Texas recently amended its Finance Code to provide for the licensing or registration of wrap mortgage lenders, which generally is defined a person who makes a residential mortgage loan to wrap around a seller's existing mortgage loan to finance the purchase of residential real estate. Some exemptions include persons licensed to originate residential mortgage loans under other statutory provisions, for example, the Residential Mortgage Loan Company, Mortgage Bankers, and Consumer Loans chapters. The newly added chapter, titled Wrap Mortgage Loan Financing, also addresses disclosure requirements and wrap borrower's rights, among other items.
Texas also amended its Residential Mortgage Loan Company licensing provisions to clarify certain exemptions, such as the de minimis exemption for an owner of residential real estate who makes no more than three, which has been amended from five, residential mortgage loans in a 12-month period.
The amendments will become effective on January 1, 2022.
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