Texas Regulatory Round-Up
by: Margaret Wright, Esq.
Proposed Updates for Reverse Mortgages
The Texas Legislature has recently proposed an amendment to the Texas Constitution which will allow a reverse mortgage to be utilized for the purchase of homestead property that the borrower will occupy as a principal residence. Previously, reverse mortgages could not be used for purchase purposes in Texas.
Included in this proposal is also new item concerning when the principal and interest payment may become due reflecting issues distinctive to purchase transactions. The amendment proposes that where a reverse mortgage is used for the purchase of an owner-occupied homestead property, the principal and interest payment may become due if the borrower fails to occupy the property within a certain period of time after the mortgage is consummated, as stipulated in the written agreement.
The proposed amendment also includes an additional disclosure requirement, “IMPORTANT NOTICE TO BORROWERS RELATED TO YOUR REVERSE MORTGAGE”, which must be provided to applicants at least 12 days prior to closing. The required language of the “Important Notice” disclosure is included in the proposed amendment.
Reverse mortgage counseling has always been a requirement, however the proposed amendment now includes the requirement of a borrower attestation that the counseling was completed “not earlier than the 180th day nor later than the 5th day before the date the extension of credit is closed.”
Prior to the reverse mortgage amendments becoming law, this proposal must be approved by Texas voters at the November 5, 2013 Texas election.
View the proposed amendment on AllRegs at:
Foreclosure Notice of Sale Requirement for County Websites
Texas has amended Property Code Section 51.002, Sale of Real Property Under Contract Lien, to include a new subsection requiring counties to post a notice of foreclosure sale filed with the county clerk to the county maintained internet website. The internet page where the notice of sale is posted must be available for public view without required registration of payment of fees. This new requirement only applies to counties which maintain a county website.
The county website foreclosure notice requirement is effective September 1, 2013.
View the rule on AllRegs at:
Correction Instruments in the Conveyance of Real Property
Texas has amended Property Code Section 5.028, Correction Instruments: Nonmaterial Corrections, to reflect nonmaterial corrections to recorded instruments resulting from clerical errors and inadvertent errors.
Subsection (a) has been revised to reflect that a correction instrument may be prepared by a person with personal knowledge of facts relevant to correction of the clerical error. Clerical items which may be corrected have been amended to include “a reference to a plat or other plat information” and “block number”, in addition to the previously listed items.
Subsection (a-1) has been added to reflect corrections resulting from inadvertent errors. Inadvertent errors which may be added, corrected or clarified by a correction instrument include:
- Omitted legal description
- Omitted call in metes and bounds legal description
Texas Property Code Section 5.030, Correction Instruments: Effect, is also amended to reflect that a correction instrument replaces and is a substitute for the original instrument, but notes that a correction instrument is subject to the claim of a creditor or subsequent purchaser where their property interest was acquired on or after the date of the original instrument was acknowledged, sworn to, or proved and filed for record and before the correction instrument was acknowledged, sworn to, or proved and filed for record.
The amendments to the correction instrument requirements are effective September 1, 2013.
View the rule on AllRegs at:
About the Author:
Margaret Wright, Esq. is Vice President and Senior Counsel at Bankers Advisory, Inc. She serves as director of regulatory research and is a member of the Massachusetts Mortgage Bankers Association Compliance Committee. A graduate of Stonehill College, Margaret earned her Juris Doctor at Suffolk University Law School and is admitted to the Massachusetts Bar. She can be reached at Margaret@bankersadvisory.com
Margaret Wright, JD, is regulatory compliance director with CLA. She is a graduate of Stonehill College and earned her juris doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar.
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