A lender proposes to issue a debit card and a book of 20 preprinted checks so a Texas home equity line can be drawn at will. May the lender provide this proposed combination of access devices?
Correct Answer
B) Not permitted: a card or unsolicited preprinted check may not be used
The owner may not use a credit card, debit card or similar device, or a preprinted check unsolicited by the borrower, to obtain an advance on a Texas home equity line. Other choices: the exclusion for preprinted checks turns on their being unsolicited, but the card prohibition is flat, so a written request does not rescue the proposal; keeping each draw above $4,000 satisfies a different rule; and the line can be drawn after closing, which is what makes it a line. Source: Tex. Const. art. XVI, sec. 50(t)(3)
Why This Is the Correct Answer
The owner may not use a credit card, debit card or similar device, or a preprinted check unsolicited by the borrower, to obtain an advance on a Texas home equity line. Other choices: the exclusion for preprinted checks turns on their being unsolicited, but the card prohibition is flat, so a written request does not rescue the proposal; keeping each draw above $4,000 satisfies a different rule; and the line can be drawn after closing, which is what makes it a line. Source: Tex. Const. art. XVI, sec. 50(t)(3)
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