Selling Guide

Published August 29, 2017

  • Selling Guide: Main Page
    • Part B: Origination Through Closing
      • B5: Unique Eligibility and Underwriting Considerations
        • B5-4: Property-Specific Products
          • B5-4.1: General Requirements of Texas Section 50(a)(6) Mortgages (03/292010)
            • B5-4.1-05: Texas Section 50(a)(6) Mortgage Legal Considerations (09/30/2014)

B5-4.1-05: Texas Section 50(a)(6) Mortgage Legal Considerations (09/30/2014)

This topic contains information on Texas Section 50(a)(6) mortgage legal considerations, including:

Mortgage Documentation

Lenders must originate Texas Section 50(a)(6) mortgages using the Texas Home Equity Security Instrument (First Lien) (Form 3044.1) and the specific Texas Section 50(a)(6) notes and riders, as well as a special Section 50(a)(6) borrower affidavit. Refer to B8-5-03, Texas Section 50(a)(6) Mortgage Documentation.

Title Insurance

For all Texas Section 50(a)(6) mortgages, a title insurance policy written on Texas Land Title Association forms (standard or short form), supplemented by an Equity Loan Mortgage Endorsement (Form T-42) and a Supplemental Coverage Equity Loan Mortgage Endorsement (Form T-42.1), is required.

Note: There may be no exceptions or deletions to the coverage provided by Paragraphs 2(a) through (e) of the T-42 endorsement, and the endorsement must include the optional coverage provided by Paragraph 2(f), as well as the additional coverage provided by Endorsement T-42.1.

The title insurance policy cannot include language that:

  • excludes coverage for a title defect that arises because financed origination expenses are held not to be “reasonable costs necessary to refinance” or

  • defines the “reasonable costs necessary to refinance” requirement as a “consumer credit protection” law since the standard title policy excludes coverage when lien validity is questioned due to a failure to comply with consumer credit protection laws.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2014–12 September 30, 2014
Announcement SEL-2010–04 March 29, 2010