The Texas Finance Commission and the Texas Credit Union Commission (collectively, the Commissions) recently adopted amendments to the home equity loan regulations found in Title 7, Chapter 153 of the Texas Code of Administration (Chapter 153). Note Chapter 153 contains the Commission’s interpretations of the home equity loan provisions of the Texas Constitution, Article XVI, Section 50 (Section 50). In general, the amendments primarily clarify electronic disclosure requirements and clarify the applicability of Section 50 to out-of-state financial institutions. The changes made by these amendments came into effect on January 6, 2022.
In particular, the amendments add statutory definitions and citations for the terms “E-Sign Act” and “UETA” (referring to the Texas Uniform Electronic Transactions Act). The terms “E-Sign Act” and “UETA” are now used in Chapter 153 in relation to electronic disclosures as a concise way to refer to these two laws.
For example, Section 50 provides that a home equity loan closing must occur at least 12 days after the homeowner “submits a loan application to the lender”. As a result of the amendments, a new provision in Chapter 153 now specifies that a loan application may be submitted electronically in accordance with federal and state laws governing electronic disclosures, with references to UETA and the E- sign. As another example, Section 50 requires a lender to provide the owner with a copy of the loan application and detailed final disclosure of the amounts that will be charged at closing. The corresponding amended provision of Chapter 153 now provides that a lender may provide such disclosure electronically in accordance with state and federal laws governing electronic signatures and electronic document delivery, and includes references to UETA and the Act E-Sign.
The amendments also clarify that a bank organized under the laws of another state may make home equity loans under the Texas Constitution. Specifically, Chapter 153, as amended, clarifies that for the purposes of Section 50, a “bank, credit union, savings bank or credit union carrying on business under the laws of that State or the United States” includes a state-chartered financial corporation. institution that is described by Section 201.101(1)(A) through (D) of the Texas Finance Code, is licensed under the laws of another state, and operates in Texas under applicable state law.
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