1. Home Equity Loans
   1. Voluntary Lien
      
      
   2. 80% LTV (includes all debt)
      
      
   3. Written Acknowledgment of Fair Market Value; Lender and Borrower must sign prior to or at closing
      
      
   4. No Additional Collateral
      
      
      1. Co-signers/ Guarantors [Prohibited]
         
         
      2. excess acreage - [Prohibited]
         
         urban 10 acres or less
         
         rural (single) 100 acres or less
         
         rural (family) 200 acres or less
         
         
      3. right of offset [Prohibited]
         
         
      4. cross-collateralization [Prohibited]
         
         
   5. Non-Recourse
      
      
   6. Foreclosure by court order only
      
      
   7. Fee limitations - 3% of original loan amount
      
      
      1. discount points = interest and are excluded from calculation. Must truly be money paid to discount the rate
         
         
      2. origination fee - trial court held not interest and a fee - Case remanded - don’t call “origination fee” call “origination interest”
         
         
      3. fees to evaluate - credit report, survey, flood certification, tax certification, title report, appraisal
         
         
      4. fees to maintain - tax service fee, life of loan flood certification
         
         
      5. fees to record
         
         
      6. fees to insure - title insurance
         
         
      7. fees to service - any fee that is not interest - escrows - not a fee; however Lenders shall not contract for right of offset (additional collateral violation)
         
         
   8. Additional fee limitations if “secondary mortgage loan” - Chapter 342 Finance Code
      
      
      1. APR exceeds 10%
         
         
      2. subordinate lien - only fees allowed:
         
         title fees
         
         attorney fees (not employee of Lender)
         
         recording fees
         
         appraisal fees
         
         credit report
         
         survey
         
         insurance products (credit/ life/flood insurance)
         
         discount points - but must spread with other interest to see if rate exceeds 18% - if so usury!!
         
         loan administrative fee - $125.00
         
         
   9. No prepayment penalty
      
      
   10. No Agriculture tax exempt property
       
       
   11. No cross default unless other loan is only secured by the homestead
       
       
   12. One Home Equity loan at a time - commentary provides that if property is no longer homestead, Lender may treat the Home Equity loan on that property as a non-homestead mortgage
       
       
   13. Substantially equal payments (allows for ARMs) [No Balloons]
       
       
   14. 12 Day Notice of Extension of Credit given in language used by Borrower
       
       
   15. Pre-Closing Disclosure
       
       - one “business day” in advance
       
       - all costs, fees and APR
       
       - HUD-I OK
       
       - Waiver allowed if bona fide emergency or other good cause
       
       
   16. One year anniversary - cannot refinance until expiration of one year from closing date.
       
       Query: same house, new homeowner?
       
       
   17. Authorized Lender
       
       
       1. bank, savings and loan, savings bank, credit union, state or federally chartered
          
          
       2. HUD approved Lenders - if second lien Home Equity Line, then must have license from OCCC under Chapter 342
          
          
       3. licensed regulated loan Lender
          
          
       4. licensed mortgage broker
          
          
   18. Use of Proceeds - can not require debt owed to you be paid unless the debt owed to you is secured by the homestead
       
       
   19. No Assignment of Wages
       
       
   20. No blanks in documents
       
       
   21. No Confession of Judgment
       
       
   22. Copies of Loan Documents
       
       
   23. Security Instrument Disclosure
       
       
   24. Effective September 1, 2003 - New notice in deeds and deeds of trust executed on or after January 1, 2004:

25. Release/ Transfer of Lien - you must provide copy of Note and Transfer to Borrower if you sell the loan; you must provide a canceled Note and Release of Lien to Borrower within a reasonable time of payment in full. You don’t have to record it for Borrower.
    
    
26. Rescission - Federal and State [Commentary issued by the OCCC/Credit Union Commission provides federal notice takes care of state rescission requirement]

• Borrower may request advances, repay money, and reborrow money
  
  
• Any single debit or advance is not less than $4,000.00
  
  
• Borrower may not use a credit card, debit card preprinted solicitation check, or similar device or advance
  
  
• Any fees described by Section 50(a)(6)(E) are charged and collected only at the time the Credit Agreement is established and no fee is charged or collected in connection with any debit or advance
  
  
• The maximum principal amount that may be extended under the account, when added to the aggregate total of the outstanding principal balances of all indebtedness secured by the Homestead Property on the date the Credit Agreement is established, does not exceed an amount described under Section 50(a)(6)(B) - 80% LTV
  
  
• No additional debits or advances are made if the total principal amount outstanding exceeds an amount equal to 50% of the fair market value of the Homestead Property as determined on the date the Credit Agreement is established
  
  
• Lender or a holder may not unilaterally amend this Security Instrument or the Credit Agreement
  
  
• Repayment is to be made in regular periodic installments, not more often than every 14 days and not less often than monthly beginning not later than two months from the date the Credit Agreement is established
  
  
• During the period during which borrower may request advances, each installment equals or exceeds the amount of accrued interest. - no negative amortization
  
  
• After the period during which borrower may request advances, installments are substantially equal. - no balloons

2. Finance Code (346, 342, 303, 302)

1. 18% highest rate
   
   
2. Late charge can not exceed lesser of $15.00 or 5% of the payment due if not paid within 10 days of due date
   
   
3. Additional Disclosure required on periodic statements - the following notice must be printed or typed in at least 10-point type that is boldfaced, capitalized or underlined:

3. New Cure Provisions - Under the Amendment, lenders are given sixty days after receiving notification of a failure to comply to correct the failure. In addition, the Amendment explains how various failures to comply can be corrected. Generally:

• If a lender has charged more than the permitted amount of fees, has charged excessive interest, or has charged a penalty or other charge as a condition to paying the mortgage in advance, the lender may correct its failure to comply by paying the owner of the property an amount equal to the overcharge paid by the owner.
  
  
• If a lender has originated a mortgage in an amount that exceeds the maximum permitted amount, the lender may correct its failure to comply by sending the owner a written acknowledgement that the lien is valid only up to the maximum permitted amount.
  
  
• If a lender has originated a mortgage secured by real or personal property other than the homestead or has made a loan secured by an ineligible homestead property designated for agricultural use, the lender may correct its failure to comply by sending the owner a written acknowledgement that the mortgage is not secured by the ineligible collateral.
  
  
• A lender may send an owner a written notice modifying any other amount, percentage, term, or other provision of a mortgage and adjust the borrower’s account to ensure compliance with Section 50(a)(6). (Sometimes the Amendment uses the term “owner,” and sometimes the Amendment uses the term “borrower.” Our Announcement tracks the language of the Amendment.)
  
  
• If a lender failed to timely provide the owner a copy of all documents signed by the owner in connection with the mortgage, the lender may correct its failure to comply by delivering the required documents to the borrower.
  
  
• If a lender failed to obtain a written acknowledgement of the fair market value of the property signed by both the owner and the lender, the lender may correct its failure to comply by obtaining the appropriate signatures.
  
  
• A lender may send the owner a written acknowledgement that the accrual of interest and all of the owner’s obligations under the mortgage are abated until a prior prohibited lien is not longer secured by the property.
  
  
• If a lender’s failure to comply is curable and cannot be cured in any of the ways discussed above, the lender may cure the failure to comply by giving the owner a refund or credit in the amount of $1,000.00 and offering the owner the right to refinance the mortgage for its remaining term at no cost and on the same terms, including interest rate, as the original loan with any modifications necessary to comply with Section 50(a)(6).