A borrower loses $9,300 to a licensed Texas originator misconduct in 2026 and asks what the recovery fund pays. What kind of loss may an eligible applicant recover from the fund for covered originator misconduct?
Correct Answer
C) Actual out-of-pocket damages caused by the licensed originator acts
The recovery fund reimburses residential mortgage loan applicants for actual damages, limited to out-of-pocket losses caused by an act of an originator licensed under Chapter 157 that violates one of the listed provisions. Other choices: punitive damages of 3 times the loss are not what the fund pays; legal fees and 12 months of interest are not within out-of-pocket losses as the subchapter frames them; and the fund exists for applicants rather than for lenders. Source: Tex. Fin. Code sec. 156.501(b)
Why This Is the Correct Answer
The recovery fund reimburses residential mortgage loan applicants for actual damages, limited to out-of-pocket losses caused by an act of an originator licensed under Chapter 157 that violates one of the listed provisions. Other choices: punitive damages of 3 times the loss are not what the fund pays; legal fees and 12 months of interest are not within out-of-pocket losses as the subchapter frames them; and the fund exists for applicants rather than for lenders. Source: Tex. Fin. Code sec. 156.501(b)
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