Happy Holidays From PPDocs, PPDocs' New 50(f)(2) Home Equity Rate/Term Refinance FAQs, 2021 Rescission Calendar and more!

In a year that has proved to be more challenging than anyone could have anticipated, we are thankful and grateful for your business and loyalty. It has been our joy and privilege to serve you through this difficult time. We look forward to a time (hopefully) very soon when we can gather again with friends and families and enjoy the little things that make life gratifying. We wish you a Very Merry Christmas, the Happiest of Holidays, and a Prosperous New Year.

With Appreciation,

Mike Patterson and the PPDocs staff

Since January 1, 2018—when the Texas Constitution was amended to permit Section 50(f)(2) rate/term refinances of Texas 50(a)(6) home equity loans—we have received many questions regarding the various aspects of these refinances. To assist our clients in answering the questions we receive most often, we created a “Frequently Asked Questions” document. You can find it by navigating to our homepage, clicking on “Tools,” and then scrolling down the end of the “Home Equity” section to the document entitled: "F2 Rate/Term Refinance FAQs.” Alternatively, you can click this link: F2 Rate/Term Refinance FAQs

Our 2021 Rescission Calendar is now available on our website.

The Texas Joint Financial Regulatory Agencies adopted the home equity rule amendments we reported on in our August newsletter. The effective date of the adopted changes was November 26, 2020. The amendments are not significant and likely will not affect how you are currently operating. Here are our summaries of the amendments:

• 7 TAC §153.11 (1):

  The amendment to §153.11(1) explains that the constitutional repayment schedule requirements for an equity loan apply at closing, and thus do not prohibit a lender from agreeing with the borrower to certain subsequent modifications of the equity loan terms. The amendment further explains that a modification may include a deferment of the original obligation. This is based on the Texas Supreme Court decision in Sims v. Carrington Mortg. Servs., LLC, 440 S.W.3d 10 (2014). The court in Sims held that when a borrower and a lender agree to capitalize past-due interest, fees, property taxes, and insurance premiums into the loan principal without satisfying or replacing the original note, advancing new funds or increasing the obligations created by the original note, the resulting debt is not a new extension of credit.



• 7 TAC §153.11(2):

  The amendment to §153.11(2) explains that a modification does not affect the requirement that payments must begin no later than two months from the date the extension of credit is made. (This is an amendment to what was previously §153.11(1)--§153.11(a) is now §153.11(2).)



• 7 TAC §153.14:

  The Texas Constitution prohibits a home equity loan from being closed within one year after another home equity loan on the same property, but includes an exception for a state of emergency declared by the President or Governor. The amendment to 153.14 explains that a “state of emergency” as set forth in the Texas Constitution includes a national state of emergency declared by the President or a state of disaster declared by the Governor.



• 7 TAC §153.15:

  The amendment to §153.15 explains that a closing may occur in any area located at the permanent physical address of the lender, attorney, or title company. This rule was amended to facilitate closings while social distancing is being observed, but is not necessarily limited to that.



• 7 TAC §153.22:

  The amendment to §153.22 explains that the lender may provide documents electronically in accordance with state and federal law governing electronic signatures and delivery of electronic documents.



• 7 TAC §153.26:

  The amendment to §153.26 explains that a lender may sign the written acknowledgement of fair market value before or at closing, and that an authorized agent may sign the written acknowledgement on behalf of the lender. Amended §153.26 additionally clarifies that “on the date the extension of credit is made” refers to “the fair market value of the homestead property” and is not a reference to the date the lender must sign the acknowledgment of fair market value.

The joint financial regulatory agencies (Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Credit Union Department) (Agencies) issued guidance on emergency measures for home equity lenders to consider in response to the COVID-19 pandemic. The guidance replaces the guidance published by the Agencies on April 22, 2020. The issuance includes guidance on:

• Advances on existing HELOC.
• When a lender may waive the one-year waiting period on a Section 50(a)(6) refinance and that Texas law does not permit waiving it it on a Section 50(f)(2) rate term refinance.
• Modifying a home equity loan.
• Authorized closing location.

If you have any questions after reading the guidance, please email us at legal@ppdocs.com.

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued a statement encouraging banks to transition away from the U.S. Dollar LIBOR Index as soon as practicable and, in any event, by December 31, 2021, in order to facilitate an orderly—and safe and sound— LIBOR transition.

The Consumer Financial Protection Bureau, Comptroller of the Currency, and Federal Reserve Board have announced that, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers in effect on June 1, 2020, the annual threshold amount for exempting loans from special appraisal requirements for higher-priced mortgage loans will remain at $27,200, effective January 1, 2021.

As part of a periodic review of our forms, we have decided to conform our Form SSA-89 more closely to the version promulgated by the Social Security Administration, and you will likely notice a change in format. The change is cosmetic; the material provisions of the form remain unchanged.

In observance of the upcoming holidays, our office will close at noon Christmas Eve and New Year’s Eve. Our office will be closed all day Christmas Day and New Year’s Day.

During 2021, our offices will be closed on: New Year’s Day, Memorial Day (May 31), Labor Day (September 6), and Thanksgiving Day (November 25). Our offices will close at noon on Christmas Eve and New Year’s Eve.

December’s Frequently Asked Question