A Texas home equity note calls for a single balloon payment 5 years after closing and nothing before it. Does this balloon-only structure satisfy the home equity installment requirement?
Correct Answer
A) Not permitted: equal periodic installments, starting within 2 months
A home equity loan is scheduled to be repaid in substantially equal successive periodic installments, not more often than every 14 days and not less often than monthly, beginning no later than two months from the date the credit is extended, with each installment at least covering accrued interest. Other choices: disclosing a prohibited structure in the 12-day notice does not permit it; the 80% test is a separate requirement; and no minimum term of 15 years exists. Source: Tex. Const. art. XVI, sec. 50(a)(6)(L)
Why This Is the Correct Answer
A home equity loan is scheduled to be repaid in substantially equal successive periodic installments, not more often than every 14 days and not less often than monthly, beginning no later than two months from the date the credit is extended, with each installment at least covering accrued interest. Other choices: disclosing a prohibited structure in the 12-day notice does not permit it; the 80% test is a separate requirement; and no minimum term of 15 years exists. Source: Tex. Const. art. XVI, sec. 50(a)(6)(L)
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