A deed of trust securing a Texas home equity loan is drafted from a standard form with no reference to Section 50(a)(6). What disclosure of the credit type must the security instrument contain?
Correct Answer
D) Deficient: the instrument discloses the type of credit it secures
The security instruments securing the loan must contain a disclosure that the extension of credit is the type defined by Subsection (a)(6), which puts a later purchaser or holder on notice of the restrictions that travel with the lien. Other choices: the 12-day notice goes to the owner rather than into the public record; the 2 title endorsements insure the lien without disclosing its character; and the requirement is a statement of type rather than a recital of every borrower protection. Source: Tex. Const. art. XVI, sec. 50(a)(6)(Q)(vi)
Why This Is the Correct Answer
The security instruments securing the loan must contain a disclosure that the extension of credit is the type defined by Subsection (a)(6), which puts a later purchaser or holder on notice of the restrictions that travel with the lien. Other choices: the 12-day notice goes to the owner rather than into the public record; the 2 title endorsements insure the lien without disclosing its character; and the requirement is a statement of type rather than a recital of every borrower protection. Source: Tex. Const. art. XVI, sec. 50(a)(6)(Q)(vi)
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