| (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, 15
U.S.C. §1635(a), and Regulation Z, 12 C.F.R. §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 12 C.F.R. Part 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:
Attached Graphic
(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:
Attached Graphic
(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:
Attached Graphic
(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, 12 C.F.R. §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.
Attached Graphic
(14) A sample model promissory note that does not allow
for withdrawals or multiple advances is presented in the following
example.
Attached Graphic
(15) A sample model contract that allows for withdrawals
or multiple advances is presented in the following example.
Attached Graphic
(16) A sample model promissory note that allows for
withdrawals or multiple advances is presented in the following example.
Attached Graphic
(17) A sample model deed of trust that allows for withdrawals
or multiple advances is presented in the following example.
Attached Graphic
(b) A licensee has considerable flexibility to arrange
the format of the model form if the revised format does not significantly
adversely affect the substance, clarity, or meaningful sequence of
the disclosures.
|
| Source Note: The provisions of this §90.604 adopted to be effective August 31, 2006, 31 TexReg 6694; amended to be effective March 15, 2007, 32 TexReg 1244; amended to be effective September 6, 2007, 32 TexReg 5676; amended to be effective January 3, 2008, 32 TexReg 9952; amended to be effective September 9, 2010, 35 TexReg 8104; amended to be effective November 5, 2015, 40 TexReg 7635; amended to be effective July 9, 2020, 45 TexReg 4501 |
