| (a) A Chapter 342, Subchapter G purchase money loan
transaction may include, but is not limited to, the following contract
provisions to the extent not prohibited by law or regulation. If the
licensee desires to exercise its rights under one of the following
provisions, it must include that provision in the contract. A licensee
who does not desire to apply a provision is not required to include
it in the contract. For example, a licensee who does not assess a
fee for dishonored checks may omit the fee for dishonored check clause.
A licensee may also exclude non-relevant portions of a model clause.
For example, a licensee who does not routinely finance certain insurance
coverages may omit those non-applicable portions of the model clause.
A Chapter 342, Subchapter G second lien purchase money loan transaction
may contain the following provisions:
(1) Identification of the parties, including the name
and address of each party and specifying the pronouns that designate
the borrower and the lender, and the property address;
(2) A promise to pay;
(3) A late charge provision;
(4) A provision for after maturity interest;
(5) A prepayment clause;
(6) A provision specifying the finance charge earnings
and refund method;
(7) A provision contracting for a fee for a dishonored
check;
(8) A provision specifying the conditions causing default;
(9) A provision regarding property insurance;
(10) A credit insurance disclosure box;
(11) A provision regarding the mailing of notices to
the borrower;
(12) A provision regarding the due on sale clause,
notice of intent to accelerate, and notice of acceleration;
(13) A provision expressing no waiver of the lender's
rights;
(14) A collection expenses clause;
(15) A provision providing for joint liability;
(16) A usury savings clause;
(17) A savings clause stating that if any part of the
loan agreement is invalid, the rest remains valid;
(18) An integration clause stating that the contract
supersedes all prior agreements and that the contract may not be changed
by oral agreement;
(19) A provision stating that the property described
in the loan agreement is subject to the lien of the security document;
(20) A provision specifying that federal law and Texas
law apply to the contract;
(21) OCCC notice;
(22) A provision describing the collateral; and
(23) Signature blocks.
(b) The security document for a Chapter 342, Subchapter
G second lien purchase money loan contract may contain the following
provisions:
(1) A definitions section;
(2) A provision regarding the secured nature of the
agreement;
(3) A provision regarding the transfer of rights in
the property;
(4) Borrower and Lender's promise;
(5) A provision regarding late charges and prepayment
of principal and interest;
(6) A provision regarding the funds for escrow items;
(7) A provision regarding charges and liens;
(8) A provision regarding property insurance;
(9) A provision regarding preservation, maintenance,
protection, and inspection of the property;
(10) A provision regarding protection of the lender's
interest in the property and rights under the security document;
(11) A provision regarding the assignment of miscellaneous
proceeds and forfeiture;
(12) A provision specifying that the borrower is not
released from liability if the licensee modifies the payment schedule;
(13) A provision regarding joint and several liability
and specifying that the person who signs the contract grants ownership
in the homestead and binds the person's successors and assigns;
(14) A provision regarding the extension of credit
charges;
(15) A provision regarding the delivery of notices;
(16) A provision regarding the law governing the contract,
stating that if any part of the contract is invalid, the rest of the
contract remains valid;
(17) A provision regarding rules of clause construction;
(18) A provision specifying that the licensee will
give the borrower a copy of all signed documents at the time the loan
agreement is made;
(19) A provision regarding a transfer of interest in
the property;
(20) A provision regarding the borrower's right to
reinstate after acceleration;
(21) A provision regarding the sale of the loan, change
of loan servicer, notice of grievance, and the lender's right to comply;
(22) A provision regarding hazardous substances;
(23) A provision regarding acceleration and remedies;
(24) A provision regarding the assignment of rents,
appointment of receiver, and the lender in possession;
(25) A provision regarding the power of sale;
(26) A provision regarding the release of the lien
securing the loan agreement;
(27) A provision regarding the lender's rights and
the borrower's responsibilities;
(28) A provision regarding trustees and trustee liability;
(29) A default provision;
(30) A provision regarding subrogation;
(31) A provision regarding what happens if the sum
secured and other charges violate applicable law;
(32) A request for notice of default and foreclosure
under superior mortgages or security documents provision;
(33) Signature blocks;
(34) An acknowledgment; and
(35) A provision regarding notice of confidentiality
rights.
(c) The provisions described in this section are separate
from the TILA-RESPA integrated disclosures required under Regulation
Z, 12 C.F.R. §§1026.19, 1026.37 and 1026.38.
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| Source Note: The provisions of this §90.502 adopted to be effective August 31, 2006, 31 TexReg 6687; amended to be effective September 9, 2010, 35 TexReg 8104; amended to be effective November 5, 2015, 40 TexReg 7635 |
