We’re tackling your top 5 questions about Texas Home Equity Loans. Here’s #2:
2. Could you explain the new 2% fee cap rules?
Under the Texas Constitutional amendment S.J.R. 60 that took effect in January, 2018, the fee cap for 50(a)(6) loans was reduced to 2% of the loan amount, but certain fees are now excluded. These excluded fees include 1) mortgagee’s title insurance premium and any relevant endorsements, 2) a property appraisal from a third-party appraiser (that is, not an employee of the lender), and 3) a property survey from a TX-authorized surveyor. If lender will not require a mortgagee policy then a fee for a title examination report may be excluded provided the cost is less than the base mortgagee title policy. Appraisal management fees are not excluded and must be factored in the 2% fee cap (n.b. appraisal management companies are required to itemize these fees per Texas law). Also note that bona fide discount points, per diem interest, HOA assessments, and escrows for property taxes and property insurance are not considered fees and thus not included in the 2% fee cap.