Continuing our series of commonly asked questions, we asked Dallas-based attorney Brandon Pieratt a few questions to help us better understand appraisal requirements for Texas 50(a)(6) home equity loans and Section 50(f)(2) conversion loans.

Brandon, may I use an appraisal waiver when closing a Texas 50(a)(6) home equity loan?

Although not a strict Texas 50(a)(6) home equity loan legal requirement, most secondary market investors do require an appraisal to determine the fair market value of the borrower’s homestead as of the date the loan is closed. In addition, Fannie Mae and Freddie Mac will not purchase a Texas 50(a)(6) home equity loan without a full appraisal, regardless of whether DU allows an appraisal waiver. The same holds true for most other investors.

Furthermore, the title company must delete insuring provision 1(g) from the T-42.1 endorsement unless there is a full appraisal or property valuation. Fannie Mae/Freddie Mac and most other investors require full T-42 and T-42.1 endorsement coverage to purchase a Texas 50(a)(6) home equity loan.


Check back next week as Brandon answers how to approach Section 50(f)(2) conversion loans.