Texas Adopts Provisions Relating to Loan Status Forms

The Finance Commission of Texas, on behalf of the Department of Savings and Mortgage Lending, recently adopted provisions relating to loan status forms that include its Conditional Pre-Qualification and Conditional Approval letters.  The provisions are effective on May 1, 2020.

The new provisions are intended to clarify the usage of conditional pre-qualification and conditional loan approval forms when such forms are provided by mortgage loan companies, mortgage bankers, and residential mortgage loan originators to mortgage applicants or prospective mortgage applicants.  The new requirements: (i) make the content of the conditional pre-qualification forms or letters used by mortgage loan companies, mortgage bankers, and residential mortgage loan originators more uniform; (ii) help emphasize to the mortgage applicants that the pre-qualification form is not a loan approval or commitment to lend; (iii) make the content of the conditional loan approval forms or letters used by mortgage loan companies, mortgage bankers, and residential mortgage loan originators more uniform; and (iv) clarify the content of the conditional loan approval form  to emphasize that the applicant is in fact approved for a mortgage loan, provided that certain conditions are met prior to loan closing.