CHAPTER 64. LOANS AND INVESTMENTS
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE B. SAVINGS AND LOAN ASSOCIATIONS
CHAPTER 64. LOANS AND INVESTMENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 867, Sec. 28, eff. Sept. 1,
2001.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER B. LOAN EXPENSES
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER C. LOAN PAYMENTS
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER D. CHARGES RELATING TO REAL PROPERTY LOANS
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER E. INVESTMENT IN LOCAL SERVICE AREA
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 867, Sec. 29, eff. Sept. 1,
2001.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER F. PROPERTY OF ASSOCIATION
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.