A Texas license holder is assisting a buyer who has been pre-approved for an FHA loan. The contract includes the TREC Third Party Financing Addendum. The loan fails to close because the buyer cannot meet the FHA lending requirements. Under the TREC Third Party Financing Addendum, what happens to the buyer's earnest money?
Correct Answer
B) The earnest money is returned to the buyer if the buyer has complied with the terms of the Third Party Financing Addendum and cannot obtain loan approval
Under the TREC Third Party Financing Addendum, if the buyer complies with the addendum terms and is unable to obtain loan approval by the deadline, the buyer may terminate the contract and receive a refund of the earnest money. This applies to FHA, VA, and conventional loans.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Tx Specific Financing Question
Background Knowledge for Tx Specific Financing
Real World Application in Tx Specific Financing
Common Mistakes to Avoid on Tx Specific Financing Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
More Tx Specific Financing Questions
A Texas reverse mortgage borrower has a homestead valued at $300,000 with no existing liens. Under the 80% LTV rule, the lender offers a reverse mortgage equal to 50% of the maximum allowed. How much will the borrower receive?
A veteran purchases a home in San Antonio for $320,000 using a VA loan with no down payment. The VA funding fee is 2.15% for a first-time VA borrower with no down payment. If the veteran finances the funding fee into the loan, what is the total loan amount secured by a deed of trust?
A buyer in Dallas is purchasing a home for $240,000 using an FHA loan with 3.5% down. The annual MIP rate is 0.55% of the base loan amount. What is the monthly mortgage insurance premium for the first month?
A Texas homeowner takes out a home equity loan and later wants to refinance it. Under Texas Constitution Article XVI, Section 50(f), how long must the homeowner wait after the original home equity loan was closed before refinancing?
A Texas homeowner applies for a home equity loan on March 1 and receives the required disclosure notice the same day. The lender wants to close as quickly as possible. Under Texas law, what is the earliest the lender can disburse the loan proceeds after closing?
- → 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?
- → A Texas lender makes a home equity loan that violates one of the requirements of Texas Constitution Article XVI, Section 50(a)(6). After the loan is made, the lender discovers the violation. Under Texas law, the lender has how many days to cure the defect after being notified by the borrower?
- → A Texas homeowner obtained a home equity loan that violated the constitutional requirements under Article XVI, Section 50(a)(6). The lender claims it did not know about the violation. The borrower sends a written notice of the defect to the lender. Under Texas law, which of the following correctly describes the cure and forfeiture process?
- → A Texas homeowner wants to add an addition to the home. The contractor's total bid is $85,000. Which of the following must be completed BEFORE work begins for the contractor to have a valid mechanic's lien on the homestead?