A lender in Texas closes a home equity loan on a borrower's homestead. On day 8 after closing, the borrower decides to rescind the loan. Under Texas law, which of the following is TRUE?
Correct Answer
B) The borrower can rescind because Texas grants a 12-day rescission period for home equity loans
Under Texas Constitution Article XVI, Section 50(a)(6)(Q)(x), borrowers have a 12-calendar-day right to rescind a home equity loan after closing. Since day 8 falls within this window, the borrower may rescind without needing to provide any reason.
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Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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- → A Texas property owner defaults on both a first mortgage and a second-lien home equity loan. The first mortgage lender forecloses and sells the property at the trustee's sale. Under Texas law, what happens to the second-lien home equity loan?
- → Under Texas foreclosure law, a property is sold at a trustee's sale on the first Tuesday of the month. The winning bidder pays the full purchase price. Under Texas Property Code, when does the bidder receive a trustee's deed?
- → In Texas, the standard security instrument for real estate loans is a deed of trust rather than a mortgage. Which parties are involved in a Texas deed of trust?
- → Under Texas Constitution Article XVI, Section 50(a)(6), a home equity loan on a Texas homestead must comply with numerous constitutional requirements. All of the following are required provisions of a Texas home equity loan EXCEPT:
- → Under Texas Constitution Article XVI, Section 50, all of the following liens may be enforced against a Texas homestead EXCEPT:
- → A Texas homeowner closes on a home equity loan on January 15. The loan proceeds are not actually disbursed until January 18, three days after closing. The borrower exercises the right of rescission on January 26. Under Texas Constitution Article XVI, Section 50(a)(6), is this rescission timely?
- → A Texas lender fails to cure a constitutional defect in a home equity loan within the required timeframe. The borrower files a lawsuit. Under Texas Constitution Article XVI, Section 50(a)(6)(Q)(x), what is the potential penalty for the lender's failure to cure?
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Under Texas Constitution Article XVI, Section 50(a)(6), all of the following are requirements for a valid home equity loan on a Texas homestead EXCEPT:
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A Texas homeowner's property is valued at $600,000. The homeowner wants to obtain a home equity loan but has no existing mortgage. Under Texas law, what is the maximum home equity loan the lender can approve?