Unless an equity loan is a home equity line of credit under
Section 50(t), the loan must be scheduled at closing to be repaid
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.
(1) Section 50(a)(6)(L)(i) does not prohibit a lender
from agreeing with a borrower to modify an equity loan if the modification
does not satisfy and replace the original equity loan and does not
create a new extension of credit. The modification may include a deferment
of the borrower's original obligation, and may include amounts that
are past due under the equity loan (e.g., accrued but unpaid interest,
taxes and insurance).
(2) The two month time period contained in Section
50(a)(6)(L)(i) begins on the date of closing. A modification described
by paragraph (1) of this subsection does not affect the two month
time period.
(3) For purposes of Section 50(a)(6)(L)(i), a month
is the period from a date in a month to the corresponding date in
the succeeding month. For example, if a home equity loan closes on
March 1, the first installment must be due no later than May 1. If
the succeeding month does not have a corresponding date, the period
ends on the last day of the succeeding month. For example, if a home
equity loan closes on July 31, the first installment must be due no
later than September 30.
(4) For a closed-end equity loan to have substantially
equal successive periodic installments, some amount of principal must
be reduced with each installment. This requirement prohibits balloon
payments.
(5) Section 50(a)(6)(L)(i) does not preclude a lender's
recovery of payments as necessary for other amounts such as taxes,
adverse liens, insurance premiums, collection costs, and similar items.
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| Source Note: The provisions of this §153.11 adopted to be effective January 8, 2004, 29 TexReg 84; amended to be effective November 13, 2008, 33 TexReg 9074; amended to be effective November 26, 2020, 45 TexReg 8307 |
