Residential purchase money loans are subject to numerous federal regulations as outlined in Chapter 13. Numerous notices are required. Where the loan has an adjustable interest rate, additional disclosures apply.
Purchase money loans by their nature involve a contract to buy a home. This is sometimes referred to as an “earnest money contract” because the buyer puts down a deposit or “earnest money” which will typically go to the seller if the buyer does not complete the transaction through no fault of the seller. The basic contents of an earnest money or sale contract are outlined below together with a basic document checklist for a Texas residential purchase money loan.
If the Bank intends to offer residential loans, a set of Bank drafted and branded forms is optimum. Bank counsel should be involved in preparation of these documents and in preparing a residential lending compliance program.