A Texas lender originates a home equity loan that inadvertently exceeds the 80% LTV cap due to an appraisal error discovered after closing. The borrower notifies the lender of the defect. Under Texas Constitution Article XVI, Section 50(a)(6)(Q)(x), how should the lender cure this violation?
Correct Answer
A) The lender must obtain a new appraisal and adjust the loan balance downward to comply with the 80% LTV cap within 60 days
Under Texas Constitution Article XVI, Section 50(a)(6)(Q)(x), the lender has 60 days to cure a constitutional defect after being notified. For an LTV violation, the appropriate cure is to reduce the loan balance to bring the total indebtedness within the 80% LTV limit. A new appraisal may be necessary to verify compliance.
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Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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Previous Question
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?
Next Question
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?