Texas Passes Provisions for Loan Status Forms | PC Weiner Brodsky Kider

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The Texas Finance Commission, on behalf of the Department of Savings and Mortgages, recently passed provisions for loan status forms, including its conditional prequalification and conditional approval letters. The provisions come into force on May 1, 2020.

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

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