40 Tex. Admin. Code § 177.10 - Loan Security
(a) An approved
loan must be secured by a mortgage, deed of trust, or other lien on the home
prior to any disbursement of funds to the participating lending institution by
the board. All paperwork associated with the note and lien shall be deposited
for safekeeping with the administrator.
(b) The security for the board's loan will be
provided by:
(1) a participation first lien
mortgage with the board and the participating lending institution joining as
mortgagees, each receiving a share of the mortgage payment in proportion to
each's loan, or a first or second lien and deed of trust securing the full
amount of the board's loan;
(2)
mortgage insurance providing for repayment of at least 50% of the total
outstanding principal balances of all loans, or repayment of at least 50% of
all anticipated losses, based upon the administrator's analysis and forecast of
potential losses shown by the actual experience of the mortgage lending
industry on similar types of loans. The board may contract with a mortgage
insurance company for pooled coverage or with individual companies for
insurance on each loan, or the board may elect to be self insured in part or in
whole in order to meet the requirements of the Natural Resources Code, §
162.011(d);
(3) hazard insurance on the structure naming
the board loss payee in at least the amount of the board's loan.
(c) When the board has determined
that a transaction under this program has been completed and the board's loan
is secured as provided in subsections (a) and (b) of this section, the board
shall disburse funds to the participating lending institution for the board's
portion of the mortgage.
(d) The
board may establish a master policy for group insurance which will be made
available to all purchasers under this program for payment of the outstanding
principal balance of the board's portion of the loan upon the death of the
borrower.
Notes
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