Texas Finance Code 159.104 – Failure to Provide Disclosure Before Closing; Right of Rescission
(a) Subject to Subsection (b), if a wrap mortgage loan is closed without the wrap lender providing the disclosure statement required by § 159.101 or any disclosure required by § 159.102, the wrap borrower may rescind the wrap mortgage loan agreement and the related purchase agreement at any time by providing the wrap lender notice of rescission in writing.
(b) If the wrap borrower receives a required disclosure statement under § 159.101 or 159.102 after the date the wrap mortgage loan is closed but before the wrap borrower provides notice of rescission, the wrap borrower may rescind the wrap mortgage loan agreement and the related purchase agreement in writing on or before the 21st day after the date of receipt of the disclosure statement.
Terms Used In Texas Finance Code 159.104
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- in writing: includes any representation of words, letters, or figures, whether by writing, printing, or other means. See Texas Government Code 312.011
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Property: means real and personal property. See Texas Government Code 311.005
- Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
(c) Not later than the 30th day after the date the wrap borrower provides notice of rescission under this section, the wrap lender shall return to the wrap borrower:
(1) all principal and interest payments made by the wrap borrower on the wrap mortgage loan;
(2) any money or property given as earnest money, a down payment, or otherwise in connection with the wrap mortgage loan or related purchase transaction; and
(3) any escrow amounts for the wrap mortgage loan or related purchase transaction.
(d) On the date on which all of the returned money or property described by Subsection (c) is received by the wrap borrower, the wrap borrower shall convey to the wrap lender or the wrap lender’s designee the residential real estate described by § 159.001(7)(A). The wrap borrower shall surrender possession of the residential real estate not later than the 30th day after the date of the wrap borrower’s receipt of the money or property returned as described by this subsection.
(e) Notwithstanding Subsection (a) or (b), the wrap lender may avoid rescission if not later than the 30th day after the date of receipt of notice of rescission under Subsection (a), the wrap lender:
(1) pays the outstanding balance due on any debt described by § 159.001(7)(A)(ii);
(2) pays any due and unpaid taxes or other government assessment on the residential real estate described by § 159.001(7)(A);
(3) pays to the wrap borrower as damages for noncompliance the sum of $1,000 and any reasonable attorney’s fees incurred by the wrap borrower; and
(4) provides to the wrap borrower evidence of compliance with Subdivisions (1) and (2).