We are in the process of a debate regarding this issue.
According to Reg Z Sec. 226.32(a)(2) specifically exempts a “residential mortgage transactions” (RMT) and that is defined in 226.2(a)(24) as - Residential mortgage transaction means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer's principal dwelling to finance the acquisition or initial construction of that dwelling.
The “Texas Twist” comes in because 343.201(1)(E) specifically states that the Texas legal definition of a “High Cost Home Loan” is a credit transaction described by 12 C.F.R. Section 226.32, except that the term includes a residential mortgage transaction, as defined by 12 C.F.R. Section 226.2, if the total loan amount is $20,000 or more and:(i) the annual percentage rate exceeds the rate indicated in 12 C.F.R. Section 226.32(a)(1)(i), as amended; or (ii) the total points and fees payable by the consumer at or before loan closing will exceed the amount indicated in 12 C.F.R. Section 226.32(a)(1)(ii), as amended.
Does this mean that if you apply the same “32” APR and fee tests to any “home loan” (basically anything that is secured by a consumer’s principal residence) and that loan exceeds the tolerances, you must apply the Texas mandated restrictions found in 343.202 thru 343.205? Of course, if it is a RMT, you would not have to give the Reg. Z “32” disclosure because Reg. Z exempts these.
Our prior research regarding this matter is dated. I would like to thank you in advance for any advice.
Last edited by Skyline Viewer; 08/02/07 12:58 PM.
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CRCM, CLBB