| (a) A Chapter 342, Subchapter G second lien home improvement
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 home improvement loan transaction may
contain the following provisions:
(1) For a contract for use in a transaction that does
not allow withdrawals or multiple advances:
(A) An identification clause;
(B) A definitions section;
(C) A provision regarding construction of improvements;
(D) A clause regarding the contract price;
(E) A transfer of lien clause;
(F) A provision specifying that completion is made
by the contractor, not the lender;
(G) A partial lien clause;
(H) A provision regarding changes and extras;
(I) A provision regarding receipts and releases;
(J) A provision specifying that no work has been done
prior to execution of the contract;
(K) A provision regarding the trustee's duties;
(L) A notice specifying the preservation of claims
and defenses;
(M) A notice specifying that the owner and the contractor
are responsible for meeting the terms of the contract;
(N) An assignment; and
(O) A provision regarding notice of confidentiality
rights.
(2) For a promissory note for use in a transaction
that does not allow withdrawals or multiple advances:
(A) An identification clause;
(B) A security for payment provision;
(C) A definitions section;
(D) A promise to pay;
(E) A late charge provision;
(F) A provision for after maturity interest;
(G) A prepayment clause;
(H) A provision specifying the finance charge earnings
and refund method;
(I) A deferment clause;
(J) A provision contracting for a fee for a dishonored
check;
(K) A provision specifying the conditions causing default;
(L) A provision regarding property insurance;
(M) A credit insurance disclosure box;
(N) A provision regarding the mailing of notices to
the borrower;
(O) A provision specifying that the borrower's statements
are truthful;
(P) A provision regarding the due on sale clause, notice
of intent to accelerate, and notice of acceleration;
(Q) A provision expressing no waiver of the lender's
rights;
(R) A collection expenses clause;
(S) A provision providing for joint liability;
(T) A usury savings clause;
(U) A savings clause stating that if any part of the
loan agreement is invalid, the rest remains valid;
(V) An integration clause stating that the contract
supersedes all prior agreements and that the contract may not be changed
by oral agreement;
(W) A provision specifying that federal law and Texas
law apply to the contract;
(X) OCCC notice;
(Y) A provision describing the collateral;
(Z) A notice regarding the preservation of claims and
defenses; and
(AA) Signature blocks.
(3) For a contract for use in a transaction that allows
for withdrawals or multiple advances:
(A) An identification clause;
(B) A definitions section;
(C) A provision regarding construction of improvements;
(D) A clause regarding the contract price;
(E) A clause regarding the note payable to the lender;
(F) A clause regarding the note being secured by the
lien;
(G) A transfer of lien clause;
(H) A clause regarding exceptions to conveyance and
warranty;
(I) A provision specifying that completion is made
by the contractor, not the lender;
(J) A partial lien clause;
(K) A provision regarding changes and extras;
(L) A provision regarding receipts and releases;
(M) A provision specifying that no work has been done
prior to execution of the contract;
(N) A provision regarding the owner's promises and
rights;
(O) A provision regarding the owner's duties;
(P) A provision regarding the contractor's duties;
(Q) A provision regarding the contractor's rights;
(R) A provision regarding the trustee's duties;
(S) General provisions;
(T) A notice specifying the preservation of claims
and defenses;
(U) A notice specifying that the owner and the contractor
are responsible for meeting the terms of the contract;
(V) An assignment; and
(W) A provision regarding notice of confidentiality
rights.
(4) For a promissory note for use in a transaction
that allows for withdrawals or multiple advances:
(A) An identification clause;
(B) A security for payment provision;
(C) A definitions section;
(D) A promise to pay;
(E) A late charge provision;
(F) A provision for after maturity interest;
(G) A prepayment clause;
(H) A provision specifying the finance charge earnings
and refund method;
(I) A deferment clause;
(J) A provision contracting for a fee for a dishonored
check;
(K) A provision specifying the conditions causing default;
(L) A provision regarding property insurance;
(M) A credit insurance disclosure box;
(N) A provision regarding the mailing of notices to
the borrower;
(O) A provision specifying that the borrower's statements
are truthful;
(P) A provision regarding the due on sale clause, notice
of intent to accelerate, and notice of acceleration;
(Q) A provision expressing no waiver of the lender's
rights;
(R) A collection expenses clause;
(S) A provision providing for joint liability;
(T) A usury savings clause;
(U) A savings clause stating that if any part of the
loan agreement is invalid, the rest remains valid;
(V) An integration clause stating that the contract
supersedes all prior agreements and that the contract may not be changed
by oral agreement;
(W) A provision specifying that the note is secured
by a deed of trust;
(X) A provision specifying that federal law and Texas
law apply to the contract;
(Y) OCCC notice;
(Z) A provision describing the collateral;
(AA) A notice regarding the preservation of claims
and defenses; and
(BB) Signature blocks.
(5) For a deed of trust for use in a transaction that
allows for withdrawals or multiple advances:
(A) A definitions section;
(B) A provision regarding the transfer of rights in
the property;
(C) A provision regarding late charges and prepayment
of principal and interest;
(D) A provision regarding the funds for escrow items;
(E) A provision regarding charges and liens;
(F) A provision regarding property insurance;
(G) A provision regarding preservation, maintenance,
protection, and inspection of the property;
(H) A provision regarding protection of the lender's
interest in the property and rights under the deed of trust;
(I) A provision regarding the assignment of miscellaneous
proceeds and forfeiture;
(J) A provision expressing no waiver of the lender's
rights;
Cont'd... |
