FINANCE CODE
CHAPTER 64. LOANS AND INVESTMENTS
SUBCHAPTER A. GENERAL PROVISIONS
§ 64.001. ADOPTION OF RULES. (a) The finance
commission shall adopt rules relating to the power of associations
operating under this subtitle to make loans and investments.
(b) Rules adopted under this section must contain
provisions reasonably necessary to ensure that:
(1) a loan made by an association is consistent with
sound lending practices; and
(2) an investment made by an association promotes the
purposes of this subtitle.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 28, eff. Sept. 1, 2001.
§ 64.002. CONTENT OF RULES. Rules adopted under this
subchapter may include provisions governing:
(1) types of loans an association may originate, make,
or sell;
(2) conditions under which an association may
originate, make, or sell a loan;
(3) conditions under which an association may purchase
or participate in a loan made by another lender;
(4) conditions for servicing a loan for another
lender;
(5) conditions under which an association may lend
money on the security of a loan made by another lender;
(6) conditions under which an association may pledge a
loan held by the association as collateral for money borrowed by the
association;
(7) conditions under which an association may invest
in securities and debt instruments;
(8) documentation that an association must have in the
association's loan files when the association funds, purchases, or
participates in a loan;
(9) the form and content of statements of expenses,
fees, and other charges paid, or required to be paid, by a borrower;
(10) title information required to be maintained in
force;
(11) insurance coverage required to be provided by a
borrower for property that secures a loan;
(12) appraisal reports;
(13) financial statements of borrowers;
(14) fees or other compensation that may be paid to an
officer, director, employee, affiliated person, consultant, or
third party in connection with procuring a loan for an association;
(15) conditions under which an association may advance
money to pay taxes, assessments, insurance premiums, and similar
charges for the protection of the association's interest in
property securing a loan;
(16) terms under which an association may acquire and
deal in real property;
(17) valuation on an association's books of real
property held by the association;
(18) terms governing an association's investment in a
subsidiary corporation;
(19) powers that may be exercised by a subsidiary of an
association; and
(20) any other matter necessary for proper
administration of transactions conducted by an association.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.003. PROHIBITED TRANSACTIONS. An association may
not engage in a transaction that violates a rule adopted under this
subchapter.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER B. LOAN EXPENSES
§ 64.021. BORROWER PAYMENT OF LOAN EXPENSES. An
association may require a borrower to pay all reasonable expenses
incurred in connection with making, closing, disbursing,
extending, readjusting, or renewing a loan.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.022. COLLECTION OF LOAN EXPENSES. An expense
payment authorized by Section 64.021 may be:
(1) collected by the association from the borrower
and:
(A) retained by the association; or
(B) paid to a person rendering a service for
which a charge was made, including an officer, director, or
employee of the association rendering the service; or
(2) paid directly by a borrower to the person
rendering the service.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.023. CHARACTER OF LOAN EXPENSE PAYMENTS. An
expense payment authorized by Section 64.021 is not interest or
compensation charged by an association for the loan of money.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. LOAN PAYMENTS
§ 64.041. PENALTY FOR PREPAYMENT OR LATE PAYMENT. An
association may charge a penalty for a prepayment of or late payment
on a loan.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.042. APPLICATION OF PREPAYMENTS TO LOAN
INSTALLMENTS. Unless otherwise agreed in writing, an association
shall apply:
(1) a prepayment of principal to the final installment
of the obligation until the final installment is fully paid; and
(2) additional prepayments on installments in the
inverse order of their maturity.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER D. CHARGES RELATING TO REAL PROPERTY LOANS
§ 64.061. ADVANCES PAID BY ASSOCIATION. (a) An
association may pay taxes, assessments, insurance premiums, and
similar charges for the protection of the association's interest in
property that secures a real property loan of the association.
(b) A payment under Subsection (a) is an advance, and the
association may:
(1) carry the payment on the association's books as an
asset of the association for which the association may charge
interest; or
(2) add the payment to the unpaid balance of the loan
to which it applies as of the first day of the month in which the
payment is made.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.062. ADVANCES ARE LIEN ON PROPERTY. A payment
under Section 64.061 is a lien against the real property that
secures the loan for which it is made.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.063. PAYMENT OF ESTIMATED CHARGES BY
BORROWER. (a) To enable the association to pay charges as they
become due, an association may require a borrower to pay monthly in
advance, in addition to interest or interest and principal, an
amount equal to one-twelfth of the estimated annual taxes,
assessments, insurance premiums, and other charges on the real
property securing a loan.
(b) An association may increase or decrease the amount of
the loan payment as necessary to meet the charges.
(c) An association may:
(1) carry payments in trust in an account; or
(2) credit the payments to the indebtedness and
advance the money for charges as the charges become due.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.064. RECORD OF CHARGES. An association shall keep
a record of the status of taxes, assessments, insurance premiums,
and other charges on real property securing the association's
loans.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER E. INVESTMENT IN LOCAL SERVICE AREA
§ 64.081. REQUIRED INVESTMENTS. An association shall
maintain in the association's portfolio not less than 15 percent of
the association's deposits from its local service area designated
under Section 64.082 in:
(1) first and second lien residential mortgage loans
or foreclosed residential mortgage loans originated in the
association's local service area;
(2) home improvement loans;
(3) interim residential construction loans;
(4) mortgage-backed securities secured by loans in the
association's local service area; and
(5) loans for community reinvestment.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.082. DESIGNATION OF LOCAL SERVICE AREA. (a) The
commissioner shall designate an association's local service area at
the time of the association's incorporation.
(b) Unless the commissioner and the association otherwise
agree, an association may rely on the designation of the local
service area for the duration of corporate existence as an
association.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.083. RULES. The finance commission shall adopt
rules to implement this subchapter, including rules that define the
categories of loans and investments described by Section 64.081.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 29, eff. Sept. 1, 2001.
§ 64.084. WAIVERS. The commissioner may grant a
limited-term waiver from the requirements of Section 64.081 if
quality loans in the categories described by that section are not
available in an association's local service area.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER F. PROPERTY OF ASSOCIATION
§ 64.101. REAL PROPERTY ON WHICH ASSOCIATION FACILITY IS
LOCATED. An association may own real property on which a facility
used in connection with the operation of the association is
located.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.102. DISPOSAL OF OTHER REAL PROPERTY. An
association shall dispose of real property, other than real
property described by Section 64.101, that is acquired by the
association in the course of the association's business not later
than the fifth anniversary of the date on which it is acquired
unless the commissioner extends the time for disposal.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.103. TRANSACTIONS RELATING TO ASSOCIATION'S REAL
PROPERTY. On authorization by the association's board of
directors, an association may sell, convey, exchange for other real
property, lease, improve, repair, or mortgage real property.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 64.104. RECORD OF CHARGES ON REAL AND PERSONAL
PROPERTY. An association shall keep a record of the status of
taxes, assessments, insurance premiums, and other charges on all
real and personal property owned by the association.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
