On January 8, 2009, the Texas Court of Appeals, Third District, at Austin, issued its opinion1 in the civil suit filed by the Association of Community Organizations for Reform Now (ACORN) seeking to invalidate a number of the home equity interpretations (Rules) issued jointly by the Finance Commission of Texas and the Credit Union Commission of Texas (Commissions). The ACORN opinion, in addition to other decisions affecting the Rules that will be the subject of a later memorandum, affirmed the trial court’s judgment invalidating Rule 153.1(11), which defines “interest” for purposes of the three percent fee cap imposed by Section 50(a)(6)(E) of Article XVI of the Texas Constitution (3% fee cap). Rule 153.1(11) defines interest to be “interest as defined in the Texas Finance Code §301.002(4) [sic] and as interpreted by the courts.” Section 301.002(a)(4) defines interest, in pertinent part, as “compensation for the use, forbearance, or detention of money.”
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FHA Mortgagee Letter 2009-53 – Origination Fee Cap Removed
On December 30, 2009, FHA, in accordance with the regulatory changes to 24 CFR §203.27, issued M.L. 2009-53 that, among other matters, removed the one percent origination fee cap for FHA’s standard mortgage insurance programs. The Home Equity Conversion Mortgage (HECM) and the Section 203(k) Rehabilitation Mortgage Insurance programs retain their statutory origination fee caps. As noted in No. 2 below, in order to correct a misstatement, FHA revised M.L. 2009-53. The full text of revised M.L. 2009-53, which is attached to this memorandum, is briefly summarized below:
Legislative Update, 81st Regular Session of the Texas Legislature, 2009 – Bills Effective on and after September 1, 2009
This is the third and last legislative update from the 81st Regular Session of the Texas Legislature, 2009, prepared by this firm and summarizes House and Senate Bills effective on September 1, 2009, that we consider are of interest to our clients.
SAFE Act – Regulation of Texas Residential Mortgage Loan Originators
This is the second legislative update from the 81st Regular Session of the Texas Legislature, 2009, prepared by this firm and summarizes House Bills 10, 2774, and 2779 that provide for the regulation of Texas residential mortgage loan originators in order to comply with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) enacted by Congress on July 30, 2008.
New and Amended Mineral Interests Rules, Rates, and Endorsements by the Texas Department of Insurance, effective November 1, 2009
In the August 28, 2009 issue of the Texas Register, the Texas Department of Insurance (TDI) adopted new rules and endorsement forms and modified currently existing rules for mineral interests affecting Texas properties as part of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual). These procedural rules, rates, and endorsement forms relating to mineral interests become effective November 1, 2009, and are identified as follows: amended Texas Title Insurance Information page; new Procedural Rule P-5.1; amended Procedural Rule P-50; new Procedural Rule P-50.1; new Minerals and Surface Damage Endorsement Form T-19.2; new Minerals and Surface Damage Endorsement Form T-19.3; amended Rate Rule R-29; and new Rate Rule R-29.1.
Regulation Z Early Disclosure Rules (Section 226.19(a)) Do Not Apply To Non-borrower
This memorandum addresses the following question: “When must a non-borrower coowner (i.e., spouse or separate co-owner who occupies the dwelling) receive a copy of the TILA disclosures for a loan rescindable under Section 226.23 of Regulation Z?”
New Federal Rules – (1) Identity Theft Prevention Program; (2) Consumer Report Address Discrepancy -DELAYED
On October 17, 2008, we issued a memorandum explaining the above referenced federal rules. Subsequently, on October 22, 2008 and May 1, 2009, we updated the October 17, 2008 memorandum to advise you that the FTC had delayed enforcement of the Identify Theft Prevention Program (“Red Flags Rule”). The updated October 17, 2008 memorandum is posted on our website www.bmandg.com.
Regulation Z – New Whole Loan Sale Disclosure Notice, Effective May 20, 2009
On May 20, 2009, the President signed into law the “Helping Families Save Their Homes Act of 2009” (Public Law 111-22). Section 404(a) of the Act amends Section 131 of the Truth in Lending Act (TILA) to require that a borrower be notified in writing not later than 30 days after the borrower’s mortgage loan has been sold, transferred, or assigned. The notice must include information identifying the new creditor, the date of transfer, how to reach the new creditor, the location of where the transfer of the loan is recorded, and other relevant information regarding the new creditor. The new creditor is required to give this notice and the notice applies only to a consumer loan secured by the borrower’s principal dwelling.
Legislative Update from 81st Regular Session of the Texas Legislature, 2009 – Bills Effective Immediately
This is the first of several legislative updates prepared by this firm and summarizes those bills effective before September 1, 2009, that we consider of interest to our clients. The legislative updates that follow this update will summarize, respectively, (i) those bills that we consider important enough to be the subject of a separate legislative update, and (ii) bills effective on and after September 1, 2009, that we consider of interest to our clients.
Regulation Z – New Early Disclosure Requirements, Effective July 30, 2009
In a final rule published in the May 19, 2009 issue of the Federal Register (the “May 2009 final rule”), the Federal Reserve Board (“Board”) amends the early disclosure requirements of Section 226.19(a) of Regulation Z to require: (1) early disclosures for all closed-end, dwelling-secured loans subject to Regulation Z and Regulation X (i.e., RESPA loans); and, (2) additional seven-business-day and three-business-day early disclosure requirements for these loans in addition to the existing disclosure requirement of Section 226.19(a)(1) requiring initial disclosures within three business days of loan application. The May 2009 final rule revises the Board’s July 30, 2008 final rule (“July 2008 final rule”) that also amended the early disclosure requirements of §226.19(a)(1).