Mortgage Origination|

Last Updated on January 20, 2022

On January 1, 2022, Texas Finance Code Chapter 159 (Chapter 159) became effective, concerning the regulation of wrap mortgage loans. Effective January 8, 2022, the Department of Savings and Mortgage Lending (Department) adopted new rules (regulations) to implement Chapter 159, contained in 7 Texas Administrative Code Chapter 78 (Chapter 78).

The new rules were published for adoption in the December 31, 2021 issue of the Texas Register, including a minor change on adoption to 7 Texas Administrative Code Section 78.2, concerning Definitions. The other rules proposed in Chapter 78 were adopted without changes to the text as published in the October 29, 2021 issue of the Texas Register. Beginning January 8, 2022 (the effective date for the rules), the new rules will be available on the Texas Secretary of State’s website for the Texas Administrative Code.

Required Disclosure Statement

Pursuant to Texas Finance Code Section 159.101, a wrap lender must provide to a wrap borrower a written disclosure statement, and the Department is required to adopt a model disclosure form meeting the requirements of such section. Adoption of Chapter 78 included adoption of the following model disclosure form deemed by rule to meet the requirements of Texas Finance Code Section 159.101:

Pursuant to Texas Finance Code Section 159.102, if a wrap mortgage loan is negotiated primarily in a language other than English, a wrap lender must provide to a wrap borrower a copy of the written disclosure statement required by Texas Finance Code Section 159.101 in such language. The Department, in adopting Chapter 78, Section 78.101, also resolved to provide on its website a Spanish-language version of the form deemed by rule to meet the requirements of Texas Finance Code Section 159.101, with respect to negotiations of a wrap mortgage loan conducted primarily in Spanish.

The following Spanish-language model disclosure form is designed to meet the requirements of Texas Finance Code Sections 159.101 and 159.102, with respect to negotiations of a wrap mortgage loan conducted primarily in Spanish (wrap lenders should check the Department’s website periodically to ensure it is using the most recent version of the Spanish-language disclosure form published by the Department):

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