Current through Reg. 49, No. 38; September 20, 2024
(a) The Amy Young
Barrier Removal Program is excluded from this section, to the extent funded
with the Texas HTF.
(b) Title
Insurance Requirements. A "Mortgagee's Title Insurance Policy" is required for
all Department Mortgage Loans, exclusive of subordinate lien Mortgage Loans for
down payment assistance and closing costs.
(1)
The title insurance policy shall be issued by an entity that is licensed and in
good standing with the Texas Department of Insurance.
(2) The policy must be in the amount of the
Mortgage Loan. The mortgagee named shall be: "Texas Department of Housing and
Community Affairs."
(3) The policy
must include survey deletion coverage.
(c) Title Reports.
(1) Title reports are acceptable only for
grants.
(2) Title reports must
disclose the current ownership, easements, restrictions, and liens relating to
the property, and include a search for judgements, mortgages or liens,
affidavits, deed restrictions, building setback and easements, and any other
factors which may impair the good and marketable title to the
property.
(3) The preliminary title
report may not be older than six months from the date of submission of the
Activity to the Department.
(d) Builder's Risk. Builder's Risk
(non-reporting form only) is required when the Department provides construction
funds for a Single Family Housing Unit. At the end of the construction period,
the binder must be endorsed to remove the "pending disbursements"
clause.
(e) Hazard Insurance. If
Department funds are provided in an amount that exceeds $20,000, then:
(1) The Department requires property
insurance for fire and extended coverage;
(2) Homeowner's policies or package policies
that provide property and liability coverage are acceptable. All risk policies
are acceptable;
(3) The amount of
hazard insurance coverage should be no less than 100% of the current insurable
value of improvements as of the date of Mortgage Loan closing or effective date
of the grant agreement; and
(4) The
Department must be named as a loss payee and mortgagee on the hazard insurance
policy for any Activity receiving a Mortgage Loan from the
Department.
(f) Flood
Insurance. Flood insurance must be maintained for all structures located in
special flood hazard areas as determined by the U.S. Federal Emergency
Management Agency (FEMA).
(1) A Household may
elect to obtain flood insurance even though flood insurance is not required.
However, the Household may not be coerced or required to obtain flood insurance
unless it is required in accordance with this section.
(2) Evidence of insurance, as required in
this chapter, must be obtained prior to Mortgage Loan funding for acquisition
only projects. For activities involving construction, evidence of hazard
insurance must be submitted prior to Mortgage Loan funding, and evidence of
flood insurance, if required, must be provided prior to payment of retainage. A
one year insurance policy must be paid. For Amortizing Mortgage Loans, a
minimum of two months of reserves must be collected at the closing of the
Mortgage Loan. The Department must be named as the loss payee on the
policy.
