Form 11-2

Home Equity Extension of Credit

[Promissory Note]

Basic Information

The loan evidenced by this instrument is an extension of credit as defined by Section 50(a)(6), Article XVI, of the Texas Constitution (“Home Equity Exten­sion of Credit”).

Date:

Borrower:

Borrower’s Mailing Address:

Lender:

Place for Payment:

Principal Amount:

Annual Interest Rate:

Maturity Date:

Annual Interest Rate on Matured, Unpaid Amounts:

Terms of Payment (principal and interest): The Principal Amount and interest are due and payable in equal periodic installments of [amount] DOLLARS ($[amount]), on the [specify] day[s] of each month, beginning [date] and continuing until the unpaid princi­pal and accrued, unpaid interest have been paid in full. Payments will be applied first to accrued interest and the remainder to the Principal Amount.

Security for Payment: This Home Equity Extension of Credit is secured by a deed of trust dated [date] from [Borrower/[name of grantor in deed of trust]] to [name of trustee], trustee, which covers the following real property: [property description] (the “Property”).

A.Promise to Pay

Borrower promises to pay to the order of Lender the Principal Amount plus interest at the Annual Interest Rate. This Home Equity Extension of Credit is payable at the Place for Payment and according to the Terms of Payment. All unpaid amounts are due by the Maturity Date. If any amount is not paid either when due under the Terms of Payment or on accelera­tion of maturity, Borrower promises to pay any unpaid amount plus interest from the date the payment was due to the date of payment at the Annual Interest Rate on Matured, Unpaid Amounts.

B.Default and Remedies

If Borrower defaults in the payment of this Home Equity Extension of Credit or in the performance of any obligation in any instrument securing this Home Equity Extension of Credit, Lender may declare the unpaid principal balance and earned interest on the Home Equity Extension of Credit due. Borrower waives all demand for payment, presentation for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, protest, and notice of protest, to the extent permitted by law.

C.Attorney’s Fees

Borrower also promises to pay reasonable attorney’s fees and court and other costs if an attorney is retained to collect or enforce the Home Equity Extension of Credit. These expenses will bear interest from the date of advance at the Annual Interest Rate on Matured, Unpaid Amounts. Borrower will pay Lender these expenses and interest on demand at the Place for Payment. These expenses and interest will become part of the Home Equity Extension of Credit and will be secured by the Security for Payment.

Borrower also promises to pay reasonable attorney’s fees and court costs and other fees incurred if this Home Equity Extension of Credit is placed in the hands of an attorney who is not an employee of Lender to collect or enforce the Home Equity Extension of Credit. Bor­rower will pay Lender these expenses on demand at the Place for Payment. These expenses will become part of the Home Equity Extension of Credit and will be secured by the Security for Payment.

D.Loan Conditions

The Home Equity Extension of Credit is made on condition that—

D.1.Borrower not be required to apply the proceeds of the Home Equity Extension of Credit to repay another debt except debt secured by the Property or debt to another lender;

D.2.Borrower not assign wages as security for the Home Equity Extension of Credit;

D.3.Borrower not sign any instrument in which blanks are left to be filled in;

D.4.Borrower not sign a confession of judgment or power of attorney to Lender or to a third person to confess judgment or to appear for Borrower in a judicial proceeding;

D.5.Lender, at the time the Home Equity Extension of Credit is made, provide Bor­rower a copy of all documents signed by Borrower related to the Home Equity Extension of Credit;

D.6.within a reasonable time after termination and full payment of the Home Equity Extension of Credit, Lender cancel and return the Home Equity Extension of Credit to Bor­rower and deliver, in recordable form, a release of the lien securing the Home Equity Exten­sion of Credit or a copy of an endorsement or assignment of the lien to a lender that is refinancing the Home Equity Extension of Credit;

D.7.Borrower and Borrower’s spouse may, within three days after the Home Equity Extension of Credit is made, rescind the Home Equity Extension of Credit without penalty or charge;

D.8.Borrower and Lender sign a written acknowledgment of the fair market value of the Property on the date the Home Equity Extension of Credit is made;

D.9.except as otherwise provided in this paragraph, Lender or any holder of the Home Equity Extension of Credit will forfeit all principal and interest of the Home Equity Extension of Credit if Lender or the holder fails to comply with Lender’s or the holder’s obli­gations under Tex. Const. art. XVI, § 50(a)(6), and fails to correct the failure not later than the sixtieth day after the date that the Lender or the holder is notified by Borrower of failure to comply; except as otherwise provided in this paragraph, Lender or holder may correct a fail­ure to comply with Tex. Const. art. XVI, § 50(a)(6), by—

a.paying to Borrower an amount equal to any overcharge paid by Borrower under or related to the Home Equity Extension of Credit if Borrower has paid an amount that exceeds an amount stated in Tex. Const. art. XVI, § 50(a)(6)(E), (a)(6)(G), or (a)(6)(O);

b.sending Borrower a written acknowledgment that the lien securing the Home Equity Extension of Credit is valid only in the amount that the Home Equity Extension of Credit does not exceed the percentage described by Tex. Const. art. XVI, § 50(a)(6)(B), if applicable, or is not secured by property described in Tex. Const. art. XVI, § 50(a)(6)(H) or (a)(6)(I), if applicable;

c.sending Borrower a written notice modifying any other amount, percent­age, term, or other provision prohibited by Tex. Const. art. XVI, § 50(a)(6), to a permitted amount, percentage, term, or other provision and adjusting the account of Borrower to ensure that Borrower is not required to pay more than an amount permitted by Tex. Const. art. XVI, § 50, and is not subject to any other term or provision prohibited by Tex. Const. art. XVI, § 50;

d.delivering the required documents to Borrower if Lender or holder fails to comply with Tex. Const. art. XVI, § 50(a)(6)(Q)(v), or obtaining the appropriate signatures if Lender or holder fails to comply with Tex. Const. art. XVI, § 50(a)(6)(Q)(ix);

e.sending Borrower a written acknowledgment, if the failure to comply is prohibited by Tex. Const. art. XVI, § 50(a)(6)(K), that the accrual of inter­est and all of Borrower’s obligations under the Home Equity Extension of Credit are abated while any prior lien prohibited under Tex. Const. art. XVI, § 50(a)(6)(K), remains secured by the homestead; or

f.if the failure to comply cannot be cured by (a)–(e) above, curing the failure to comply by refund or credit to Borrower of $1,000 and offering Borrower the right to refinance the Home Equity Extension of Credit with Lender or holder for the remaining term of this Home Equity Extension of Credit at no cost to Borrower on the same terms, including interest, as the original Home Equity Extension of Credit with any modifications necessary to comply with Tex. Const. art. XVI, § 50, or terms on which Borrower and Lender or holder otherwise agree that comply with Tex. Const. art. XVI, § 50;

D.10.Lender or any holder of this Home Equity Extension of Credit shall forfeit all principal and interest of this Home Equity Extension of Credit if this Home Equity Extension of Credit is made by a person other than a person described in Tex. Const. art. XVI, § 50(a)(6)(P), or if the lien is not created under a written agreement with consent of Borrower and Borrower’s spouse, unless Borrower and Borrower’s spouse who did not initially consent subsequently consent to this Home Equity Extension of Credit;

D.11.the Home Equity Extension of Credit is without recourse for personal liability against Borrower or Borrower’s spouse unless the Home Equity Extension of Credit was obtained by actual fraud;

D.12.the Home Equity Extension of Credit is not a form of open-end account that may be debited from time to time or under which credit may be extended from time to time unless this Home Equity Extension of Credit is a home equity line of credit as defined by Tex. Const. art. XVI, § 50(t);

D.13.the Home Equity Extension of Credit is payable in advance without penalty or charge; unless Lender agrees otherwise in writing, prepayments will be applied to the last maturing principal; installments will continue as scheduled until the Principal Amount and all accrued interest are paid;

D.14.the Home Equity Extension of Credit may not be accelerated because of a decrease in the market value of the Property or Borrower’s default under other indebtedness not secured by a prior valid encumbrance against the Property; and

D.15.the Home Equity Extension of Credit is closed only at the office of Lender, an attorney at law, or a title company.

E.Prepayments

Borrower may at any time make full or partial prepayments on the principal without paying any penalty, in addition to making regularly scheduled payments. Unless Lender agrees otherwise in writing, the making of partial prepayments will not alter the dates or amounts of regularly scheduled payments.

F.Usury Savings

Interest on the debt evidenced by this Home Equity Extension of Credit will not exceed the maximum rate or amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law. Any interest in excess of that maximum amount will be credited on the Principal Amount or, if the Principal Amount has been paid, refunded. On any acceleration or required or permitted prepayment, any excess interest will be canceled automatically as of the acceleration or prepayment or, if the excess interest has already been paid, credited on the Principal Amount or, if the Principal Amount has been paid, refunded. Loan charges, fees, or similar amounts other than interest will not exceed the maximum amount or rate that may be contracted for, taken, reserved, charged, or received under law. Any loan charges, fees, or similar amounts other than interest in excess of that maximum rate or amount will be credited on the Principal Amount or, if the Principal Amount has been paid, refunded. This provision overrides any conflicting provisions in this Home Equity Extension of Credit and all other instruments concerning the debt.

G.Other Clauses

Borrower will provide written notice to Lender or a holder of Lender’s on the holder’s failure to comply with any obligations of Tex. Const. art. XVI, § 50, the deed of trust, or applicable law delivered by certified or registered mail, licensed courier, or express mail ser­vice providing proof of delivery.

When the context requires, singular nouns and pronouns include the plural.

   
[Name of borrower]