Source: https://compliance.docutech.com/2017/11/28/document-updates-various-texas-home-equity-loan-documents-2/
Timestamp: 2019-04-22 02:58:13+00:00

Document:
On November 7, 2017 voters in Texas approved (by approximately 68.60%) Proposition 2, effectively passing Tex. S.J.R. 60 (2017) and amending Tex. Const. art. 16, § 50. Details about some of the changes made by this amendment can be found at: http://blog.docutechcorp.com/time-texas-home-equity-overhaul-texans-set-amend-constitution. These amendments take effect on January 1, 2018.
We are updating our documents and system functions for these amendments and will post updates periodically on this page as they are made. FNMA is currently assessing impact to their documents (see FNMA Ann. SEL-2017-09) and we will update our versions of their documents after FNMA publishes them.
If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
As a result of these changes, we are updating our duplicates of these forms to match the latest revisions published on FNMA’s website. The text of the updated versions will print when “Closing Date On or After 01/01/2018” (FI 118148) equals “Yes”. We are also monitoring this website for any changes to the Spanish-version of Form 3044.1 and will update this form accordingly.
These changes will take effect on December 29, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
One of the substantial changes to Tex. Const. art. 16, § 50 is that a Texas home equity loan may now be refinanced by a no-cash out refinance loan, without such loan being considered a home equity loan, if certain conditions are met (see Tex. Const. art 16, § 50[f], as amended by Tex. S.R. 60 ; all citations in this update are to Tex. Const. art. 16, § 50, as amended). Such loans are subject to Ibid. § 50(a)(4), rather than Ibid. § 50(a)(6) (see Ibid. § 50[f] & [f-1]). If the conditions are not met, then the no-cash out refinance loan must be structured as a loan subject to Ibid. § 50(a)(6).
“Texas 50(a)(6) loan” refers to a loan subject to § 50(a)(6), whether it be a home equity loan or a no-cash out refinance of a home equity loan which fails to meet the conditions under Ibid. § 50(f)(2).
“Texas 50(a)(4) loan” refers to a no-cash out refinance loan.
“Texas 50(f)(2) loan” refers to a Texas 50(a)(4) loan which refinances a Texas 50(a)(6) loan and is considered a Texas 50(a)(4) loan under § 50(f)(2) and (f-1).
To make necessary changes to our current documents, we have created a new field entitled “No Cash-Out Refinancing a TX Home Equity 50(a)(6) loan” (FI 118143). This field will primarily be used to determine whether a loan in our system is a Texas 50(f)(2) loan.
We will also be creating new field “Closing Date On or After 01/01/2018” (FI 118148), since the amendments to Texas’ Constitution do not take effect until January 1, 2018.
We will be renaming field “Convert Failed 3% Points and Fees Test to ‘Pass’” (FI 81963) to “Convert Failed 2% Points and Fees Test to ‘Pass’”, due to changes in the amount of fees which may be charged (see Tex. Const. art. 16, § 50[a][E], as amended).
We will also be modifying the optional global field prompt for “Is this a Texas Home Equity Section 50(a)(6) loan?” (FI 29932) by adding “Document Package Type = Initial Disclosure” as a condition to current conditions. This is due to changes we are making to document configurations (as set forth below).
TX Notice Concerning Extensions of Credit – Spanish (Cx3640). We will be modifying the current content of this document to match the forms supplied by the Texas Finance Commission on their website (https://www.fc.texas.gov/homeinfo/homeinfo.html), which reflect the constitutionally-prescribed text set forth in Tex. Const. art. 16, § 50(g) (albeit translated into Spanish, as required under ) which must be provided in connection with a Texas 50(a)(6) loan.
In addition, we are merging into this document the new 12-day notice required to be provided under amended Ibid. § 50(f)(2)(D) for Texas 50(f)(2) loans (we will be modifying the print configurations for this document to print for both types of loans, as described later). The language for this notice is also based on the forms provided by the Texas Finance Commission, which matches the constitutionally-prescribed text set forth in Ibid. (albeit translated into Spanish). We note that this notice is not required to be provided in Spanish, but we will be providing it nevertheless, due to client demand.
TX Affidavit of Fair Market Value of Homestead Property (Cx3653). The text of this document does not need to be changed for a Texas 50(a)(6) loan. However, in order for a Texas 50(a)(4) loan to be considered a Texas 50(f)(2) loan, it must 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 refinance of the extension of credit is made” (amended Tex. Const. art. 16, § 50[f][C]).
Removing the text and field in the third numbered bullet point: “at the office of [Field 1992 ‘Title Company Name’]”. The reason for this is that a Texas 50(f)(2) loan is not required to be closed at the office of a title company, unlike a Texas 50(a)(6) loan, which must be closed at the office of the lender, title company, or an attorney (see § 50[a][N]).
Removing Subparagraph (14)(ii), which affirms that the originating lender has obtained title insurance against land being used for agricultural purposes, and renumbering subsequent subparagraphs.
We note that the Texas Department of Insurance has not modified their handbook and Equity Loan Mortgage Endorsement (T-42) to reflect Ibid. § 50(a)(6)(I), which no longer prohibits a Texas 50(a)(6) loan from being secured by property used primarily for agricultural purposes (see http://www.tdi.texas.gov/title/titlem4i.html#p44). However, the affirmations set forth in Paragraph (14) (renumbered to ) are not an exhaustive attestations of the type of title insurance obtained by the originating lender; thus, absence of a reference to this title insurance does not preclude the lender from obtaining (or not obtaining) such insurance.
These changes will only appear when “Closing Date On or After 01/01/2018” equals “Yes”, else the current text will continue to print.
Changing the revision date in the footer to “(1/18)”.
These changes will appear when “Closing Date On or After 01/01/2018” equals “Yes”, else the current text will continue to appear for Texas 50(a)(6) loans.
TX Home Equity Addendum to Closing Instructions From Lender (Cx5011). While no changes were necessary for this document due to the amendments to Texas’ Constitution, a minor grammatical error was identified in Paragraph 5 and will be corrected.
Important Notice: Currently by default, we provide the 12-day notice required for Texas 50(a)(6) loans (Cx3640 and Cx4549) for all types of refinance transactions and HELOCs, to mitigate any adverse effects which may occur if a borrower changes loan types after Initial Disclosures are provided. For example, the notice is provided in Initial Disclosures for a Texas 50(a)(4) loan, in case the borrower decides later in the loan process to change to a Texas 50(a)(6) loan, and thus avoid adding an extra 12-day waiting period required under Tex. Const. art. 16, § 50(g). We also provide it for all refinance transactions since, under current rules, any refinance of a Texas 50(a)(6) loan must be structured as either a Texas 50(a)(6) loan or a reverse mortgage (see current Ibid. § 50[f]) and we would not know if the refinance loan was refinancing a Texas 50(a)(6) loan or not.
Under these changes, Cx3640 and Cx4549 will only be provided for Texas 50(a)(6) and Texas 50(f)(2) loans. If a Texas 50(a)(4) loan is not otherwise indicated in our system to be one of these, these notices will not be provided for them. In such a case, clients will need to provide these notices separately if it is later determined that they are needed (e.g. if the borrower changes a Texas 50[a] loan to a Texas 50[a] loan).
Docutech will not make any modifications to any CUSTOM changes to any of the documents listed in this announcement to ensure compliance with the constitutional amendments. We strongly encourage clients to review with their own licensed, legal counsel, any customizations they have made to these documents (and any custom documents they have for Texas 50[a] loans).
These changes will be in effect on December 5, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
Note: All of the changes are on Stage servers for testing.

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