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You are here: Home . rules . 2004 . 0224-059
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Subchapter A. Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas

28 TAC §9.30

The Commissioner of Insurance adopts amendments to §9.30 relating to home equity. Section 9.30 adopts by reference certain amendments to home equity endorsements and procedural rules in the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) necessitated by recent amendments to the Texas Constitution. The amended section is adopted with changes to the proposed text and to the items adopted by reference as published in the January 16, 2004, issue of the Texas Register (29 TexReg 448).

The amendments to §9.30 adopt by reference the amended endorsements, forms T-42, T-42.1, T-44, T-45, and T-46 and the amended procedural rules, P-46 and P-47 to the Basic Manual. The 78th Legislature, Regular Session, adopted Senate Joint Resolution 42 proposing a constitutional amendment authorizing home equity lines of credit, adding requirements for one day advance disclosure of all fees, and revising technical procedures regarding home equity loans on Texas homestead property. By voter approval on September 13, 2003, Section 50, Article XVI of the Texas Constitution was amended to provide for home equity lines of credit, to require an additional notice to borrowers prior to the origination of such mortgages, and to permit lenders to take certain actions to cure origination defects with such mortgages, including offering borrowers the opportunity to refinance such mortgages under certain circumstances. Stewart Title Guaranty Company petitioned the department for amendments to the applicable procedural rules and endorsements in the Basic Manual to facilitate the issuing of mortgagee title policies insuring home equity liens on homestead property. The modifications to the existing title insurance forms relating to home equity refer to the correct and applicable law, provide insurance for future advances under home equity lines of credit, and insure disclosure of fees by title insurance companies or title insurance agents who close home equity loans. The amended endorsements and procedural rules will enable title insurance companies to write additional title insurance coverages regarding home equity lending in Texas . The amendments will also provide both lenders and borrowers more certainty regarding the meaning of the law and a clear means of resolving origination problems. The effective date of the section as published in the proposal was March 15, 2004 ; the effective date of the section has been changed to April 1, 2004 . The department has made typographical corrections to the items adopted by re ference, and based on comments, the department has clarified the reference to "business day" in form T-42.1 and Procedural Rule P-47 to be consistent with the recently adopted rules of the Texas Finance Commission and the Texas Credit Union Commission.

The amended endorsement forms are as follows: Amendment to the Equity Loan Mortgage Endorsement (T-42) conforms this endorsement to the new amendments to constitutional provisions for home equity loans, including new provisions for home equity lines of credit. Amendment to the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) insures the advance disclosure of fees as required by the new amendments to constitutional provisions for home equity loans and also incorporates a definition of business day for purposes of the endorsement. Amendments to the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) and the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) conform these endorsements to the new amendments to constitutional provisions for home equity loans. Amendment to the Texas Residential Limited Coverage Junior Mortgagee Policy Variable Rate Endorsement (T-46) conforms this endorsement to the new amendments to constitutional provisions for home equity loans, including new provisions for home equity lines of credit and adds to the name of the endorsement a reference to home equity line of credit.

The amended procedural rules are Procedural Rule P-46, which incorporates references to applicable constitutional provisions for home equity lines of credit and to the modified Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46), and Procedural Rule P-47, which establishes requirements for issuance of the newly adopted additional coverages to the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1).

The department has filed a copy of each of the amended forms and procedural rules with the Secretary of State´s Texas Register section. Persons desiring copies of the adopted items can obtain them from the Office of the Chief Clerk, Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. To request copies, please contact Sylvia Gutierrez at 512/463-6327.

Comment:Several commenters pointed out that the reference to "business day" in form T-42.1 and Procedural Rule P-47 should be clarified to be consistent with the recently adopted rules of the Texas Finance Commission and the Texas Credit Union Commission.

Agency Response: The department agrees and has changed form T-42.1 and Procedural Rule P-47 accordingly.

NAMES OF THOSE COMMENTING FOR AND AGAINST THE SECTION.

For: FannieMae

For with changes: Stewart Title Guaranty Company; Texas Land Title Association; and lawyers.

The amended section is adopted pursuant to the Insurance Code Articles 9.07, 9.21, and §36.001, and Section 50, Article XVI of the Texas Constitution. Article 9.07 authorizes and requires the commissioner to promulgate or approve rules and policy forms of title insurance and otherwise to provide for the regulation of the business of title insurance. Article 9.21 authorizes the commissioner to promulgate and enforce rules prescribing underwriting standards and practices, and to promulgate and enforce all other rules necessary to accomplish the purposes of chapter 9, concerning regulation of title insurance. By voter approval on September 13, 2003, Section 50, Article XVI of the Texas Constitution was amended to provide for home equity lines of credit, to require an additional notice to borrowers prior to the origination of such mortgages, and to permit lenders to take certain actions to cure origination defects with such mortgages, including offering borrowers the opportunity to refinance such mortgages under certain circumstances. Section 36.001 of the Insurance Code provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

§9.30 Procedural Rules, Rates, and Forms Relating to Home Equity. In addition to material adopted by reference under §9.1 of this title (relating to Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (the manual)), the Texas Department of Insurance adopts by reference, as part of the manual, amendments to Procedural Rule P-46 and Procedural Rule P-47 and endorsement forms, Equity Loan Mortgage Endorsement (T-42), Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1), Texas Residential Limited Coverage Junior Mortgagee Policy (T-44), Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45), and Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46), as amended effective April 1, 2004. This document is available from and on file at the Texas Department of Insurance, Title Division, Mail Code 106-2T, William P. Hobby State Office Building , 333 Guadalupe Street, P.O. Box 149104 , Austin , Texas 78714-9104 .



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