Texas Refinance Updates

New Penn Financial’s Texas 50(a)(6) program has been updated to align with the recent constitutional changes that impact home equity lending. These changes are effective for loans closed on or after January 1st, 2018.

Texas 50(a)(6)

The changes to 50(a)(6) include the following:

  • Change to the cap on fees from 3% to 2%, along with excluding the following fees from the cap:
  • Non-affiliate fees related to appraisal
  • Property survey
  • Title insurance premiums
  • Refinance of a previous 50(a)(6) to a rate-and-term loan using the new Texas (f)(2) product

Texas (f)(2)

The new (f)(2) product allows for a loan that is currently an (a)(6) to be refinanced into a non-home equity mortgage, with the following requirements:

  • Maximum LTV/CLTV of 80%
  • No additional funds can be rolled into the loan except closing costs and prepaid items
  • Twelve months’ seasoning required since the closing date of the existing loan
  • New “NOTICE CONCERNING REFINANCE OF EXISTING HOME EQUITY LOAN” Disclosure is provided within three days of application

The borrower may decide to remain a Texas 50(a)(6) for the foreclosure protection presented under the Texas Constitution. Refinancing into an (f)(2) allows future rate-and-term refinances {(a)(4)} to not be subject to the seasoning requirements or 80% LTV/CLTV cap.

To review the full guidelines, click here.