A Texas loan priced above the federal triggers has a principal amount of 70% of the conventional first mortgage limit. Does the loan meet the Chapter 343 high-cost definition’s principal-amount limit?
Correct Answer
A) Outside the chapter: the principal must be at or under half that limit
A Texas high-cost home loan must have a principal amount equal to or less than one-half the maximum conventional loan amount for first mortgages set by the Federal National Mortgage Association, so a loan at 70% of that limit is too large for the chapter. Other choices: meeting the federal pricing triggers is one element and the size test is another; the $20,000 figure belongs to a different branch of the definition; and the ceiling is one-half rather than one-quarter. Source: Tex. Fin. Code sec. 343.201(1)(C)
Why This Is the Correct Answer
A Texas high-cost home loan must have a principal amount equal to or less than one-half the maximum conventional loan amount for first mortgages set by the Federal National Mortgage Association, so a loan at 70% of that limit is too large for the chapter. Other choices: meeting the federal pricing triggers is one element and the size test is another; the $20,000 figure belongs to a different branch of the definition; and the ceiling is one-half rather than one-quarter. Source: Tex. Fin. Code sec. 343.201(1)(C)
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