a decrease in 

the market value of the homestead or because of the owner's default 

under other indebtedness not secured by a prior valid encumbrance 

against the homestead;

(K) is the only debt secured by the homestead at the 

time the extension of credit is made unless the other debt was made 

for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)

(8) of this section;

(L) is scheduled to be repaid:

(i) in substantially equal successive periodic 

installments, not more often than every 14 days and not less often 

than monthly, beginning no later than two months from the date the 

extension of credit is made, each of which equals or exceeds the 

amount of accrued interest as of the date of the scheduled 

installment; or

(ii) if the extension of credit is a home equity 

line of credit, in periodic payments described under Subsection (t)(8) 

of this section;

(M) is closed not before:

(i) the 12th day after the later of the date 

that the owner of the homestead submits a loan application to the 

lender for the extension of credit or the date that the lender 

provides the owner a copy of the notice prescribed by Subsection (g) 

of this section;

(ii) one business day after the date that the 

owner of the homestead receives 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 documentation to the owner or the lender may modify 

previously provided documentation on the date of closing; and

(iii) the first anniversary of the closing date 

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of any other extension of credit described by 

Subsection (a)(6) of this section secured by the same homestead 

property, except a refinance described by Paragraph (Q)(x)(f) of this 

subdivision, unless the owner on oath requests an earlier closing due 

to a state of emergency that:

(a) has been declared by the president of 

the United States or the governor as provided by law; and

(b) applies to the area where the homestead 

is located;

(N) is closed only at the office of the lender, an 

attorney at law, or a title company;

(O) permits a lender to contract for and receive any 

fixed or variable rate of interest authorized under statute;

(P) is made by one of the following that has not been 

found by a federal regulatory agency to have engaged in the practice 

of refusing to make loans because the applicants for the loans reside 

or the property proposed to secure the loans is located in a certain 

area:

(i) a bank, savings and loan association, 

savings bank, or credit union doing business under the laws of this 

state or the United States;

(ii) a federally chartered lending 

instrumentality or a person approved as a mortgagee by the United 

States government to make federally insured loans;

(iii) a person licensed to make regulated loans, 

as provided by statute of this state;

(iv) a person who sold the homestead property to 

the current owner and who provided all or part of the financing for 

the purchase;

(v) a person who is related to the homestead 

property owner within the second degree of affinity or consanguinity; 

or

(vi) a person regulated by this state as a 

mortgage broker; and

(Q) is made on the condition that:

(i) the owner of the homestead is not required 

to apply the proceeds of the extension of credit to repay another debt 

except debt secured by the homestead or debt to another lender;

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(ii) the owner of the homestead not assign wages 

as security for the extension of credit;

(iii) the owner of the homestead not sign any 

instrument in which blanks relating to substantive terms of agreement 

are left to be filled in;

(iv) the owner of the homestead not sign a 

confession of judgment or power of attorney to the lender or to a 

third person to confess judgment or to appear for the owner in a 

judicial proceeding;

(v) at the time the extension of credit is made, 

the owner of the homestead shall receive a copy of the final loan 

application and all executed documents signed by the owner at closing 

related to the extension of credit;

(vi) the security instruments securing the 

extension of credit contain a disclosure that the extension of credit 

is the type of credit defined by Section 50(a)(6), Article XVI, Texas 

Constitution;

(vii) within a reasonable time after termination 

and full payment of the extension of credit, the lender cancel and 

return the promissory note to the owner of the homestead and give the 

owner, in recordable form, a release of the lien securing the 

extension of credit or a copy of an endorsement and assignment of the 

lien to a lender that is refinancing the extension of credit;

(viii) the owner of the homestead and any spouse 

of the owner may, within three days after the extension of credit is 

made, rescind the extension of credit without penalty or charge;

(ix) the owner of the homestead and the lender 

sign a written acknowledgment as to the fair market value of the 

homestead property on the date the extension of credit is made;

(x) except as provided by Subparagraph (xi) of 

this paragraph, the lender or any holder of the note for the extension 

of credit shall forfeit all principal and interest of the extension of 

credit if the lender or holder fails to comply with the lender's or 

holder's obligations under the extension of credit and fails to 

correct the failure to comply not later than the 60th day after the 

date the lender or holder is notified by the borrower of the lender's 

failure to comply by:

(a) paying to the owner an amount equal to 

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any overcharge paid by the owner under or 

related to the extension of credit if the owner has paid an amount 

that exceeds an amount stated in the applicable Paragraph (E), (G), or 

(O) of this subdivision;

(b) sending the owner a written 

acknowledgement that the lien is valid only in the amount that the 

extension of credit does not exceed the percentage described by 

Paragraph (B) of this subdivision, if applicable, or is not secured by 

property described under Paragraph (H) or (I) of this subdivision, if 

applicable;

(c) sending the owner a written notice 

modifying any other amount, percentage, term, or other provision 

prohibited by this section to a permitted amount, percentage, term, or 

other provision and adjusting the account of the borrower to ensure 

that the borrower is not required to pay more than an amount permitted 

by this section and is not subject to any other term or provision 

prohibited by this section;

(d) delivering the required documents to 

the borrower if the lender fails to comply with Subparagraph (v) of 

this paragraph or obtaining the appropriate signatures if the lender 

fails to comply with Subparagraph (ix) of this paragraph;

(e) sending the owner a written 

acknowledgement, if the failure to comply is prohibited by Paragraph 

(K) of this subdivision, that the accrual of interest and all of the 

owner's obligations under the extension of credit are abated while any 

prior lien prohibited under Paragraph (K) remains secured by the 

homestead; or

(f) if the failure to comply cannot be 

cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the 

failure to comply by a refund or credit to the owner of $1,000 and 

offering the owner the right to refinance the extension of credit with 

the lender or holder for the remaining term of the loan at no cost to 

the owner on the same terms, including interest, as the original 

extension of credit with any modifications necessary to comply with 

this section or on terms on which the owner and the lender or holder 

otherwise agree that comply with this section; and

(xi) the lender or any holder of the note for 

the extension of credit shall forfeit all principal and interest of 

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the extension of credit if the extension of 

credit is made by a person other than a person described under 

Paragraph (P) of this subdivision or if the lien was not created under 

a written agreement with the consent of each owner and each owner's 

spouse, unless each owner and each owner's spouse who did not 

initially consent subsequently consents;

(7) a reverse mortgage; or

(8) the conversion and refinance of a personal property 

lien secured by a manufactured home to a lien on real property, 

including the refinance of the purchase price of the manufactured 

home, the cost of installing the manufactured home on the real 

property, and the refinance of the purchase price of the real property.

(b) An owner or claimant of the property claimed as homestead 

may not sell or abandon the homestead without the consent of each 

owner and the spouse of each owner, given in such manner as may be 

prescribed by law.

(c) No mortgage, trust deed, or other lien on the homestead 

shall ever be valid unless it secures a debt described by this 

section, whether such mortgage, trust deed, or other lien, shall have 

been created by the owner alone, or together with his or her spouse, 

in case the owner is married. All pretended sales of the homestead 

involving any condition of defeasance shall be void.

(d) A purchaser or lender for value without actual knowledge 

may conclusively rely on an affidavit that designates other property 

as the homestead of the affiant and that states that the property to 

be conveyed or encumbered is not the homestead of the affiant.

(e) A refinance of debt secured by a homestead and described by 

any subsection under Subsections (a)(1)-(a)(5) that includes the 

advance of additional funds may not be secured by a valid lien against 

the homestead unless:

(1) the refinance of the debt is an extension of credit 

described by Subsection (a)(6) of this section; or

(2) the advance of all the additional funds is for 

reasonable costs necessary to refinance such debt or for a purpose 

described by Subsection (a)(2), (a)(3), or (a)(5) of this section.

(f) A refinance of debt secured by the homestead, any portion 

of which is an extension of credit described by Subsection (a)(6) of 

this section, may not be secured by a valid lien against the homestead 

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unless the refinance of the debt is an extension of credit 

described by Subsection (a)(6) or (a)(7) of this section.

(g) An extension of credit described by Subsection (a)(6) of 

this section 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 following written notice on a 

separate instrument:

"NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)

(6), ARTICLE XVI, TEXAS CONSTITUTION:

"SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS 

CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME. SUCH 

LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY THE 

LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY 

FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT:

"(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF 

EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE;

"(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE MUST 

NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES OF ALL 

OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE FAIR 

MARKET VALUE OF YOUR HOME;

"(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY 

AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS 

EXTENSION OF CREDIT BY ACTUAL FRAUD;

"(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY WITH 

A COURT ORDER;

"(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 3 PERCENT 

OF THE LOAN AMOUNT;

"(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE DEBITED 

FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM TIME TO 

TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT;

"(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;

"(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;

"(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS 

DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE 

AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION 

OF MILK;

"(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED 

SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE 

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YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR HOME;

"(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, 

OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY GIVEN 

TIME;

"(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT 

EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT PERIOD;

"(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A 

LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE 

THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR CONSENT 

CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE A 

COPY OF YOUR 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; AND IF YOUR HOME WAS SECURITY 

FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN SECURED BY 

THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED FROM THE 

CLOSING DATE OF THE OTHER LOAN, UNLESS ON OATH YOU REQUEST AN EARLIER 

CLOSING DUE TO A DECLARED STATE OF EMERGENCY;

"(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER, TITLE 

COMPANY, OR AN ATTORNEY AT LAW;

"(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF 

INTEREST AUTHORIZED BY STATUTE;

"(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED 

BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;

"(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE 

TEXAS CONSTITUTION MUST:

"(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT 

EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER LENDER;

"(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;

"(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS 

FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN;

"(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR POWER 

OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN A LEGAL 

PROCEEDING ON YOUR BEHALF;

"(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN 

APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING;

"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A DISCLOSURE 

THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6), ARTICLE XVI, OF 

THE TEXAS CONSTITUTION;

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"(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER WILL 

SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE LIEN, 

WHICHEVER IS APPROPRIATE;

"(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND 

THE LOAN WITHOUT PENALTY OR CHARGE;

"(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR MARKET 

VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND

"(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND 

INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S OBLIGATIONS 

UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS PROVIDED BY SECTION 50

(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS CONSTITUTION; AND

"(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:

"(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW MONEY 

UNDER THE LINE OF CREDIT;

"(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN AMOUNT 

OF AT LEAST $4,000;

"(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR 

DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO OBTAIN 

ADVANCES UNDER THE LINE OF CREDIT;

"(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND COLLECTED 

ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER MAY 

NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE;

"(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN 

ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80 

PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF 

CREDIT IS ESTABLISHED;

"(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY 

TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS 

DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY NOT 

CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE 

BALANCE IS LESS THAN 50 PERCENT OF THE FAIR MARKET VALUE; AND

"(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE LINE 

OF CREDIT.

"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS 

CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, OF 

THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE."

If the discussions with the borrower are conducted primarily in 

a language other than English, the lender shall, before closing, 

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provide an additional copy of the notice translated into the 

written language in which the discussions were conducted.

(h) A lender or assignee for value may conclusively rely on the 

written acknowledgment as to the fair market value of the homestead 

property made in accordance with Subsection (a)(6)(Q)(ix) of this 

section if:

(1) the value acknowledged to is the value estimate in an 

appraisal or evaluation prepared in accordance with a state or federal 

requirement applicable to an extension of credit under Subsection (a)

(6); and

(2) the lender or assignee does not have actual knowledge 

at the time of the payment of value or advance of funds by the lender 

or assignee that the fair market value stated in the written 

acknowledgment was incorrect.

(i) This subsection shall not affect or impair any right of the 

borrower to recover damages from the lender or assignee under 

applicable law for wrongful foreclosure. A purchaser for value 

without actual knowledge may conclusively presume that a lien securing 

an extension of credit described by Subsection (a)(6) of this section 

was a valid lien securing the extension of credit with homestead 

property if:

(1) the security instruments securing the extension of 

credit contain a disclosure that the extension of credit secured by 

the lien was the type of credit defined by Section 50(a)(6), Article 

XVI, Texas Constitution;

(2) the purchaser acquires the title to the property 

pursuant to or after the foreclosure of the voluntary lien; and

(3) the purchaser is not the lender or assignee under the 

extension of credit.

(j) Subsection (a)(6) and Subsections (e)-(i) of this section 

are not severable, and none of those provisions would have been 

enacted without the others. If any of those provisions are held to be 

preempted by the laws of the United States, all of those provisions 

are invalid. This subsection shall not apply to any lien or extension 

of credit made after January 1, 1998, and before the date any 

provision under Subsection (a)(6) or Subsections (e)-(i) is held to be 

preempted.

(k) "Reverse mortgage" means an extension of credit:

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(1) that is secured by a voluntary lien on homestead 

property created by a written agreement with the consent of each owner 

and each owner's spouse;

(2) that is made to a person who is or whose spouse is 62 

years or older;

(3) that is made without recourse for personal liability 

against each owner and the spouse of each owner;

(4) under which advances are provided to a borrower:

(A) based on the equity in a borrower's homestead; or

(B) for the purchase of homestead property that the 

borrower will occupy as a principal residence;

(5) that does not permit the lender to reduce the amount 

or number of advances because of an adjustment in the interest rate if 

periodic advances are to be made;

(6) that requires no payment of principal or interest 

until:

(A) all borrowers have died;

(B) the homestead property securing the loan is sold 

or otherwise transferred;

(C) all borrowers cease occupying the homestead 

property for a period of longer than 12 consecutive months without 

prior written approval from the lender;

(C-1) if the extension of credit is used for the 

purchase of homestead property, the borrower fails to timely occupy 

the homestead property as the borrower's principal residence within a 

specified period after the date the extension of credit is made that 

is stipulated in the written agreement creating the lien on the 

property; or

(D) the borrower:

(i) defaults on an obligation specified in the 

loan documents to repair and maintain, pay taxes and assessments on, 

or insure the homestead property;

(ii) commits actual fraud in connection with the 

loan; or

(iii) fails to maintain the priority of the 

lender's lien on the homestead property, after the lender gives notice 

to the borrower, by promptly discharging any lien that has priority or 

may obtain priority over the lender's lien within 10 days after the 

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date the borrower receives the notice, unless the 

borrower:

(a) agrees in writing to the payment of the 

obligation secured by the lien in a manner acceptable to the lender;

(b) contests in good faith the lien by, or 

defends against enforcement of the lien in, legal proceedings so as to 

prevent the enforcement of the lien or forfeiture of any part of the 

homestead property; or

(c) secures from the holder of the lien an 

agreement satisfactory to the lender subordinating the lien to all 

amounts secured by the lender's lien on the homestead property;

(7) that provides that if the lender fails to make loan 

advances as required in the loan documents and if the lender fails to 

cure the default as required in the loan documents after notice from 

the borrower, the lender forfeits all principal and interest of the 

reverse mortgage, provided, however, that this subdivision does not 

apply when a governmental agency or instrumentality takes an 

assignment of the loan in order to cure the default;

(8) that is not made unless the prospective borrower and 

the spouse of the prospective borrower attest in writing that the 

prospective borrower and the prospective borrower's spouse received 

counseling regarding the advisability and availability of reverse 

mortgages and other financial alternatives that was completed not 

earlier than the 180th day nor later than the 5th day before the date 

the extension of credit is closed;

(9) that is not closed before the 12th day after the date 

the lender provides to the prospective borrower the following written 

notice on a separate instrument, which the lender or originator and 

the borrower must sign for the notice to take effect:

"IMPORTANT NOTICE TO BORROWERS

RELATED TO YOUR REVERSE MORTGAGE

"UNDER THE TEXAS TAX CODE, CERTAIN ELDERLY PERSONS MAY DEFER THE 

COLLECTION OF PROPERTY TAXES ON THEIR RESIDENCE HOMESTEAD. BY 

RECEIVING THIS REVERSE MORTGAGE YOU MAY BE REQUIRED TO FORGO ANY 

PREVIOUSLY APPROVED DEFERRAL OF PROPERTY TAX COLLECTION AND YOU MAY BE 

REQUIRED TO PAY PROPERTY TAXES ON AN ANNUAL BASIS ON THIS PROPERTY.

"THE LENDER MAY FORECLOSE THE REVERSE MORTGAGE AND YOU MAY LOSE YOUR 

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HOME IF:

"(A) YOU DO NOT PAY THE TAXES OR OTHER ASSESSMENTS ON THE HOME 

EVEN IF YOU ARE ELIGIBLE TO DEFER PAYMENT OF PROPERTY TAXES;

"(B) YOU DO NOT MAINTAIN AND PAY FOR PROPERTY INSURANCE ON THE 

HOME AS REQUIRED BY THE LOAN DOCUMENTS;

"(C) YOU FAIL TO MAINTAIN THE HOME IN A STATE OF GOOD CONDITION 

AND REPAIR;

"(D) YOU CEASE OCCUPYING THE HOME FOR A PERIOD LONGER THAN 12 

CONSECUTIVE MONTHS WITHOUT THE PRIOR WRITTEN APPROVAL FROM THE LENDER 

OR, IF THE EXTENSION OF CREDIT IS USED FOR THE PURCHASE OF THE HOME, 

YOU FAIL TO TIMELY OCCUPY THE HOME AS YOUR PRINCIPAL RESIDENCE WITHIN 

A PERIOD OF TIME AFTER THE EXTENSION OF CREDIT IS MADE THAT IS 

STIPULATED IN THE WRITTEN AGREEMENT CREATING THE LIEN ON THE HOME;

"(E) YOU SELL THE HOME OR OTHERWISE TRANSFER THE HOME WITHOUT 

PAYING OFF THE LOAN;

"(F) ALL BORROWERS HAVE DIED AND THE LOAN IS NOT REPAID;

"(G) YOU COMMIT ACTUAL FRAUD IN CONNECTION WITH THE LOAN; OR

"(H) YOU FAIL TO MAINTAIN THE PRIORITY OF THE LENDER'S LIEN ON 

THE HOME, AFTER THE LENDER GIVES NOTICE TO YOU, BY PROMPTLY 

DISCHARGING ANY LIEN THAT HAS PRIORITY OR MAY OBTAIN PRIORITY OVER THE 

LENDER'S LIEN WITHIN 10 DAYS AFTER THE DATE YOU RECEIVE THE NOTICE, 

UNLESS YOU:

"(1) AGREE IN WRITING TO THE PAYMENT OF THE OBLIGATION 

SECURED BY THE LIEN IN A MANNER ACCEPTABLE TO THE LENDER;

"(2) CONTEST IN GOOD FAITH THE LIEN BY, OR DEFEND AGAINST 

ENFORCEMENT OF THE LIEN IN, LEGAL PROCEEDINGS SO AS TO PREVENT THE 

ENFORCEMENT OF THE LIEN OR FORFEITURE OF ANY PART OF THE HOME; OR

"(3) SECURE FROM THE HOLDER OF THE LIEN AN AGREEMENT 

SATISFACTORY TO THE LENDER SUBORDINATING THE LIEN TO ALL AMOUNTS 

SECURED BY THE LENDER'S LIEN ON THE HOME.

"IF A GROUND FOR FORECLOSURE EXISTS, THE LENDER MAY NOT COMMENCE 

FORECLOSURE UNTIL THE LENDER GIVES YOU WRITTEN NOTICE BY MAIL THAT A 

GROUND FOR FORECLOSURE EXISTS AND GIVES YOU AN OPPORTUNITY TO REMEDY 

THE CONDITION CREATING THE GROUND FOR FORECLOSURE OR TO PAY THE 

REVERSE MORTGAGE DEBT WITHIN THE TIME PERMITTED BY SECTION 50(k)(10), 

ARTICLE XVI, OF THE TEXAS CONSTITUTION. THE LENDER MUST OBTAIN A 

COURT ORDER FOR FORECLOSURE EXCEPT THAT A COURT ORDER IS NOT REQUIRED 

IF THE FORECLOSURE OCCURS BECAUSE:

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"(1) ALL BORROWERS HAVE DIED; OR

"(2) THE HOMESTEAD PROPERTY SECURING THE LOAN IS SOLD OR 

OTHERWISE TRANSFERRED."

"YOU SHOULD CONSULT WITH YOUR HOME COUNSELOR OR AN ATTORNEY IF YOU 

HAVE ANY CONCERNS ABOUT THESE OBLIGATIONS BEFORE YOU CLOSE YOUR 

REVERSE MORTGAGE LOAN. TO LOCATE AN ATTORNEY IN YOUR AREA, YOU MAY 

WISH TO CONTACT THE STATE BAR OF TEXAS."

"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS 

CONSTITUTION. YOUR RIGHTS ARE GOVERNED IN PART BY SECTION 50, ARTICLE 

XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE.";

(10) that does not permit the lender to commence 

foreclosure until the lender gives notice to the borrower, in the 

manner provided for a notice by mail related to the foreclosure of 

liens under Subsection (a)(6) of this section, that a ground for 

foreclosure exists and gives the borrower at least 30 days, or at 

least 20 days in the event of a default under Subdivision (6)(D)(iii) 

of this subsection, to:

(A) remedy the condition creating the ground for 

foreclosure;

(B) pay the debt secured by the homestead property 

from proceeds of the sale of the homestead property by the borrower or 

from any other sources; or

(C) convey the homestead property to the lender by a 

deed in lieu of foreclosure; and

(11) that is secured by a lien that may be foreclosed upon 

only by a court order, if the foreclosure is for a ground other than a 

ground stated by Subdivision (6)(A) or (B) of this subsection.

(l) Advances made under a reverse mortgage and interest on 

those advances have priority over a lien filed for record in the real 

property records in the county where the homestead property is located 

after the reverse mortgage is filed for record in the real property 

records of that county.

(m) A reverse mortgage may provide for an interest rate that is 

fixed or adjustable and may also provide for interest that is 

contingent on appreciation in the fair market value of the homestead 

property. Although payment of principal or interest shall not be 

required under a reverse mortgage until the entire loan becomes due 

and payable, interest may accrue and be compounded during the term of 

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the loan as provided by the reverse mortgage loan agreement.

(n) A reverse mortgage that is secured by a valid lien against 

homestead property may be made or acquired without regard to the 

following provisions of any other law of this state:

(1) a limitation on the purpose and use of future advances 

or other mortgage proceeds;

(2) a limitation on future advances to a term of years or 

a limitation on the term of open-end account advances;

(3) a limitation on the term during which future advances 

take priority over intervening advances;

(4) a requirement that a maximum loan amount be stated in 

the reverse mortgage loan documents;

(5) a prohibition on balloon payments;

(6) a prohibition on compound interest and interest on 

interest;

(7) a prohibition on contracting for, charging, or 

receiving any rate of interest authorized by any law of this state 

authorizing a lender to contract for a rate of interest; and

(8) a requirement that a percentage of the reverse 

mortgage proceeds be advanced before the assignment of the reverse 

mortgage.

(o) For the purposes of determining eligibility under any 

statute relating to payments, allowances, benefits, or services 

provided on a means-tested basis by this state, including supplemental 

security income, low-income energy assistance, property tax relief, 

medical assistance, and general assistance:

(1) reverse mortgage loan advances made to a borrower are 

considered proceeds from a loan and not income; and

(2) undisbursed funds under a reverse mortgage loan are 

considered equity in a borrower's home and not proceeds from a loan.

(p) The advances made on a reverse mortgage loan under which 

more than one advance is made must be made according to the terms 

established by the loan documents by one or more of the following 

methods:

(1) an initial advance at any time and future advances at 

regular intervals;

(2) an initial advance at any time and future advances at 

regular intervals in which the amounts advanced may be reduced, for 

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one or more advances, at the request of the borrower;

(3) an initial advance at any time and future advances at 

times and in amounts requested by the borrower until the credit limit 

established by the loan documents is reached;

(4) an initial advance at any time, future advances at 

times and in amounts requested by the borrower until the credit limit 

established by the loan documents is reached, and subsequent advances 

at times and in amounts requested by the borrower according to the 

terms established by the loan documents to the extent that the 

outstanding balance is repaid; or

(5) at any time by the lender, on behalf of the borrower, 

if the borrower fails to timely pay any of the following that the 

borrower is obligated to pay under the loan documents to the extent 

necessary to protect the lender's interest in or the value of the 

homestead property:

(A) taxes;

(B) insurance;

(C) costs of repairs or maintenance performed by a 

person or company that is not an employee of the lender or a person or 

company that directly or indirectly controls, is controlled by, or is 

under common control with the lender;

(D) assessments levied against the homestead 

property; and

(E) any lien that has, or may obtain, priority over 

the lender's lien as it is established in the loan documents.

(q) To the extent that any statutes of this state, including 

without limitation, Section 41.001 of the Texas Property Code, purport 

to limit encumbrances that may properly be fixed on homestead property 

in a manner that does not permit encumbrances for extensions of credit 

described in Subsection (a)(6) or (a)(7) of this section, the same 

shall be superseded to the extent that such encumbrances shall be 

permitted to be fixed upon homestead property in the manner provided 

for by this amendment.

(r) The supreme court shall promulgate rules of civil procedure 

for expedited foreclosure proceedings related to the foreclosure of 

liens under Subsection (a)(6) of this section and to foreclosure of a 

reverse mortgage lien that requires a court order.

(s) The Finance Commission of Texas shall appoint a director to 

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conduct research on the availability, quality, and prices of 

financial services and research the practices of business entities in 

the state that provide financial services under this section. The 

director shall collect information and produce reports on lending 

activity of those making loans under this section. The director shall 

report his or her findings to the legislature not later than December 

1 of each year.

(t) A home equity line of credit is a form of an open-end 

account that may be debited from time to time, under which credit may 

be extended from time to time and under which:

(1) the owner requests advances, repays money, and 

reborrows money;

(2) any single debit or advance is not less than $4,000;

(3) the owner does not use a credit card, debit card, or 

similar device, or preprinted check unsolicited by the borrower, to 

obtain an advance;

(4) any fees described by Subsection (a)(6)(E) of this 

section are charged and collected only at the time the extension of 

credit is established and no fee is charged or collected in connection 

with any debit or advance;

(5) the maximum principal amount that may be extended 

under the account, when added to the aggregate total of the 

outstanding principal balances of all indebtedness secured by the 

homestead on the date the extension of credit is established, does not 

exceed an amount described under Subsection (a)(6)(B) of this section;

(6) no additional debits or advances are made if the total 

principal amount outstanding exceeds an amount equal to 50 percent of 

the fair market value of the homestead as determined on the date the 

account is established;

(7) the lender or holder may not unilaterally amend the 

extension of credit; and

(8) repayment is to be made in regular periodic 

installments, not more often than every 14 days and not less often 

than monthly, beginning not later than two months from the date the 

extension of credit is established, and:

(A) during the period during which the owner may 

request advances, each installment equals or exceeds the amount of 

accrued interest; and

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(B) after the period during which the owner may 

request advances, installments are substantially equal.

(u) The legislature may by statute delegate one or more state 

agencies the power to interpret Subsections (a)(5)-(a)(7), (e)-(p), 

and (t), of this section. An act or omission does not violate a 

provision included in those subsections if the act or omission 

conforms to an interpretation of the provision that is:

(1) in effect at the time of the act or omission; and

(2) made by a state agency to which the power of 

interpretation is delegated as provided by this subsection or by an 

appellate court of this state or the United States.

(v) A reverse mortgage must provide that:

(1) the owner does not use a credit card, debit card, 

preprinted solicitation check, or similar device to obtain an advance;

(2) after the time the extension of credit is established, 

no transaction fee is charged or collected solely in connection with 

any debit or advance; and

(3) the lender or holder may not unilaterally amend the 

extension of credit. 

(Amended Nov. 6, 1973, and Nov. 7, 1995; Subsecs. (a)-(d) amended and 

(e)-(s) added Nov. 4, 1997; Subsecs. (k), (p), and (r) amended Nov. 

2, 1999; Subsec. (a) amended Nov. 6, 2001; Subsecs. (a), (f), and (g) 

amended and (t) and (u) added Sept. 13, 2003; Subsec. (p) amended and 

(v) added Nov. 8, 2005; Subsecs. (a), (g), and (t) amended Nov. 6, 

2007; Subsec. (k) amended Nov. 5, 2013.)

Sec. 51. AMOUNT OF HOMESTEAD; USES. The homestead, not in a 

town or city, shall consist of not more than two hundred acres of 

land, which may be in one or more parcels, with the improvements 

thereon; the homestead in a city, town or village, shall consist of 

lot or contiguous lots amounting to not more than 10 acres of land, 

together with any improvements on the land; provided, that the 

homestead in a city, town or village shall be used for the purposes of 

a home, or as both an urban home and a place to exercise a calling or 

business, of the homestead claimant, whether a single adult person, or 

the head of a family; provided also, that any temporary renting of the 

homestead shall not change the character of the same, when no other 

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homestead has been acquired; provided further that a release or 

refinance of an existing lien against a homestead as to a part of the 

homestead does not create an additional burden on the part of the 

homestead property that is unreleased or subject to the refinance, and 

a new lien is not invalid only for that reason. 

(Amended Nov. 3, 1970, Nov. 6, 1973, Nov. 8, 1983, and Nov. 2, 1999.)

NOTE: The joint resolution amending Sec. 51 in 1983 included a 

section that did not purport to amend the constitution and that 

provided the following: "This amendment applies to all homesteads in 

this state, including homesteads acquired before the adoption of this 

amendment."

Sec. 52. DESCENT AND DISTRIBUTION OF HOMESTEAD; RESTRICTIONS ON 

PARTITION. On the death of the husband or wife, or both, the 

homestead shall descend and vest in like manner as other real property 

of the deceased, and shall be governed by the same laws of descent and 

distribution, but it shall not be partitioned among the heirs of the 

deceased during the lifetime of the surviving husband or wife, or so 

long as the survivor may elect to use or occupy the same as a 

homestead, or so long as the guardian of the minor children of the 

deceased may be permitted, under the order of the proper court having 

the jurisdiction, to use and occupy the same.

Sec. 53. (Repealed Nov. 2, 1999.) 

(TEMPORARY TRANSITION PROVISIONS for Sec. 53: See Appendix, Note 1.)

Sec. 54. (Repealed Aug. 5, 1969.)

Sec. 55. (Repealed Aug. 5, 1969.)

Sec. 56. (Repealed Nov. 6, 2001.) 

(TEMPORARY TRANSITION PROVISION for Sec. 56: See Appendix, Note 3.)

Sec. 57. (Repealed Aug. 5, 1969.)

Sec. 58. (Repealed Aug. 5, 1969.)

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Sec. 59. CONSERVATION AND DEVELOPMENT OF NATURAL RESOURCES AND 

PARKS AND RECREATIONAL FACILITIES; CONSERVATION AND RECLAMATION 

DISTRICTS. (a) The conservation and development of all of the natural 

resources of this State, and development of parks and recreational 

facilities, including the control, storing, preservation and 

distribution of its storm and flood waters, the waters of its rivers 

and streams, for irrigation, power and all other useful purposes, the 

reclamation and irrigation of its arid, semiarid and other lands 

needing irrigation, the reclamation and drainage of its overflowed 

lands, and other lands needing drainage, the conservation and 

development of its forests, water and hydro-electric power, the 

navigation of its inland and coastal waters, and the preservation and 

conservation of all such natural resources of the State are each and 

all hereby declared public rights and duties; and the Legislature 

shall pass all such laws as may be appropriate thereto.

(b) There may be created within the State of Texas, or the 

State may be divided into, such number of conservation and reclamation 

districts as may be determined to be essential to the accomplishment 

of the purposes of this amendment to the constitution, which districts 

shall be governmental agencies and bodies politic and corporate with 

such powers of government and with the authority to exercise such 

rights, privileges and functions concerning the subject matter of this 

amendment as may be conferred by law.

(c) The Legislature shall authorize all such indebtedness as 

may be necessary to provide all improvements and the maintenance 

thereof requisite to the achievement of the purposes of this 

amendment. All such indebtedness may be evidenced by bonds of such 

conservation and reclamation districts, to be issued under such 

regulations as may be prescribed by law. The Legislature shall also 

authorize the levy and collection within such districts of all such 

taxes, equitably distributed, as may be necessary for the payment of 

the interest and the creation of a sinking fund for the payment of 

such bonds and for the maintenance of such districts and 

improvements. Such indebtedness shall be a lien upon the property 

assessed for the payment thereof. The Legislature shall not authorize 

the issuance of any bonds or provide for any indebtedness against any 

reclamation district unless such proposition shall first be submitted 

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to the qualified voters of such district and the proposition 

adopted.

(c-1) In addition and only as provided by this subsection, the 

Legislature may authorize conservation and reclamation districts to 

develop and finance with taxes those types and categories of parks and 

recreational facilities that were not authorized by this section to be 

developed and financed with taxes before September 13, 2003. For 

development of such parks and recreational facilities, the Legislature 

may authorize indebtedness payable from taxes as may be necessary to 

provide for improvements and maintenance only for a conservation and 

reclamation district all or part of which is located in Bexar County, 

Bastrop County, Waller County, Travis County, Williamson County, 

Harris County, Galveston County, Brazoria County, Fort Bend County, or 

Montgomery County, or for the Tarrant Regional Water District, a water 

control and improvement district located in whole or in part in 

Tarrant County. All the indebtedness may be evidenced by bonds of the 

conservation and reclamation district, to be issued under regulations 

as may be prescribed by law. The Legislature may also authorize the 

levy and collection within such district of all taxes, equitably 

distributed, as may be necessary for the payment of the interest and 

the creation of a sinking fund for the payment of the bonds and for 

maintenance of and improvements to such parks and recreational 

facilities. The indebtedness shall be a lien on the property assessed 

for the payment of the bonds. The Legislature may not authorize the 

issuance of bonds or provide for indebtedness under this subsection 

against a conservation and reclamation district unless a proposition 

is first submitted to the qualified voters of the district and the 

proposition is adopted. This subsection expands the authority of the 

Legislature with respect to certain conservation and reclamation 

districts and is not a limitation on the authority of the Legislature 

with respect to conservation and reclamation districts and parks and 

recreational facilities pursuant to this section as that authority 

existed before September 13, 2003.

(d) No law creating a conservation and reclamation district 

shall be passed unless notice of the intention to introduce such a 

bill setting forth the general substance of the contemplated law 

shall have been published at least thirty (30) days and not more than 

ninety (90) days prior to the introduction thereof in a newspaper or 

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newspapers having general circulation in the county or counties 

in which said district or any part thereof is or will be located and 

by delivering a copy of such notice and such bill to the Governor who 

shall submit such notice and bill to the Texas Water Commission, or 

its successor, which shall file its recommendation as to such bill 

with the Governor, Lieutenant Governor and Speaker of the House of 

Representatives within thirty (30) days from date notice was received 

by the Texas Water Commission. Such notice and copy of bill shall 

also be given of the introduction of any bill amending a law creating 

or governing a particular conservation and reclamation district if 

such bill (1) adds additional land to the district, (2) alters the 

taxing authority of the district, (3) alters the authority of the 

district with respect to the issuance of bonds, or (4) alters the 

qualifications or terms of office of the members of the governing body 

of the district.

(e) No law creating a conservation and reclamation district 

shall be passed unless, at the time notice of the intention to 

introduce a bill is published as provided in Subsection (d) of this 

section, a copy of the proposed bill is delivered to the commissioners 

court of each county in which said district or any part thereof is or 

will be located and to the governing body of each incorporated city or 

town in whose jurisdiction said district or any part thereof is or 

will be located. Each such commissioners court and governing body may 

file its written consent or opposition to the creation of the proposed 

district with the governor, lieutenant governor, and speaker of the 

house of representatives. Each special law creating a conservation 

and reclamation district shall comply with the provisions of the 

general laws then in effect relating to consent by political 

subdivisions to the creation of conservation and reclamation districts 

and to the inclusion of land within the district.

(f) A conservation and reclamation district created under this 

section to perform any or all of the purposes of this section may 

engage in fire-fighting activities and may issue bonds or other 

indebtedness for fire-fighting purposes as provided by law and this 

constitution. 

(Added Aug. 21, 1917; Subsec. (d) added Nov. 3, 1964; Subsec. (e) 

added Nov. 6, 1973; Subsec. (f) added Nov. 7, 1978; Subsec. (c) 

amended Nov. 2, 1999; Subsec. (a) amended and (c-1) added Sept. 13, 

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2003.) (TEMPORARY TRANSITION PROVISIONS for Sec. 59: See Appendix, 

Note 1.)

Sec. 60. (Repealed Aug. 5, 1969.)

Sec. 61. COMPENSATION OF DISTRICT, COUNTY, AND PRECINCT 

OFFICERS; SALARY OR FEE BASIS; DISPOSITION OF FEES. (a) All district 

officers in the State of Texas and all county officers in counties 

having a population of twenty thousand (20,000) or more, according to 

the then last preceding Federal Census, shall be compensated on a 

salary basis.

(b) In all counties in this State, the Commissioners Courts 

shall be authorized to determine whether precinct officers shall be 

compensated on a fee basis or on a salary basis, with the exception 

that it shall be mandatory upon the Commissioners Courts, to 

compensate all justices of the peace, constables, deputy constables 

and precinct law enforcement officers on a salary basis.

(c) In counties having a population of less than twenty 

thousand (20,000), according to the then last preceding Federal 

Census, the Commissioners Courts have the authority to determine 

whether county officers shall be compensated on a fee basis or on a 

salary basis, with the exception that it shall be mandatory upon the 

Commissioners Courts to compensate all sheriffs, deputy sheriffs, 

county law enforcement officers including sheriffs who also perform 

the duties of assessor and collector of taxes, and their deputies, on 

a salary basis.

(d) All fees earned by district, county and precinct officers 

shall be paid into the county treasury where earned for the account of 

the proper fund, provided that fees incurred by the State, county and 

any municipality, or in case where a pauper's oath is filed, shall be 

paid into the county treasury when collected and provided that where 

any officer is compensated wholly on a fee basis such fees may be 

retained by such officer or paid into the treasury of the county as 

the Commissioners Court may direct.

(e) All Notaries Public, county surveyors and public weighers 

shall continue to be compensated on a fee basis. 

(Added Aug. 24, 1935; amended Nov. 2, 1948, Nov. 7, 1972, and Nov. 2, 

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1999.) (TEMPORARY TRANSITION PROVISIONS for Sec. 61: See Appendix, 

Note 1.)

Sec. 62. (Repealed April 22, 1975.)

Sec. 63. (Repealed April 22, 1975.)

Sec. 64. TERMS OF OFFICE, CERTAIN OFFICES. The elective 

district, county, and precinct offices which have heretofore had terms 

of two years, shall hereafter have terms of four years; and the 

holders of such offices shall serve until their successors are 

qualified. 

(Added Nov. 2, 1954; amended Nov. 6, 2007.)

Sec. 65. TERMS OF OFFICE; AUTOMATIC RESIGNATION. (a) This 

section applies to the following offices: District Clerks; County 

Clerks; County Judges; Judges of the County Courts at Law, County 

Criminal Courts, County Probate Courts and County Domestic Relations 

Courts; County Treasurers; Criminal District Attorneys; County 

Surveyors; County Commissioners; Justices of the Peace; Sheriffs; 

Assessors and Collectors of Taxes; District Attorneys; County 

Attorneys; Public Weighers; and Constables.

(b) If any of the officers named herein shall announce their 

candidacy, or shall in fact become a candidate, in any General, 

Special or Primary Election, for any office of profit or trust under 

the laws of this State or the United States other than the office then 

held, at any time when the unexpired term of the office then held 

shall exceed one year and 30 days, such announcement or such candidacy 

shall constitute an automatic resignation of the office then held, and 

the vacancy thereby created shall be filled pursuant to law in the 

same manner as other vacancies for such office are filled.

(Added Nov. 2, 1954; amended Nov. 4, 1958, and Nov. 2, 1999; Subsec. 

(a) amended Nov. 6, 2007; Subsec. (b) amended Nov. 8, 2011.) 

(TEMPORARY TRANSITION PROVISIONS for Sec. 65: See Appendix, Note 1.)

Sec. 65A. (Repealed Nov. 6, 2001.) 

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(TEMPORARY TRANSITION PROVISION for Sec. 65A: See Appendix, Note 3.)

Sec. 66. PROTECTED BENEFITS UNDER CERTAIN PUBLIC RETIREMENT 

SYSTEMS. (a) This section applies only to a public retirement system 

that is not a statewide system and that provides service and 

disability retirement benefits and death benefits to public officers 

and employees.

(b) This section does not apply to a public retirement system 

that provides service and disability retirement benefits and death 

benefits to firefighters and police officers employed by the City of 

San Antonio.

(c) This section does not apply to benefits that are:

(1) health benefits;

(2) life insurance benefits; or

(3) disability benefits that a retirement system 

determines are no longer payable under the terms of the retirement 

system as those terms existed on the date the retirement system began 

paying the disability benefits.

(d) On or after the effective date of this section, a change in 

service or disability retirement benefits or death benefits of a 

retirement system may not reduce or otherwise impair benefits accrued 

by a person if the person:

(1) could have terminated employment or has terminated 

employment before the effective date of the change; and

(2) would have been eligible for those benefits, without 

accumulating additional service under the retirement system, on any 

date on or after the effective date of the change had the change not 

occurred.

(e) Benefits granted to a retiree or other annuitant before the 

effective date of this section and in effect on that date may not be 

reduced or otherwise impaired.

(f) The political subdivision or subdivisions and the 

retirement system that finance benefits under the retirement system 

are jointly responsible for ensuring that benefits under this section 

are not reduced or otherwise impaired.

(g) This section does not create a liability or an obligation 

to a retirement system for a member of the retirement system other 

than the payment by active members of a required contribution or a 

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future required contribution to the retirement system.

(h) A retirement system described by Subsection (a) and the 

political subdivision or subdivisions that finance benefits under the 

retirement system are exempt from the application of this section if:

(1) the political subdivision or subdivisions hold an 

election on the date in May 2004 that political subdivisions may use 

for the election of their officers;

(2) the majority of the voters of a political subdivision 

voting at the election favor exempting the political subdivision and 

the retirement system from the application of this section; and

(3) the exemption is the only issue relating to the 

funding and benefits of the retirement system that is presented to the 

voters at the election. 

(Former Sec. 66 repealed Nov. 2, 1999; current Sec. 66 added Sept. 13, 

2003.)

Sec. 67. STATE AND LOCAL RETIREMENT SYSTEMS. (a) General 

Provisions. (1) The legislature may enact general laws establishing 

systems and programs of retirement and related disability and death 

benefits for public employees and officers. Financing of benefits 

must be based on sound actuarial principles. The assets of a system 

are held in trust for the benefit of members and may not be diverted.

(2) A person may not receive benefits from more than one 

system for the same service, but the legislature may provide by law 

that a person with service covered by more than one system or program 

is entitled to a fractional benefit from each system or program based 

on service rendered under each system or program calculated as to 

amount upon the benefit formula used in that system or program. 

Transfer of service credit between the Employees Retirement System of 

Texas and the Teacher Retirement System of Texas also may be 

authorized by law.

(3) Each statewide benefit system must have a board of 

trustees to administer the system and to invest the funds of the 

system in such securities as the board may consider prudent 

investments. In making investments, a board shall exercise the 

judgment and care under the circumstances then prevailing that persons 

of ordinary prudence, discretion, and intelligence exercise in the 

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management of their own affairs, not in regard to 

speculation, but in regard to the permanent disposition of their 

funds, considering the probable income therefrom as well as the 

probable safety of their capital. The legislature by law may further 

restrict the investment discretion of a board.

(4) General laws establishing retirement systems and 

optional retirement programs for public employees and officers in 

effect at the time of the adoption of this section remain in effect, 

subject to the general powers of the legislature established in this 

subsection.

(b) State Retirement Systems. (1) The legislature shall 

establish by law a Teacher Retirement System of Texas to provide 

benefits for persons employed in the public schools, colleges, and 

universities supported wholly or partly by the state. Other employees 

may be included under the system by law.

(2) The legislature shall establish by law an Employees 

Retirement System of Texas to provide benefits for officers and 

employees of the state and such state-compensated officers and 

employees of appellate courts and judicial districts as may be 

included under the system by law.

(3) The amount contributed by a person participating in 

the Employees Retirement System of Texas or the Teacher Retirement 

System of Texas shall be established by the legislature but may not be 

less than six percent of current compensation. The amount contributed 

by the state may not be less than six percent nor more than 10 percent 

of the aggregate compensation paid to individuals participating in the 

system. In an emergency, as determined by the governor, the 

legislature may appropriate such additional sums as are actuarially 

determined to be required to fund benefits authorized by law.

(c) Local Retirement Systems. (1) The legislature shall 

provide by law for:

(A) the creation by any city or county of a system of 

benefits for its officers and employees;

(B) a statewide system of benefits for the officers 

and employees of counties or other political subdivisions of the state 

in which counties or other political subdivisions may voluntarily 

participate; and

(C) a statewide system of benefits for officers and 

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employees of cities in which cities may voluntarily 

participate.

(2) Benefits under these systems must be reasonably 

related to participant tenure and contributions.

(d) Judicial Retirement System. (1) Notwithstanding any other 

provision of this section, the system of retirement, disability, and 

survivors' benefits heretofore established in the constitution or by 

law for justices, judges, and commissioners of the appellate courts 

and judges of the district and criminal district courts is continued 

in effect. Contributions required and benefits payable are to be as 

provided by law.

(2) General administration of the Judicial Retirement 

System of Texas is by the Board of Trustees of the Employees 

Retirement System of Texas under such regulations as may be provided 

by law.

(e) Anticipatory Legislation. Legislation enacted in 

anticipation of this amendment is not void because it is anticipatory.

(f) Retirement Systems Not Belonging to a Statewide System. 

The board of trustees of a system or program that provides retirement 

and related disability and death benefits for public officers and 

employees and that does not participate in a statewide public 

retirement system shall:

(1) administer the system or program of benefits;

(2) hold the assets of the system or program for the 

exclusive purposes of providing benefits to participants and their 

beneficiaries and defraying reasonable expenses of administering the 

system or program; and

(3) select legal counsel and an actuary and adopt sound 

actuarial assumptions to be used by the system or program.

(g) If the legislature provides for a fire fighters' pension 

commissioner, the term of office for that position is four years. 

(Added April 22, 1975; Subsec. (f) added Nov. 2, 1993; Subsec. (g) 

added Nov. 6, 2001.)

Sec. 68. ASSOCIATIONS OF AGRICULTURAL PRODUCERS; ASSESSMENTS ON 

PRODUCT SALES TO FINANCE PROGRAMS OF MARKETING, PROMOTION, RESEARCH, 

AND EDUCATION. The legislature may provide for the advancement of 

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food and fiber in this state by providing representative 

associations of agricultural producers with authority to collect such 

refundable assessments on their product sales as may be approved by 

referenda of producers. All revenue collected shall be used solely to 

finance programs of marketing, promotion, research, and education 

relating to that commodity. 

(Added Nov. 8, 1983.)

Sec. 69. PRIOR APPROVAL OF EXPENDITURE OR EMERGENCY TRANSFER OF 

APPROPRIATED FUNDS. The legislature may require, by rider in the 

General Appropriations Act or by separate statute, the prior approval 

of the expenditure or the emergency transfer of any funds appropriated 

to the agencies of state government. 

(Added Nov. 5, 1985.)

Sec. 70. (Added Nov. 8, 1988; expired Sept. 1, 2008.)

Sec. 71. TEXAS PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATOR 

FUNDS; BONDS. (a) The legislature by law may establish a Texas 

product development fund to be used without further appropriation 

solely in furtherance of a program established by the legislature to 

aid in the development and production of new or improved products in 

this state. The fund shall contain a program account, an interest and 

sinking account, and other accounts authorized by the legislature. To 

carry out the program authorized by this subsection, the legislature 

may authorize loans, loan guarantees, and equity investments using 

money in the Texas product development fund and the issuance of up to 

$25 million of general obligation bonds to provide initial funding of 

the Texas product development fund. The Texas product development 

fund is composed of the proceeds of the bonds authorized by this 

subsection, loan repayments, guarantee fees, royalty receipts, 

dividend income, and other amounts received by the state from loans, 

loan guarantees, and equity investments made under this subsection and 

any other amounts required to be deposited in the Texas product 

development fund by the legislature.

(b) The legislature by law may establish a Texas small business 

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incubator fund to be used without further appropriation solely 

in furtherance of a program established by the legislature to foster 

and stimulate the development of small businesses in the state. The 

fund shall contain a project account, an interest and sinking account, 

and other accounts authorized by the legislature. A small business 

incubator operating under the program is exempt from ad valorem 

taxation in the same manner as an institution of public charity under 

Article VIII, Section 2, of this constitution. To carry out the 

program authorized by this subsection, the legislature may authorize 

loans and grants of money in the Texas small business incubator fund 

and the issuance of up to $20 million of general obligation bonds to 

provide initial funding of the Texas small business incubator fund. 

The Texas small business incubator fund is composed of the proceeds of 

the bonds authorized by this subsection, loan repayments, and other 

amounts received by the state for loans or grants made under this 

subsection and any other amounts required to be deposited in the Texas 

small business incubator fund by the legislature.

(c) The legislature may require review and approval of the 

issuance of bonds under this section, of the use of the bond proceeds, 

or of the rules adopted by an agency to govern use of the bond 

proceeds. Notwithstanding any other provision of this constitution, 

any entity created or directed to conduct this review and approval may 

include members, or appointees of members, of the executive, 

legislative, and judicial departments of state government.

(d) Bonds authorized under this section constitute a general 

obligation of the state. While any of the bonds or interest on the 

bonds is outstanding and unpaid, there is appropriated out of the 

first money coming into the treasury in each fiscal year, not 

otherwise appropriated by this constitution, the amount sufficient to 

pay the principal of and interest on the bonds that mature or become 

due during the fiscal year, less any amount in any interest and 

sinking account at the end of the preceding fiscal year that is 

pledged to payment of the bonds or interest. 

(Added Nov. 7, 1989; Subsec. (b) amended Nov. 2, 1999.)

Sec. 72. TEMPORARY REPLACEMENT OF PUBLIC OFFICER ON MILITARY 

ACTIVE DUTY. (a) An elected or appointed officer of the state or of 

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any political subdivision who enters active duty in the armed 

forces of the United States as a result of being called to duty, 

drafted, or activated does not vacate the office held, but the 

appropriate authority may appoint a replacement to serve as temporary 

acting officer as provided by this section if the elected or appointed 

officer will be on active duty for longer than 30 days.

(b) For an officer other than a member of the legislature, the 

authority who has the power to appoint a person to fill a vacancy in 

that office may appoint a temporary acting officer. If a vacancy would 

normally be filled by special election, the governor may appoint the 

temporary acting officer for a state or district office, and the 

governing body of a political subdivision may appoint the temporary 

acting officer for an office of that political subdivision.

(c) For an officer who is a member of the legislature, the 

member of the legislature shall select a person to serve as the 

temporary acting representative or senator, subject to approval of the 

selection by a majority vote of the appropriate house of the 

legislature. The temporary acting representative or senator must be:

(1) a member of the same political party as the member 

being temporarily replaced; and

(2) qualified for office under Section 6, Article III, of 

this constitution for a senator, or Section 7, Article III, of this 

constitution for a representative.

(d) The officer who is temporarily replaced under this section 

may recommend to the appropriate appointing authority the name of a 

person to temporarily fill the office.

(e) The appropriate authority shall appoint the temporary 

acting officer to begin service on the date specified in writing by 

the officer being temporarily replaced as the date the officer will 

enter active military service.

(f) A temporary acting officer has all the powers, privileges, 

and duties of the office and is entitled to the same compensation, 

payable in the same manner and from the same source, as the officer 

who is temporarily replaced.

(g) A temporary acting officer appointed under this section 

shall perform the duties of office for the shorter period of:

(1) the term of the active military service of the officer 

who is temporarily replaced; or

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(2) the term of office of the officer who is temporarily 

replaced.

(h) In this section, "armed forces of the United States" means 

the United States Army, the United States Navy, the United States Air 

Force, the United States Marine Corps, the United States Coast Guard, 

any reserve or auxiliary component of any of those services, or the 

National Guard. 

(Added Sept. 13, 2003.)

Sec. 73. VETERANS HOSPITALS. The state may contribute money, 

property, and other resources for the establishment, maintenance, and 

operation of veterans hospitals in this state.

(Added Nov. 3, 2009.)

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Vernon's Texas Rules Annotated Currentness

Texas Rules of Civil Procedure

Part VII. Rules Relating to Special Proceedings

Section 1. Procedures Related to Foreclosures of Certain Liens

Rule 735. Foreclosures Requiring a Court Order (Refs & Annos)

735.1. Liens Affected

Rule 736 provides the procedure for obtaining a court order, when required, to allow foreclosure of a lien containing a power of sale in the security instrument, dedicatory instrument, or declaration creating the lien, including a lien securing any of the following:

(a) a home equity loan, reverse mortgage, or home equity line of credit under article XVI, sections 50(a)(6),

50(k), and 50(t) of the Texas Constitution;

(b) a tax lien transfer or property tax loan under sections 32.06 and 32. 065 of the Tax Code; or

(c) a property owners' association assessment under section 209.0092 of the Property Code.

CREDIT(S)

Adopted by order of Oct. 17, 2011, eff. Jan. 1, 2012. Amended by order of Dec. 12, 2011, and Dec. 30, 2011,

eff. Jan. 1, 2012.

COMMENT--RULE 735

See comment following Rule 735.3.

RESEARCH REFERENCES

Encyclopedias

TX Jur. 3d Homesteads § 142, Foreclosure of Lien for Home Equity Loan or Reverse Mortgage.

Forms

Texas Jurisprudence Pleading & Practice Forms 2d Ed § 174:10, Application and Notice.

TX Rules of Civil Procedure, Rule 735.1 Page 1

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
1 West's Texas Forms § 11:4.10, Foreclosure of Certain Liens Requiring Court Orders.

Treatises and Practice Aids

Elliott, 11 Tex. Prac. Series § 12:34, Purpose of Rule 736 Expedited Home Equity Lien Foreclosure.

Cochran, 27 Tex. Prac. Series § 7.14, Foreclosure Procedures.

NOTES OF DECISIONS

Construction and application 1

1. Construction and application

Servicer for a junior home equity loan was not required, under state constitutional provision governing the creation and foreclosure of a lien securing a home equity loan, to obtain a court order in order to receive excess

proceeds from the foreclosure of a senior, purchase money deed of trust. Patton v. Porterfield (App. 5 Dist.

2013) 411 S.W.3d 147, rehearing overruled , reconsideration en banc denied, review denied, rehearing of petition for review denied. Homestead 109

Vernon's Ann. Texas Rules Civ. Proc., Rule 735.1, TX R RCP Rule 735.1

Current with amendments received through 3/15/2015

(C) 2015 Thomson Reuters

END OF DOCUMENT

TX Rules of Civil Procedure, Rule 735.1 Page 2

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
Vernon's Texas Rules Annotated Currentness

Texas Rules of Civil Procedure

Part VII. Rules Relating to Special Proceedings

Section 1. Procedures Related to Foreclosures of Certain Liens

Rule 735. Foreclosures Requiring a Court Order (Refs & Annos)

735.3. Judicial Foreclosure Unaffected

A Rule 736 order is not a substitute for a judgment for judicial foreclosure, but any loan agreement, contract, or

lien that may be foreclosed using Rule 736 procedures may also be foreclosed by judgment in an action for judicial foreclosure.

CREDIT(S)

Adopted by order of Oct. 17, 2011, eff. Jan. 1, 2012. Amended by order of Dec. 12, 2011, and Dec. 30, 2011,

eff. Jan. 1, 2012.

COMMENT--2011

Rules 735 and 736 have been rewritten and expanded to cover property owners' associations' assessment liens, in accordance with amendments to chapter 209 of the Property Code. Rule 735.1 makes the

expedited procedures of Rule 736 available only when the lienholder has a power of sale but a court order is nevertheless required by law to foreclose the lien. Rule 735.2 makes clear that Rule 736 is procedural only and does not affect other contractual or legal rights or duties. Any lien which can be foreclosed under Rule 736 may also be foreclosed in an action for judicial foreclosure, as Rule 735.3 states,

but no lienholder is required to obtain both a Rule 736 order and a judgment for judicial foreclosure.

The requirement of conspicuousness in Rule 736.1(d)(5) has reference to section 1.201(b)(10) of the

Business and Commerce Code.

RESEARCH REFERENCES

Forms

1 West's Texas Forms § 11:4.10, Foreclosure of Certain Liens Requiring Court Orders.

Treatises and Practice Aids

Elliott, 11 Tex. Prac. Series § 12:34, Purpose of Rule 736 Expedited Home Equity Lien Foreclosure.

TX Rules of Civil Procedure, Rule 735.3 Page 1

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
Cochran, 27 Tex. Prac. Series § 7.14, Foreclosure Procedures.

Vernon's Ann. Texas Rules Civ. Proc., Rule 735.3, TX R RCP Rule 735.3

Current with amendments received through 3/15/2015

(C) 2015 Thomson Reuters

END OF DOCUMENT

TX Rules of Civil Procedure, Rule 735.3 Page 2

© 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.