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To:          All Agents, Direct Operations and Attorneys for the State of Texas

From:      Stephen R. Streiff

Date:       April 22, 2003

Re:          Calculation of Anniversary Date for Home Equity Transactions

Section 50 (a)(6)(M)(ii) of the Texas Constitution provides that an extension of credit secured by a valid lien against the homestead may not be closed before the first anniversary of the closing date of any other extension of credit described by Subsection (a)(6) of this section secured by the same homestead property.  The terms “closing date” or “closed” are not defined in Section 50. 

Closing the transaction as defined in Procedural Rule P-1(f) of the Texas Title Insurance Basic Manual includes that all necessary papers have been filed for record. 

Therefore, Old Republic considers the recording date of a prior home equity security instrument to be the determinative date from which such one year period is calculated.  The only exception to this position is if an Old Republic agent closed and funded the prior home equity loan.  In that case, the date of disbursement of the loan funds would be acceptable to calculate the one year period.  Old Republic will not accept proof of loan disbursement from any source other than an Old Republic agent. 

The Lender may decide to accept this risk and close a home equity loan transaction prior to the lapse of the one year period as calculated above.  In that instance, insuring provision 2(d) must be deleted from the T-42 endorsement issued.  Old Republic requires the Lender to agree in writing prior to the closing that such provision will be deleted from the T-42 endorsement.