Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 5 - OFFICE OF CONSUMER CREDIT COMMISSIONER › Chapter 90 - CHAPTER 342, PLAIN LANGUAGE CONTRACT PROVISIONS › Subchapter F - SECOND LIEN HOME IMPROVEMENT CONTRACTS (SUBCHAPTER G) › Section 90.604 - Model Contracts; Permissible Changes

Current through Reg. 49, No. 28; July 12, 2024
(a) A licensee may consider making the
				  following types of changes to the second lien home improvement contracts plain
				  language model clauses:
(1) For transactions
				  involving a security interest in the consumer's principal dwelling, the Truth
				  in Lending Act,
				  RSA
				  1635(a), and Regulation Z,
				  RSA
				  1026.23(b), require the
				  creditor to deliver to the consumer a notice of the right to rescind the
				  transaction. Model forms for the notice of the right to rescind are available
				  at RSA
				  1026, Appendix H, Model Forms H-8 and H-9.
				  The Truth in Lending Act right of rescission form for use in a transaction
				  involving the consumer's principal dwelling reads:
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(2) If
				  the Texas constitutional homestead requirements apply to the transaction, the
				  licensee must add a clause regarding notice of cancellation, place of singing
				  the contract, and the five-day waiting period. The model clause regarding the
				  notice of cancellation, place of signing the contract, and the five-day waiting
				  period reads:
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(3)
				  Article 16, Section 50(a)(5) of the Texas Constitution provides that a contract
				  for improvements on a homestead must expressly provide the owner with notice of
				  the owner's right to cancel the contract. The model notice regarding the
				  owner's right to cancel the contract reads: "NOTICE OF RIGHT TO CANCEL. THE
				  OWNER MAY CANCEL 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."
(4) Texas Business and
				  Commerce Code, Chapter 601 requires that notice must be given to the consumer
				  regarding the consumer's right to cancel certain types of transactions. If this
				  chapter is applicable, the notice that must be given by the licensee must
				  appear in immediate proximity to the consumer's signature, or on the front page
				  of the receipt if a contract is not used. The notice must be in boldfaced type
				  and must be the equivalent of at least 10 points in the Times typeface. The
				  statement to which the notice must be substantially similar reads: "YOU, THE
				  BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD
				  BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF
				  CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT."
(5) Texas Business and Commerce Code, Chapter
				  601 also requires, if applicable, that a completed notice of cancellation form
				  in duplicate be attached to the loan documents or receipt of the consumer
				  transaction. This notice must be easily detachable from the contract or
				  receipt, be in the same language as the contract or receipt, be in boldfaced
				  type, and be the equivalent of at least 10 points in the Times typeface. The
				  required notice of cancellation reads:
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(6) The
				  licensee may add information related to information set forth in the model
				  clauses that is not otherwise prohibited by law.
(7) The licensee may substitute another term
				  for "Lender" or "Borrower" that has the same meaning, or use pronouns such as
				  "you," "we," and "us."
(8) The
				  model clauses may be presented in any order, and may be combined or further
				  segregated at the licensee's option.
(9) The licensee may insert descriptive
				  headings or number provisions.
(10)
				  The licensee may change the case of a word if otherwise permitted by the Texas
				  Finance Code.
(11) The licensee may
				  make other changes that do not affect the substance of the
				  disclosures.
(12) A licensee may
				  place its NMLS ID number, the individual residential mortgage loan originator's
				  name, or the originator's NMLS ID on any portion of a document requiring this
				  information, including the signature page. To the extent allowed by Regulation
				  Z,
				  RSA
				  1026.36(g), and the official
				  commentary to that section, a licensee may omit:
(A) the licensee's NMLS ID number, if the
				  licensee does not have an NMLS ID number and is not legally required to obtain
				  one; and
(B) the individual
				  residential mortgage loan originator's NMLS ID number, if the originator does
				  not have an NMLS ID number and is not legally required to obtain
				  one.
(13) A sample model
				  contract that does not allow for withdrawals or multiple advances is presented
				  in the following example.
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(14) A sample model promissory
				  note that does not allow for withdrawals or multiple advances is presented in
				  the following example.
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(15) A sample model contract that
				  allows for withdrawals or multiple advances is presented in the following
				  example.
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(16) A sample model promissory
				  note that allows for withdrawals or multiple advances is presented in the
				  following example.
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(17) A sample model deed of trust
				  that allows for withdrawals or multiple advances is presented in the following
				  example.
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