A high-cost loan to a Texas farmer is scheduled around harvest income, with 2 large payments a year. Under the state balloon provision, does a schedule adjusted to seasonal income qualify for the stated exception?
Correct Answer
D) Permitted: the schedule is adjusted for seasonal or irregular income
The balloon restriction does not apply where the payment schedule is adjusted to account for the seasonal or otherwise irregular income of the borrower, nor to a bridge loan connected with acquiring or constructing the borrower intended principal dwelling. Other choices: the twice-the-average test is what the exception lifts; no 50% income variance threshold appears in the section; and no regulator approval is required. Source: Tex. Fin. Code sec. 343.202
Why This Is the Correct Answer
The balloon restriction does not apply where the payment schedule is adjusted to account for the seasonal or otherwise irregular income of the borrower, nor to a bridge loan connected with acquiring or constructing the borrower intended principal dwelling. Other choices: the twice-the-average test is what the exception lifts; no 50% income variance threshold appears in the section; and no regulator approval is required. Source: Tex. Fin. Code sec. 343.202
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