                                                                                    ACCEPTED
                                                                                03-14-00716-CV
                                                                                        4954793
                                                                     THIRD COURT OF APPEALS
                                                                                AUSTIN, TEXAS
                                                                           4/20/2015 2:40:14 PM
                                                                              JEFFREY D. KYLE
                                                                                         CLERK


                   No. 03-14-00716-CV
                  _____________________________________        FILED IN
                                                        3rd COURT OF APPEALS
                                                            AUSTIN, TEXAS

            In the Third Court of Appeals               4/20/2015 2:40:14 PM
                                                          JEFFREY D. KYLE
                  _____________________________________         Clerk

                              JANOS FARKAS,
                                                                 Appellant,

                                     V.

  WELLS FARGO BANK, N.A. AND BRICE, VANDER LINDEN & WERNICK, P.C.
                   N/K/A BUCKLEY MADOLE, P.C.,
                                                          Appellees.
                  _____________________________________
                On Appeal from Cause No. D-1-GN-11-003692
                  201st District Court, Travis County, Texas
                  Hon. Lora J. Livingston, Judge Presiding


               BRIEF OF APPELLEE WELLS FARGO BANK, N.A.


 Susan A. Kidwell                         Robert T. Mowrey
 State Bar No. 24032626                    State Bar No. 14607500
 skidwell@lockelord.com                    rmowrey@lockelord.com
B. David L. Foster                        LOCKE LORD LLP
 State Bar No. 24031555                   2200 Ross Avenue, Suite 2200
 dfoster@lockelord.com                    Dallas, Texas 75201
John W. Ellis                             214-740-8000 (Telephone)
 State Bar No. 24078473                   214-740-8800 (Facsimile)
 jellis@lockelord.com
LOCKE LORD LLP
600 Congress Avenue, Suite 2200
Austin, Texas 78701
512-305-4700 (Telephone)
512-305-4800 (Facsimile)
                 ATTORNEYS FOR WELLS FARGO BANK, N.A.
                                              TABLE OF CONTENTS

                                                                                                                       Page

Index of Authorities ..................................................................................................iv 

Statement of Facts ...................................................................................................... 1 

Summary of the Argument......................................................................................... 4 

Argument.................................................................................................................... 6 

I.       The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s
         Objections to Wells Fargo’s Summary-Judgment Evidence........................... 6 

         A.        The trial court did not abuse its discretion in overruling
                   objections to the declaration of Michael Dolan. ................................... 7 

         B.        Farkas waived any complaint about the remaining declarations. ....... 11 

         C.        Conclusory assertions cannot establish harm...................................... 12 

II.      The Trial Court Did Not Err in Granting Summary Judgment on
         Farkas’s Claim for Violations of the Texas Constitution. ............................. 14 

         A.        The requirements of § 50(a)(6) only apply to “new extensions
                   of credit.” ............................................................................................. 14 

         B.        Farkas’s constitutional claims fail, as a matter of law, because
                   the alleged “breaches” of the DOT are not alleged
                   constitutional violations. ..................................................................... 17 

         C.        The trial court’s judgment may also be affirmed on no-evidence
                   grounds. ............................................................................................... 22 

III.     The Trial Court Did Not Err in Granting Summary Judgment on
         Farkas’s Claim for Violations of the Texas Debt Collection Act. ................ 24 

IV.      The Trial Court Did Not Err in Granting Summary Judgment on
         Farkas’s Fraudulent-Lien Claim. ................................................................... 27




                                                              ii
Prayer ....................................................................................................................... 31 

Certificate of Compliance ........................................................................................ 33 

Certificate of Service ............................................................................................... 33 




                                                              iii
                                           INDEX OF AUTHORITIES

                                                                                                                 Page(s)
CASES

Anderson v. Nat’l City Mortg.,
  No. 3:11-CV-1687-N, 2012 WL 612562 (N.D. Tex. Jan. 17, 2012) ................... 8

Bierwirth v. BAC Home Loans Servicing, L.P.,
   No. 03-11-00644-CV, 2012 WL 3793190 (Tex. App.—Austin Aug. 30,
   2012, pet. denied) (mem. op.) ............................................................................. 29

Cornish v. Washington Mut. Bank, FA,
  No. 02-06-400-CV, 2007 WL 2285478 (Tex. App.—Fort Worth Aug. 9,
  2007, pet. denied)................................................................................................ 11

Farkas v. Aurora Loan Servs., LLC,
  No. 05-12-01095-CV, 2013 WL 6198344 (Tex. App.—Dallas Nov. 26,
  2013, pet. denied).................................................................................................. 9

First Am. Title Ins. Co. v. Strayhorn,
   169 S.W.3d 298 (Tex. App.—Austin 2005), aff’d 258 S.W. 3d 627
   (Tex. 2008) .......................................................................................................... 22

Golden v. Wells Fargo Bank, N.A.,
  557 Fed. App’x 323 (5th Cir. Feb. 20, 2014) ..................................................... 28

In re J.P.B.,
    180 S.W.3d 570 (Tex. 2005) ................................................................................ 6

Jaimes v. Fed. Nat’l Mortg. Ass’n,
   930 F.Supp.2d 692 (W.D. Tex. 2013) ................................................................ 28

Jones v. JP Morgan Chase Bank, N.A.,
   No. 4:13-CV-456, 2014 WL 2996673 (E.D. Tex. July 3, 2014) ........................ 28

Kerlin v. Arias,
  274 S.W.3d 666 (Tex. 2008) ............................................................................ 8, 9

LaSalle Bank Nat’l Ass’n v. White,
  246 S.W.3d 616 (Tex. 2007) ........................................................................ 16, 20



                                                            iv
Lassberg v. Barrett Daffin Frappier Turner & Engel, L.L.P.,
   No. 4:13-CV-577, 2015 WL 123756 (E.D. Tex. Jan. 8, 2015) .......................... 28

Liberty Mut. Ins. Co. v. Griesing,
   150 S.W.3d 640 (Tex. App.—Austin 2004, pet. dism’d w.o.j.)......................... 26

Marsh v. JPMorgan Chase Bank, N.A.,
  888 F. Supp. 2d 805 (W.D. Tex. 2012) .............................................................. 30

Perdomo v. Fed. Nat’l Mortg. Ass’n,
   No. 3:11-CV-734-M, 2013 WL 1123629 (N.D. Tex. Mar. 18, 2013) ............... 28

Pickett v. Tex. Mut. Ins. Co.,
   239 S.W.3d 826 (Tex. App.—Austin 2007, no pet.) .......................................... 22

Rockwall Commons Assocs., Ltd. v. MRC Mortg. Grantor Trust I,
  331 S.W.3d 500 (Tex. App.—El Paso 2010, no pet.) ........................................ 25

Seaprints, Inc. v. Cadleway Props., Inc.,
   446 S.W.3d 434 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ...................... 11

Sims v. Carrington Mortg. Servs., L.L.C.,
   440 S.W.3d 10 (Tex. 2014)...............................................................14, 15, 20, 23

Star-Telegram, Inc. v. Doe,
   915 S.W.2d 471 (Tex. 1995) .............................................................................. 22

Steptoe v. JPMorgan Chase Bank, N.A.,
   No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston
   [1st Dist. Mar. 19, 2015, no pet. h.) ........................................................18, 19, 26

Stringer v. Cendant Mortg. Corp.,
   23 S.W.3d 353 (Tex. 2000)...........................................................................14, 20

Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd.,
   328 S.W.3d 623 (Tex. App.—Eastland 2010, no pet.) ......................................... 8

Tex. Dep’t of Transp. v. Able,
   35 S.W.3d 608 (Tex. 2000)................................................................................... 7

Vincent v. Bank of Am., N.A.,
   109 S.W.3d 856 (Tex. App.—Dallas 2003, pet. denied).................................... 16


                                                       v
Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners,
   160 S.W.3d 657 (Tex. App.—Austin 2005, no pet.) ..............................22, 24, 29

Wells Fargo Bank, N.A. v. Robinson,
  391 S.W.3d 590 (Tex. App.—Dallas 2012, no pet.) ..............................16, 17, 23

CONSTITUTIONAL PROVISIONS
TEX. CONST. art. XVI, § 50 ...................................................................................... 14

TEX. CONST. art. XVI, § 50(a)(6) ......................................................................passim

TEX. CONST. art. XVI, § 50(a)(6)(D) .............................................................3, 16, 18

TEX. CONST. art. XVI, § 50(a)(6)(I) ......................................................................... 16

TEX. CONST. art. XVI, § 50(a)(6)(Q)(x) .............................................................15, 22

TEX. CONST. art. XVI, § 50(k) ................................................................................. 18

TEX. CONST. ART. XVI, § 50(t) ............................................................................. 2, 18

STATUTES
TEX. CIV. PRAC. & REM. CODE § 12.001(d) ............................................................. 28

TEX. CIV. PRAC. & REM. CODE § 12.002............................................................ 28, 30

TEX. CIV. PRAC. & REM. CODE § 12.002(a) ............................................................. 29

TEX. CIV. PRAC. & REM. CODE § 12.002(a)(2) ........................................................ 30

TEX. FIN. CODE § 31.002(a)(34)............................................................................... 15

TEX. FIN. CODE § 392.001. ....................................................................................... 25
TEX. FIN. CODE § 392.403(a)(2)............................................................................... 27




                                                        vi
RULES
TEX. R. APP. P. 38.1(i).............................................................................................. 25

TEX. R. APP. P. 38.2(1)(B) ......................................................................................... 1

TEX. R. APP. P. 44.1 ................................................................................................... 7

Tex. R. Civ. P. 166a(c).........................................................................................7, 25

TEX. R. CIV. P. 166a(f) .......................................................................................7, 8, 9

TEX. R. CIV. P. 735.1 ................................................................................................ 18

TEX. R. CIV. P. 735.3 ................................................................................................ 18

TEX. R. CIV. P. 736 .........................................................................................3, 18, 26

TEX. R. CIV. P. 736.11(a) ........................................................................................... 4

TEX. R. CIV. P. 736.11 (c) .......................................................................................... 4

TEX. R. EVID. 801(d) .................................................................................................. 7




                                                           vii
TO THE HONORABLE THIRD COURT OF APPEALS:

      After defaulting on a home-equity loan, Appellant Janos Farkas filed the

underlying lawsuit to prevent Appellee Wells Fargo Bank, N.A., from obtaining an

expedited court order to foreclose on his property. Although he succeeded in

delaying foreclosure, he was unable to withstand summary judgment.

      Farkas’s brief essentially repeats his response to Wells Fargo’s motion (and

his objections to some of Wells Fargo’s summary-judgment evidence). Those

arguments were properly rejected by the trial court, so they provide no basis for

relief on appeal. The trial court’s judgment should be affirmed in its entirety.

                               STATEMENT OF FACTS

      Farkas’s “statement of undisputed facts” is incomplete. It also contains a

number of inaccurate characterizations about documents in the record.

Accordingly, Wells Fargo provides its own statement.           See TEX. R. APP. P.

38.2(1)(B).

      On January 11, 2007, Farkas executed an Account Agreement (CR:47-61)

and a Texas Deed of Trust (CR:70-81) securing a home equity line of credit in the

principal amount of $103,441.00. The Account Agreement and the Deed of Trust

will be collectively referred to as the “Loan Documents.” The Loan Documents

define the “Borrower” as “Janos Farkas” and the “Lender” as “Wells Fargo Bank,

N.A.” (CR:47, 70.) In accordance with Texas law, the Loan Documents state that
they relate to “an extension of credit as defined by section 50(a)(6) and 50(t),

Article XVI of the Texas Constitution.” (Id.)

      The Deed of Trust (“DOT”) securing the loan provides that “Borrower will

be in default if (1) any payment required by the Debt Instrument or this Security

instrument is not made when it is due . . . .” (CR:78.) In the event of a default, the

DOT requires Wells Fargo to provide Farkas with notice before invoking remedies

of acceleration and foreclosure. (CR:78-79.) The notice must specify: “(a) the

default; (b) the action required to cure the default; (c) a date, not less than 30 days

from the date the notice is given to Borrower, by which the default must be cured;

and (d) that failure to cure the default on or before the date specified in the notice

will result in acceleration of the sums secured by this Security Instrument and sale

of the Property.” (CR:79.) In accordance with Texas law, the DOT also states that

“[t]he lien evidenced by this Security Instrument may be foreclosed upon only by a

court order.” (Id.)

      On April 21, 2011, Wells Fargo, through its foreclosure counsel (Brice,

Vander Linden & Wernick, P.C.), sent Farkas a “Notice of Default and Intention to

Accelerate.” (CR:87.) In accordance with the DOT, the notice states that (a) “the

loan is in default for failure to make the regular monthly payments required by the




                                          2
Note and Deed of Trust”; (b) the amount required to cure the default1 and the

address to which payment should be made; (c) the default must be cured “within

thirty (30) days of the date of this notice”; and (d) if the default is not cured by that

date, “the Note will be accelerated and all sums secured by the Deed of Trust will

be declared to be immediately due and payable.” (Id.)

       Instead of curing his default, Farkas sent a letter “request[ing] a validation of

debt under the Fair Debt Collection Practices Act stating the owner of the debt

(creditor) with its address.” (CR:200.) Wells Fargo provided Farkas with the

current amount to cure the default ($19,604.23), the current amount to pay off the

loan ($123,127.31), and the lender’s name and address. (CR:89, 203-04.) Farkas

did not remit either amount, so on June 23, 2011, Well Fargo’s foreclosure counsel

sent Farkas notice that the debt was being accelerated. (CR:90.)

       In September 2011, as permitted by the DOT (CR:79) and Rule 736 of the

Texas Rules of Civil Procedure, Wells Fargo applied for an expedited “court order

allowing foreclosure of a lien under Tex. Const. Art. XVI, Section 50(a)(6)(D).”

(See CR:92.) But, before Wells Fargo could obtain an order, Farkas filed the

underlying lawsuit challenging Wells Fargo’s ability to foreclose. (See CR:3.)

Farkas’s filing of an independent lawsuit automatically stayed Wells Fargo’s Rule


1
  As of March 22, 2011, the amount was $2,013.30. (CR:87.) However, the notice states that
“the amount required to cure the default on the day you choose to pay may be greater.” (Id.)


                                             3
736 proceeding, which was subsequently dismissed See TEX. R. CIV. P. 736.11(a),

(c).

       Wells Fargo moved for traditional and no-evidence summary judgment on

all of Farkas’s claims. (See CR:15.) Brice, Vander Linden & Wernick, P.C.

(“Brice”), which was also named as a defendant, did the same. (CR:343.) Farkas

filed his own motion for partial summary judgment, and attached many of the same

documents filed in support of Wells Fargo’s motion. (See CR:173.) He also

objected to some of Wells Fargo’s summary-judgment evidence. (CR:505.)

       After considering the motions, the responses, the pleadings, the arguments of

counsel, and “all other matters properly before the Court,” the trial court granted

Wells Fargo’s and Brice’s motions, denied Farkas’s motion, overruled Farkas’s

objections to the evidence, and entered a final judgment that Farkas take nothing

on his claims. (CR:604-05.) This appeal ensued. (CR:608.)

                           SUMMARY OF THE ARGUMENT

       1. Objections to Summary-Judgment Evidence: Farkas cannot cite any

legal authorities to support his contention that the trial court abused its discretion in

overruling groundless objections to some of Wells Fargo’s summary-judgment

evidence. So he relies on unsupported assertions that run afoul of the following

principles:

        Statements in a business-records affidavit are not “hearsay”;



                                           4
       A judgment cannot “turn” on “irrelevant” statements, so complaints

about them cannot establish reversible error;

       Statements based on personal knowledge need not be confirmed by

documentary evidence;

       “Inconsistencies” between the amounts required to cure a default and the

amounts required to pay off a loan at different points of time do not require striking

the evidence;

       Generalized objections – unsupported by arguments based on legal

authorities or citations to the record – are insufficient to preserve error; and

       Conclusory assertions that unproven errors “probably resulted in an

improper judgment” are also insufficient to preserve error.

      2. The Constitutional Claim: Farkas’s claim that Wells Fargo violated

Article XIV, § 50(a)(6) of the Texas Constitution is premised on a false theory.

None of the alleged “violations” relate to any constitutional requirements, so

Farkas’s claim fails as a matter of law. The trial court’s judgment may also be

affirmed on no-evidence grounds.

      3. The Texas Debt Collection Act Claim: Farkas failed to negate all

grounds for summary judgment on his TDCA claim. That, by itself, requires that

the judgment be affirmed. Farkas also waived any complaint on this issue by

failing to provide a cognizable legal argument supported by citations to authority


                                           5
and the record. Finally, even if considered, Farkas’s argument should be rejected

as contrary to the record and unsupported by the law.

      4. The Fraudulent Lien Claim: Farkas makes little effort to salvage his

fraudulent-lien claim.    His two-page “argument” contains no citations to the

record, no legal argument supported by authorities, and fails to negate all grounds

for summary judgment. His argument also fails on the merits. A notice of default

is not a “lien,” and Farkas’s hyper-technical complaints about statements in the

notice neither constitute fraud nor caused any damages. Because his fraudulent-

lien claim fails as a matter of law, it comes as no surprise that Farkas cannot cite to

any evidence to support multiple elements that were challenged below.

      In short, the judgment should be affirmed in its entirety as demonstrated

more fully below:

                                     ARGUMENT

I.    The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s
      Objections to Wells Fargo’s Summary-Judgment Evidence.

      Farkas reveals the weakness of his appeal by leading with an argument that

the trial court erred in overruling objections to some of Wells Fargo’s summary-

judgment evidence.       (See Br. at 9-17.)    But, by simply repeating the same

arguments the trial court rejected, Farkas fails to show how the trial court abused

its discretion. See In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005) (reviewing

evidentiary rulings under abuse of discretion standard). Nor do his conclusory


                                          6
assertions about harm show how “the judgment turns on the particular evidence

excluded or admitted,” as required for relief on appeal. See Tex. Dep’t of Transp.

v. Able, 35 S.W.3d 608, 617 (Tex. 2000); TEX. R. APP. P. 44.1. Farkas’s first

argument should be summarily rejected.

      A.        The trial court did not abuse its discretion in overruling
                objections to the declaration of Michael Dolan.

      In scattershot fashion, Farkas lodges various attacks on the business-records

declaration of Michael Dolan. (See Br. at 12-15.) None have any merit.

      Farkas first asserts that the Dolan declaration “contains inadmissible

hearsay.” (Br. at 12.) However, “‘[h]earsay’ is a statement, other than one made

by the declarant . . . offered in evidence to prove the truth of the matter asserted.”

TEX. R. EVID. 801(d) (emphasis added). Statements by a declarant in a business-

records affidavit do not fall within this definition. That is why such affidavits are a

valid and commonly-used form of summary-judgment proof. See TEX. R. CIV. P.

166a(c), (f).

      Unable to back up his novel theory of “hearsay” with any citation to

authority, Farkas’s argument quickly morphs into unsupported assertions about the

factual accuracy of two isolated statements in the affidavit. (See Br. at 12-13.) He

first complains that Dolan’s statement that “home equity loan and lines of credit

were ‘available through Wells Fargo Home Equity Group’ is misleading and

irrelevant to this proceeding.” (Br. at 13 (emphasis added).) But, because the


                                          7
judgment cannot “turn” on an “irrelevant” statement, Farkas’s first complaint does

not concern reversible error.

       Farkas also asserts that there is “zero documentation”2 to support Dolan’s

statement that “‘Wells Fargo Home Equity’ is a division of Wells Fargo Bank,

N.A.” (Br. at 13.) But Farkas cites no authority requiring statements based on

personal knowledge to be supported by documentary evidence as well. To the

contrary, the personal-knowledge requirement is satisfied when, as here, an

affidavit (i) states that it is based on personal knowledge and the facts in it are true

and (ii) shows the basis for the affiant’s personal knowledge. See TEX. R. CIV. P.

166a(f); Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008).

       Dolan states that he has “personal knowledge of each of the matters stated

herein, and they are true and correct.” (CR:43.) In addition, he explains the basis

for his knowledge: “I am employed as a Research and Mediation Manager for

Wells Fargo Bank, N.A. (‘Wells Fargo’). I am also the custodian of the records of

Wells Fargo. I have also personally reviewed Wells Fargo’s records regarding the

2
  The record, in fact, does contain documentation to support Dolan’s statement. A letter from
“Wells Fargo Bank, N.A. Home Equity Group” states that Farkas contacted “Wells Fargo Home
Equity regarding [his] account.” (CR:64.) In addition, the Account Agreement identifies the
account as a “Wells Fargo Home Equity Account.” (CR:47.) That evidence confirms the
undisputable relationship between Wells Fargo Bank and one of its divisions, the Wells Fargo
Home Equity Group. “A division of a corporation is not a separate legal entity but the
corporation itself.” Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd., 328 S.W.3d
623, 631 (Tex. App.—Eastland 2010, no pet.). Similarly, a lender and a division of the lender
are “the same entity for all intents and purposes.” Anderson v. Nat’l City Mortg., No. 3:11-CV-
1687-N, 2012 WL 612562, at *1 n.1 & n.3 (N.D. Tex. Jan. 17, 2012).


                                              8
mortgage debt at issue in the above-captioned lawsuit (the ‘Loan’).” (Id.) Dolan

also states “I am familiar with Wells Fargo’s lending and mortgage servicing

practices, including the various groups and divisions within Wells Fargo

through which it carries out those practices.”      (CR:45.)    These statements

are plainly sufficient to satisfy the applicable legal standard. See T EX. R. CIV.

P. 166a(f); Kerlin, 274 S.W.3d at 668.

      Farkas reveals nothing but desperation when he tries to question Dolan’s

credibility. (See Br. at 13.) Dolan’s statement that he has been “employed by

Wells Fargo and its predecessor institutions” (i.e., banks acquired by Wells Fargo

through various mergers) for “28 years” (CR:44) is not a claim that he started

working for Wells Fargo more than 160 years ago, as Farkas tries to suggest. (Br.

at 13.) Moreover, nothing in Texas law requires a business-records custodian to

specify the exact number of years he has worked for his employer. See TEX. R.

CIV. P. 166a(f); Kerlin, 274 S.W.3d at 668. Thus, contrary to Farkas’s belief, the

absence of such information does not cast any doubt on Dolan’s personal

knowledge.

      The Dallas Court of Appeals recently rejected similar challenges to a similar

affidavit in a similar appeal filed by Farkas. Farkas v. Aurora Loan Servs., LLC,

No. 05-12-01095-CV, 2013 WL 6198344, at *3 (Tex. App.—Dallas Nov. 26,

2013, pet. denied). There, as here, “Farkas d[id] not cite to any evidence in the



                                         9
record controverting the appellees’ evidence.”           Id.      There, as here, his

“unsupported assertions that [an] affidavit is factually inaccurate [were]

insufficient” to show reversible error. Id. And there, as here, the trial court

properly considered the challenged affidavit as summary-judgment evidence. See

id.

      Farkas demonstrates utter confusion in arguing that Dolan’s declaration

contains “inconsistencies when compared to . . . other [summary-judgment]

evidence.” (See Br. at 14 (emphasis added).) The alleged “inconsistencies” are

simply differences between the “amount required to cure Plaintiff’s default” on

March 22, 2011 ($2,013.30) versus June 20, 2011 ($19,604.23), and differences

between those amounts and the amount required to pay off the entire loan

($123,127.31 as of June 20, 2011). (Compare CR:45, with CR:87, 203, 204.)

      Farkas appears to assume that the “amounts owed” should have remained

constant over time. But he ignores the distinction amounts to cure the default and

amounts to pay off the loan. He also ignores the impact of interest and other

expenses (such as property taxes and attorneys’ fees related to foreclosure

proceedings) that accrue over time. In short, the longer Farkas waited to cure his

default, the more expensive any available cure became. That Farkas would point

to these alleged “inconsistencies” as evidence of reversible error only confirms that

he has no viable grounds to challenge the trial court’s ruling.



                                          10
      B.     Farkas waived any complaint about the remaining declarations.

      Resorting to hyperbole, Farkas transforms the alleged “inconsistencies” into

“wildly varying accounts as to the amounts allegedly owed.” (Br. at 15.) Then,

without any citation to the record or supporting legal authorities, he claims that

“[t]he conflicting portions of all of these declarations should be struck due to

inconsistencies.”   (Id. (emphasis added).3)     This two-sentence “argument” has

multiple defects, any one of which is fatal:

      First, Farkas’s generalized objection to “all of these declarations” (Br. at 15)

“fails to identify specific objectionable portions of the [declarations] or explain

why any particular passages should be disregarded as [conflicting].”                See

Seaprints, Inc. v. Cadleway Props., Inc., 446 S.W.3d 434, 442 (Tex. App.—

Houston [1st Dist.] 2014, no pet.); see also Cornish v. Washington Mut. Bank, FA,

No. 02-06-400-CV, 2007 WL 2285478, at *3 (Tex. App.—Fort Worth Aug. 9,

2007, pet. denied) (“the part[y] objecting to an affidavit must identify the specific

statements in the affidavit that are objectionable and state why they are

objectionable”). Farkas’s complaints about unidentified but allegedly “conflicting

portions” of the declarations are “inadequate” and, therefore, insufficient to

preserve error. See Seaprints, 446 S.W.3d at 442.



3
 This statement appears to be referencing the Declarations of Sammy Hooda (CR:84) and B.
David L. Foster (CR:150).


                                          11
         Second, the declarations do not contain any “conflicting” statements.

Although Farkas complains about “wildly varying accounts as to amounts

allegedly owed,” neither the Hooda nor the Foster declaration includes any

statement about amounts allegedly owed. (See CR:84-86, 150-51.) Only the

Dolan declaration contains such statements, so there is not conflict between “all of

these declarations.” Moreover, the amounts referenced in the Dolan declaration,

which states that “[t]he amount required to cure Plaintiff’s default on the Loan as

of March 22, 2011 was $2,013.30” and “[t]he amount required to cure Plaintiff’s

default on the Loan as of July 25, 2011 was $4,002.64” (CR:45) are consistent with

documentary evidence in the summary-judgment record. (CR:87&148; CR:69.)

         Third, although the documentary evidence attached to the declarations

shows variations in the amounts required to cure the default and the amounts

required to pay off the loan at different times, those variations have already been

explained. Farkas’s unfounded assumption that the “amounts owed” should have

remained constant over time is unsupported by the record and defies common

sense.

         C.    Conclusory assertions cannot establish harm.

         Recognizing his burden to show that the alleged error “probably resulted in

an improper judgment,” Farkas asserts that, “[i]f the Declaration of Michael Dolan

were struck, Wells_Bank’s MSJ would have to be denied.” (Br. at 15.) But Farkas



                                          12
later concedes that the ruling on his objections “is not necessary nor dispositive of

any ruling on Wells_Bank’s and Brice’s summary judgment motions concerning

TDCA claims.” (Br. at 27.) And he never explains why the ruling is “necessary

and dispositive” of his other claims. Nor could he.

      Wells Fargo presented multiple grounds for traditional and no-evidence

summary judgment. (See CR:19-40.) Obviously, Wells Fargo did not have to

present any evidence to prevail on its no-evidence grounds. For that reason alone,

the judgment does not “turn” on the evidentiary rulings and, therefore, Farkas

cannot show that the trial court’s rulings constitutes reversible error.

      In addition, Farkas cannot show that any of the traditional grounds require

proof of the allegedly “disputed” (and entirely immaterial) facts over which Farkas

obsesses. As explained more fully below, they do not. A judgment cannot turn on

immaterial facts.

      Finally, even if the Dolan affidavit were stricken in its entirety, evidence

attached to his affidavit is duplicated elsewhere in the record.4 Because those

documents are sufficient to support Wells Fargo’s traditional grounds, Farkas

cannot show that striking the Dolan declaration would have had any effect on the

outcome.


4
  For example, the Account Agreement appears at CR:116 and CR:272, and documents
establishing various reinstatement and payoff amounts appear at CR:140-43 and 198-213.


                                          13
      To sum up: Farkas has not shown that the trial court abused its discretion by

denying his objections to some of Wells Fargo’s summary-judgment evidence.

Nor has Farkas shown how the alleged error was harmful. His complaints about

the trial court’s evidentiary rulings provide no basis for reversal.

II.   The Trial Court Did Not Err in Granting Summary Judgment on
      Farkas’s Claim for Violations of the Texas Constitution.

      Farkas’s theory that Wells Fargo violated the Constitution by breaching

terms in the Loan Documents (Br. at 17-23) is pure fiction.            The alleged

“violations” do not involve conduct that is regulated by the Constitution, so they

could never support a constitutional claim. Nor is there any evidence to support

Farkas’s repeated assertions that Wells Fargo failed to comply with the Loan

Documents. False assertions about imaginary “violations” cast no doubt on the

trial court’s judgment.

      A.     The requirements of § 50(a)(6) only apply to “new extensions of
             credit.”

      “[H]ome equity loans are subject to the requirements of Article XVI, Section

50 of the Texas Constitution.” Sims v. Carrington Mortg. Servs., L.L.C., 440

S.W.3d 10, 11 (Tex. 2014). “Section 50(a)(6), in its totality, establishes the terms

and conditions a home-equity lender must satisfy to make a valid loan.” Stringer

v. Cendant Mortg. Corp., 23 S.W.3d 353, 356 (Tex. 2000).               The detailed




                                          14
constitutional requirements, however, only apply to “new extension[s] of credit.”

Sims, 440 S.W.3d at 17.

      The term “extension of credit” refers to “‘direct or indirect advances of

money . . . to a person that are conditioned on the obligation of the person to repay

. . . .’” Id. at 16 n.22 (quoting TEX. FIN. CODE § 31.002(a)(34)). If a transaction

does “not involve the satisfaction or replacement of the original note, an

advancement of new funds, or an increase in the obligations created by the original

note,” then “it is not a new extension of credit that must meet the requirements of

Section 50.” Id. at 17.

      If, in making a new extension of credit, a lender fails to comply with section

50, it has 60 days to cure its failure by taking specified actions that include

returning any overcharges paid by the owner, sending written confirmation that the

loan terms (e.g., interest rates) are only valid to the extent they comply with

constitutional requirements, or modifying the loan agreement to comply with

constitutional requirements. See TEX. CONST. art. XVI, § 50(a)(6)(Q)(x). Because

the constitutional requirements only relate to new extensions of credit, the methods

of cure necessarily involve taking actions to ensure that the extension of credit at

issue, i.e., the initial loan agreement, complies with the law. See id. If a lender

“fails to correct [its] failure to comply not later than the 60th day after the date the

lender or holder is notified by the borrower of the lender’s failure to comply,” then



                                          15
the lender or holder “shall forfeit all principal and interest of the extension of

credit.” Id.

      For example, § 50(a)(6)(I) “prohibits home-equity loans from being ‘secured

by homestead property designated for agricultural use.’” LaSalle Bank Nat’l Ass’n

v. White, 246 S.W.3d 616, 619 (Tex. 2007) (quoting TEX. CONST. art. XVI, §

50(a)(6)(I)).   Thus, a home-equity loan secured by property designated for

agricultural use violates the Constitution and is subject to forfeiture. Id.

      The Constitution also “requires that a home equity note be secured by a lien

that may only be foreclosed by court order.” Wells Fargo Bank, N.A. v. Robinson,

391 S.W.3d 590, 595 (Tex. App.—Dallas 2012, no pet.) (discussing TEX. CONST.

art. XVI, § 50(a)(6)(D)). However, as long as a deed of trust requires a court order

for foreclosure, it complies with constitutional requirements.          Id.    In cases

involving complaints about how foreclosure was conducted, the constitutional

remedy of forfeiture is not appropriate. See id.

      In short, “forfeiture is only available for violations of constitutionally

mandated provisions of the loan documents.” Vincent v. Bank of Am., N.A., 109

S.W.3d 856, 862 (Tex. App.—Dallas 2003, pet. denied). “A borrower’s recourse

for a lender’s failure to abide by the terms of his loan agreement is to assert

traditional tort and breach of contract causes of action,” not claims for violations of

Article XVI, § 50(a)(6) of the Texas Constitution. Robinson, 391 S.W.3d at 595.



                                          16
      B.     Farkas’s constitutional claims fail, as a matter of law, because the
             alleged “breaches” of the DOT are not alleged constitutional
             violations.

      The fatal problem that condemns Farkas’s constitutional claim is that Farkas

does not complain about any alleged violations of constitutional requirements.

Instead, he repeatedly asserts that Wells Fargo violated the DOT. (See Br. at 17-

21.) However, as a matter of law, alleged breaches of contract are not actionable

under the Constitution. See Robinson, 391 S.W.3d at 595. Moreover, Farkas’s

hyper-technical complaints about statements in a notice of default do not violate

any terms in the DOT, much less rise to the level of a constitutional violation.

             1.    Farkas has not alleged any constitutional violation.

      Farkas has never challenged the validity of the Loan Documents. Nor has he

ever taken the position that Wells Fargo failed to satisfy any of the constitutional

requirements to make a valid loan. Instead, he bases his “constitutional” claim on

allegations that the notice of default refers to a “wrong” loan number, mentions

“non-judicial foreclosure,” and demands that Farkas cure his default “within 30

days” of the notice rather than “not less than 30 days” from the notice. (Br. at 19-

20.) There are two fundamental problems:

                   (i)    Farkas’s complaints are groundless.
      The loan number: Farkas repeatedly asserts that the notice references the

“wrong” loan number. However, the summary-judgment evidence shows that the



                                         17
“Loan Number” on the notice of default (0999617061) is an “internal reference

number” used by Wells Fargo and Brice for their own, internal purposes. (CR:46,

86.) The undisputed fact that the notice of default makes no reference to either the

“Account Number” (650-650-4349999-1XXX) or the “reference Number”

(20063367500009) shown on the DOT is immaterial, because neither the

Constitution nor the DOT require a notice of default to include any reference to a

loan number.

      The reference to “non-judicial foreclosure”:        The Texas Constitution

requires a lien on a home-equity loan to “be foreclosed upon only be a court

order.”   TEX. CONST. art. XVI, § 50(a)(6)(D) (emphasis added).           From that

language, Farkas assumes that the reference to a “court order” means a lender is

required to pursue a “judicial foreclosure.” His assumption is false.

      “Rule 736 [of the Texas Rules of Civil Procedure] provides the procedure

for obtaining a court order, when required, to allow foreclosure of a lien containing

a power of sale in the security instrument . . . securing . . . a home equity loan,

reverse mortgage, or home equity line of credit under article XVI, sections

50(a)(6), 50(k), and 50(t) of the Texas Constitution.” TEX. R. CIV. P. 735.1. A

Rule 736 court order permitting a non-judicial foreclosure is not a judicial

foreclosure. See TEX. R. CIV. P. 735.3; see also Steptoe v. JPMorgan Chase Bank,

N.A., No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston [1st



                                         18
Dist.] Mar. 19, 2015, no pet. h.) (recognizing distinction between judicial

foreclosure and Rule 736 proceeding to obtain court order “to proceed with a non-

judicial foreclosure”). When, as here,5 the “home-equity lender has contracted for

the right of non-judicial foreclosure under a power of sale provision, [it] may

choose to pursue the special procedure found in Rule 736 to obtain an order

allowing it to proceed with a non-judicial foreclosure under the Texas Property

Code.” See Steptoe, 2015 WL 1263128, at *3. That is exactly what Wells Fargo

did when it initiated a Rule 736 proceeding to obtain the requisite court order

permitting non-judicial foreclosure. (See CR:92.) But Farkas obstructed Wells

Fargo’s efforts by filing this lawsuit and complaining about non-existent

constitutional “violations.” (See CR:3.)

       The deadline: Farkas’s hyper-technical suggestion that requiring payment

within 30 days violates the DOT provision requiring payment “not less than 30

days” from notice is semantic nonsense. (See Br. at 20.) Because a 30-day

deadline is both “within” 30 days of notice and “not less than” 30 days of notice, it

complies with the DOT as a matter of law.




5
  The DOT provides: “The lien evidence by this Security Instrument may be foreclosed upon
only by a court order. Lender may, at its option, follow any rules of civil procedure promulgated
by the Texas Supreme Court for expedited foreclosure proceedings related to the foreclosure of
liens under Section 50(a)(6), Article XVI of the Texas Constitution . . . .” (CR:79.)


                                               19
                   (ii)   Farkas’s complaints are not actionable under the
                          Constitution.
      As explained, the Constitution focuses on the terms of the initial loan

agreement, not the manner in which a lender may enforce that agreement in the

event of a borrower’s default. See TEX. CONST. art. XVI, § 50(a)(6); Sims, 440

S.W.3d at 16 n.22. Thus, there is no language in § 50(a)(6) that pertains to notices

of default, much less any language that:

       requires a lender to include any particular type of “loan number” on the
        notice (or prohibits foreclosure counsel from including its own internal
        reference number on the notice);

       requires a lender to specify the type of foreclosure remedy that will be
        conducted (or prohibits a lender from stating that it was asked to pursue a
        “non-judicial foreclosure in accordance with the terms of the Note and
        the Deed of Trust and applicable law”); or

       requires a lender to demand payment “not less than 30 days from the date
        notice [of default] is given” (or prohibits a lender from demanding
        payment “within 30 days of the date of this notice”).

(Contra Br. at 19-22.)

      “When interpreting the Texas Constitution,” the Texas Supreme Court

“‘rel[ies] heavily on its literal text and must give effect to its plain language.’”

LaSalle Bank, 246 S.W.3d at 619 (quoting Stringer, 23 S.W.3d at 355). Applying

that principle, the Court “decline[s] to engraft [unwritten] prohibition[s] onto the

constitutional language.” Id. This Court should do the same. Because nothing in

the Constitution prohibited Wells Fargo from referencing an internal loan number,



                                           20
pursuing non-judicial foreclosure, or demanding payment within 30 days, Farkas’s

complaints about the notice of default cannot support a constitutional claim.

             2.    Farkas has not even alleged facts that would support a
                   claim for breach of contract.

      Unable to identify any constitutional requirement that was potentially

violated, Farkas asserts that Wells Fargo failed to comply with the DOT. (See Br.

at 17-21.) That unpleaded claim is not at issue. In any event, the notice of default

establishes – on its face – that it includes all information required by the DOT.

(Compare CR:79 (DOT requirements), with CR:87 (notice).) Contrary to Farkas’s

apparent belief, nothing in the DOT:

       required Wells Fargo to include any particular type of “loan number” on
        its notice of default (or prohibited foreclosure counsel from including its
        own internal reference number on the notice);

       required Wells Fargo to specify the type of foreclosure remedy that
        would be conducted (or prohibited foreclosure counsel from making a
        reference to a “non-judicial foreclosure in accordance with the terms of
        the Note and the Deed of Trust and applicable law”); or

       required Wells Fargo to demand payment “not less than 30 days from
        the date notice [of default] is given” (or prohibited foreclosure counsel
        from demanding payment “within 30 days” of the date the notice of
        default was given.

Consequently, Wells Fargo (through foreclosure counsel) could not have

“breached” the DOT by referring to an internal loan number, stating that it had

been “requested to pursue a non-judicial foreclosure,” or demanding payment

“within 30 days.” (CR:87.) As the trial court correctly concluded, Farkas’s faulty


                                         21
constitutional theory and groundless allegations are insufficient to survive

summary judgment.

       C.      The trial court’s judgment may also be affirmed on no-evidence
               grounds.

       Implicitly recognizing his burden to negate all grounds for summary

judgment,6 Farkas falsely contends that “Wells-Bank fails to challenge specific

element of complaint regarding liability under TEX. CONST. ART. XVI,

§50(a)(6)(Q)(x).” (Br. at 23.) But again, Farkas fails to support his “argument”

with any citation to legal authorities or the record. And again, his “argument” is

premised on an invalid theory of liability.

       Section 50(a)(6)(Q)(x) is the provision that specifies methods to cure a

failure to comply with requirements applicable to new extensions of credit. None

of those methods have any application here, because Farkas has never complained

that the initial extension of credit violated section 50. Although he contends that

“there is no support” for an argument that “the constitutional obligation to fulfill

the terms of extension of credit” only applies to “origination of the extension of

credit” (see Br. at 22), he ignores the Texas Supreme Court’s recent decision in
6
  This Court has repeatedly recognized that, “[w]hen the trial court does not specify the basis for
its summary judgment, the appealing party must show it is error to base it on any ground asserted
in the motion.” Pickett v. Tex. Mut. Ins. Co., 239 S.W.3d 826, 840 (Tex. App.—Austin 2007, no
pet.) (citing Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995)); accord First Am.
Title Ins. Co. v. Strayhorn, 169 S.W.3d 298, 303 (Tex. App.—Austin 2005), aff’d 258 S.W.3d
627 (Tex. 2008); Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 160 S.W.3d
657, 671 (Tex. App.—Austin 2005, no pet.). If the appellant fails to meet this burden, “the
summary judgment must be affirmed.” Voice of the Cornerstone, 160 S.W.3d at 671.


                                                22
Sims, 440 S.W.3d at 17. That decision makes it amply clear that the requirements

in section 50 only apply to “new extensions of credit.” Id. Farkas thus spins in

circles when he asserts that “Wells_Bank had ample opportunity to cure” but

“chose not to cure.” (See Br. at 21.) Absent a violation, there is nothing to cure.

      Farkas is also wrong in asserting that Wells Fargo did not allege specific no-

evidence grounds relating to his faulty constitutional theory. In its motion for

summary judgment, Wells Fargo argued:

      Plaintiff has no evidence that the loan was invalid at the time of
      origination or somehow later became invalid. Moreover, Plaintiff has
      no evidence that any alleged violation was not cured, as no non-
      judicial foreclosure sale occurred.

(CR:37.)

      Farkas cannot overcome his failure to allege and present evidence of a

constitutional violation by asserting that Wells Fargo failed to cure an imaginary

violation. Farkas presented no evidence of violation in response to Wells Fargo’s

motion in the trial court, and he cites none on appeal. For this additional reason,

the trial court’s summary judgment on the constitutional claim should be affirmed.

      To sum up: Farkas has never identified any constitutional requirement that

was allegedly violated. When, as here, the terms of the original extension of credit

comply with the Constitution, there is no constitutional violation. See Sims, 440

S.W.3d at 17; Robinson, 391 S.W.3d at 595. As the trial court correctly concluded,

Farkas’s “constitutional” claim fails as a matter of law. (See CR:604-05.)


                                         23
III.   The Trial Court Did Not Err in Granting Summary Judgment on
       Farkas’s Claim for Violations of the Texas Debt Collection Act.

       Farkas’s four-page issue on his Texas Debt Collection Act claim wrongly

assumes that the only dispute is “over whether Wells_Bank’s actions were

wrongful.” (See Br. at 24.) To the contrary, Wells Fargo moved for traditional

summary judgment on two grounds: (i) the “factual allegations” on which Plaintiff

bases his TDCA claim are conclusively disproven by the summary judgment

evidence and, therefore, “fail as a matter of law”; and (ii) “Plaintiff’s TDCA claim

is barred by the economic loss rule.” (CR:28-29.)          In addition, Wells Fargo

moved for no-evidence summary judgment on multiple grounds, including two that

are particularly relevant on appeal: (i) “Plaintiff has no evidence that Wells Fargo

threatened to take action prohibited by law”; and (ii) “Plaintiff has no evidence that

the alleged violations of the TDCA caused him damages.” (CR:37-38.)

       Farkas attempts to show “error” by relying on conclusory assertions that

Wells Fargo “threatened an act prohibited by law.” (Br. at 24.) He also contends

that there is “ample evidence of the conduct actionable under [the TDCA].” (Br. at

25.) But there are multiple, fatal problems with his approach.

       First, when, as here, the appellant fails to negate all grounds for summary

judgment, “the summary judgment must be affirmed.” Voice of the Cornerstone,

160 S.W.3d at 671.




                                         24
       Second, Rule 38.1(i) of the Texas Rules of Appellate Procedure requires an

appellant’s brief to “contain a clear and concise argument for the contentions

made, with appropriate citations to authorities and to the record.” TEX. R. APP. P.

38.1(i). Farkas’s “argument” on the TDCA claim contains no citations to the

record – and no meaningful citations to any legal authorities.7 When, as here, a

brief fails to comply with the requirements of Rule 38.1(i), a party waives the

appellate points intended for the court’s consideration. Rockwall Commons

Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 331 S.W.3d 500, 509 (Tex. App.—El

Paso 2010, no pet.).

       Third, Farkas’s conclusory “argument” is contradicted by the record and the

law. His TDCA claim appears to be premised on the same unsupported allegations

he used in trying to salvage his constitutional claim – allegations that (i) “Wells

Fargo Bank, N.A.” “misrepresent[ed]” itself as “Wells Fargo Home Equity

Group”; (ii) Wells Fargo “misrepresented” the amount of Farkas’s debt; and (iii)

Wells Fargo “threatened non-judicial foreclosure of the property.” (See Br. at 26.)

The first two allegations are contradicted by the record, which may be why Farkas

omits any citations to it:




7
  He does make generic references to “Tex. R. Civ. P. 166a(c)” and “TEX. FIN. CODE § 392.001,
et seq.” (See Br. at 25.)


                                             25
       (i) “‘Wells Fargo Home Equity’ is a division of ‘Wells Fargo Bank, N.A.’

and is not a separate legal entity.” (CR:45; see also CR:64 (letter from “Wells

Fargo Bank, N.A.; Home Equity Group”).) There is no competent evidence to the

contrary. Unsupported assertions are insufficient for relief on appeal. Liberty Mut.

Ins. Co. v. Griesing, 150 S.W.3d 640, 648 (Tex. App.—Austin 2004, pet. dism’d

w.o.j.).

       (ii) The variations in “the amount of debt” reflect differences between the

amounts required to cure Farkas’s default versus the amounts requires to pay off

Farkas’s entire loan.    (See, e.g., CR:45, 62-63, 87, 203-06.)      These differing

amounts also varied over time. (See id.) There is no evidence to show support

Farkas’s theory that these variations somehow amount to “misrepresentations.”

       As explained (supra at 18-19), Texas law expressly permits a lender “who

has contracted for the right of non-judicial foreclosure under a power of sale

provision [to] choose to pursue the special procedure found in Rule 736 to obtain

an order allowing it to proceed with a non-judicial foreclosure . . . .” See Steptoe,

2015 WL 1263128, at *3. Thus, the statement that foreclosure counsel “has been

requested to pursue non-judicial foreclosure process in accordance with the terms

of the Note and Deed of Trust and applicable law” (CR:87 (emphasis added)) is, as

a matter of law, not a threat to do something in violation of the law.




                                          26
      Fourth, because the “threatened” foreclosure never occurred, Farkas cannot

cite any evidence showing that he sustained actual damages as a result of the

alleged violation, as required to recover on a TDCA claim. See TEX. FIN. CODE §

392.403(a)(2).

      For any or all of these reasons, the trial court’s summary judgment that

Farkas take nothing on his TDCA claim should be affirmed.

IV.   The Trial Court Did Not Err in Granting Summary Judgment on
      Farkas’s Fraudulent-Lien Claim.

      Farkas’s final argument is largely pasted from his response to Wells Fargo’s

motion for summary judgment. (Compare Br. at 29, with CR:555.) As a result, it

suffers from some of the same fatal defects that plague his other arguments: it

contains no citations to the record, and it contains no argument, supported by

citations to legal authorities, negating all grounds for summary judgment. Those

defects, alone, are enough to condemn his point.          But there are additional

problems, the most fundamental of which is that Farkas’s argument is premised on

another false theory. In short, he assumes that any document relating to a home-

equity loan (e.g., a notice of default) is a “lien” and, therefore, any alleged

“misrepresentation” in the “lien” (e.g., a reference to the “wrong” loan number)

makes the lien “fraudulent.” It is hardly surprising that he cites no legal authority

to support this remarkable proposition.




                                          27
         Under Chapter 12 of the Texas Civil Practice and Remedies Code, a “‘[l]ien’

means a claim in property for the payment of a debt and includes a security

interest.” TEX. CIV. PRAC. & REM. CODE § 12.001(d). In the mortgage context, a

deed of trust is a lien; a notice that a borrower is in default is not. See Lassberg v.

Barrett Daffin Frappier Turner & Engel, L.L.P., No. 4:13-CV-577, 2015 WL

123756, at *5 (E.D. Tex. Jan. 8, 2015); Jaimes v. Fed. Nat’l Mortg. Ass’n, 930

F.Supp.2d 692, 697 (W.D. Tex. 2013)); see also Jones v. JP Morgan Chase Bank,

N.A., No. 4:13-CV-456, 2014 WL 2996673, at *8 (E.D. Tex. July 3, 2014)

(agreeing that “the assignment, appointment of substitute trustee, and foreclosure

notices are not liens, and section 12.002 is not applicable to this case.”); Perdomo

v. Fed. Nat’l Mortg. Ass’n, No. 3:11-CV-734-M, 2013 WL 1123629, at *5 (N.D.

Tex. Mar. 18, 2013) (collecting cases holding that an a lender’s use of an

assignment, notice of foreclosure, or substitute trustee’s deed are not actionable

under Chapter 12); but see Golden v. Wells Fargo Bank, N.A., 557 Fed. App’x 323,

327 (5th Cir. Feb. 20, 2014) (unpublished) (recognizing a split in authority as to

“whether a document assigning a deed of trust constitutes a ‘lien or claim’ under

Section 12.002,” and noting that the “majority of federal district courts have held

that a document assigning a deed of trust does not qualify as a ‘lien or claim’ under

Section 12.002”) (citations omitted).8


8
    As this Court has recognized: “Federal authority is persuasive here because a great amount of


                                                28
       The statute further provides, in relevant part, that:

       A person may not make, present, or use a document or other record
       with:

       (1) knowledge that the document or other record is a fraudulent court
       record or a fraudulent lien or claim against real or personal property or
       an interest in real or personal property;

       (2) intent that the document or other record be given the same legal
       effect as a court record or document . . . evidencing a valid lien or
       claim against real or personal property or an interest in real or
       personal property; and

       (3) intent to cause another person to suffer . . . financial injury . . . .

Id., § 12.002(a).

       Without any citation to the record, Farkas accuses Wells Fargo of

“shirk[ing]” its “obligation to disprove an element” of Farkas’s claim. (See Br. at

29.)   But Wells Fargo’s motion set forth several reasons – all supported by

citations to legal authorities – why Farkas’s fraudulent-lien claim fails as a matter

of law. (See CR:30-34.) Any one of those grounds is a sufficient basis upon

which to uphold the judgment. Farkas negates none, and that is fatal. See Voice of

the Cornerstone, 160 S.W.3d at 671.

       As in the trial court, Farkas has no answer to Wells Fargo’s arguments that,

as a matter of law, complaints about documents used to foreclose on a lien are not



home-mortgage litigation in Texas is tried in its federal courts, applying Texas foreclosure law.”
Bierwirth v. BAC Home Loans Servicing, L.P., No. 03-11-00644-CV, 2012 WL 3793190, at *1
n.3 (Tex. App.—Austin Aug. 30, 2012, pet. denied) (mem. op.).


                                               29
actionable under Chapter 12 if the underlying note and deed of trust are valid. (See

CR:555 (citing authorities).) So he attempts to divert the Court’s attention with

assertions that “the statute does not require recordation of a document but rather

merely making, presenting, or using the document,” and that “[e]ven a lis pendens

is actionable under TEX. CIV. PRAC. & REM. CODE § 12.002.” (Br. at 29.) But

those assertions are meaningless when, as here, the documents that allegedly

provide the basis for a Chapter 12 claim do not falsely “evidenc[e] a valid lien or

claim against real or personal property.” See TEX. CIV. PRAC. & REM. CODE

§ 12.002(a)(2). Because Farkas does not contest the validity of the underlying note

or DOT, his Chapter 12 claim fails as a matter of law. Marsh v. JPMorgan Chase

Bank, N.A., 888 F. Supp. 2d 805, 813 (W.D. Tex. 2012).

      Farkas also fails to negate Wells Fargo’s no-evidence grounds for summary

judgment. Assertions about burden-shifting are no substitutes for evidence. And,

as in the trial court, Farkas cannot cite any evidence that even remotely suggests:

       “a fraudulent lien or claim [was] made, presented, or used by Defendant”;

       “Defendant had knowledge that a lien or claim made, presented, or used

         was fraudulent”;

       “Defendant made, presented, or used a fraudulent lien or claim with

         intent that it be given the same legal effect as a valid lien or claim”; or




                                          30
       “Defendant made, presented, or used a fraudulent lien or claim with

          intent to cause Plaintiff injury.”

(CR:38-39.)

      There is no such evidence because Farkas’s fraudulent-lien claim is

premised on a false theory. For any or all of the above reasons, the trial court’s

summary judgment on the fraudulent-lien claim should be affirmed.

                                        PRAYER

      For these reasons, Appellee Wells Fargo Bank, N.A. prays that the trial

court’s take-nothing judgment be affirmed in its entirety. Wells Fargo also prays

for any additional relief to which it may be entitled.


                                         Respectfully submitted,
                                         LOCKE LORD LLP

                                   By: /s/ Susan A. Kidwell
                                       Susan A. Kidwell
                                         State Bar No. 24032626
                                         skidwell@lockelord.com
                                       B. David L. Foster
                                         State Bar No. 24031555
                                         dfoster@lockelord.com
                                       John W. Ellis
                                         State Bar No. 24078473
                                         jellis@lockelord.com
                                       LOCKE LORD LLP
                                       600 Congress Avenue, Suite 2200
                                       Austin, Texas 78701
                                       Telephone: (512) 305-4700
                                       Facsimile: (512) 305-4800

                                           31
Robert T. Mowrey
 State Bar No. 14607500
 rmowrey@lockelord.com
LOCKE LORD LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telephone: (214) 740-8000
Facsimile: (214) 740-8800

COUNSEL FOR APPELLEE WELLS FARGO
BANK, N.A.




 32
                         CERTIFICATE OF COMPLIANCE

      I certify that the foregoing Brief of Appellee Wells Fargo Bank, N.A.

contains 7, 265 words (excluding the sections excepted under Texas Rule of

Appellate Procedure 9.4(i)(1)).

                                             /s/ Susan A. Kidwell
                                                 Susan A. Kidwell




                            CERTIFICATE OF SERVICE

      I certify that on April 20, 2015 a true and correct copy of the foregoing was

served by EfileTx.gov upon the following:

Mr. William D. Davis                        Mr. Luke Madole
bdavis@capital-ip.com                       luke.madole@buckleymadole.com
DAVIS & ASSOCIATES                          BUCKLEY MADOLE, P.C.
P. O. Box 1093                              14841 Dallas Parkway, Suite 425
Dripping Springs, Texas 78620               Dallas, Texas 75254
Counsel for Appellant Janos                 Counsel for Appellee Brice, Vander
Farkas                                      Linden & Wernick, P.C. (n/k/a Buckley
                                            Madole, P.C.


                                                    /s/ Susan A. Kidwell
                                                        Susan A. Kidwell




                                        33
HYPERLINKED MATERIAL
                                CAUSE NO. D-1-GN-11-003692

JANOS FARKAS,                                    §               IN THE DISTRICT COURT OF
          Plaintiff,                             §
                                                 §
V.                                               §                   TRAVIS COUNTY, TEXAS
                                                 §
WELLS FARGO BANK, N.A. AND BRICE,                §
VANDER LINDEN & WERNICK, P.C.,                   §
          Defendants.             §                                201 ST JUDICIAL DISTRICT


                             DECLARATION OF MICHAEL DOLAN

STATE OF CALIFORNIA                   §
                                      §
COUNTY OF LOS ANGELES                 §

       I, Michael Dolan, hereby declare the following:

        1.     "I am of sound mind, over the age of twenty-one (21) years, and capable of

making this Declaration. I am fully competent to testify to the matters stated herein. I have

personal knowledge of each of the matters stated herein, and they are true and correct.

       2.      I am employed as a Research and Mediation Manager for Wells Fargo Bank, N.A.

("Wells Fargo"). I am also a custodian of the records of Wells Fargo. I have also personally

reviewed Wells Fargo's records regarding the mortgage debt at issue in the above-captioned

lawsuit (the "Loan").

       3.      The Loan Records attached hereto are kept by Wells Fargo in the regular course

of business, and it was the regular course of business of Wells Fargo for an employee or

representative of Wells Fargo, with knowledge of the act, event, condition, opinion, or diagnosis

recorded to make the records or to transmit information thereof to be included in such records;

and the records were made at or near the time or reasonably soon thereafter.


                                                                 EXHIBIT
DECLARATION OF MICHAEL DOLAN                                                              PAGEl OF4

AUS:0567447/00358:551946v2                                         1
                                                                                                      43
        4.      Attached hereto and incorporated by reference, are true and correct copies of the

following records.

        •    Exhibit 1-A is a true and correct copy of the Wells Fargo Home Equity Account
             Agreement and Disclosure Statement executed on or about January 11, 2007 by Janos
             Farkas.

        •    Exhibit 1-B is a true and correct copy of the Reinstatement Quote for the Loan at
             issue in this suit that is good through November 1, 2013.

        •    Exhibit 1-C is a true and correct copy of the Payoff Statement for the Loan at issue
             in this suit that is good through November 1, 2013.

        •    Exhibit 1-D is a true and correct copy of a letter dated February 7, 2011, sent to
             Plaintiff Janos Farkas concerning the Loan at issue in this suit.

        •    Exhibit 1-E is a true and correct copy of relevant portions of Wells Fargo's internal
             loan notes concerning the Loan at issue in this dispute.

        5.      The attached records are the originals or exact duplicates of the originals.

        6.      As a Research and Mediation Manager for Wells Fargo Bank, N.A., part of my

job responsibilities include researching the facts of mortgage loans associated with litigation for

which Wells Fargo acts or acted as the mortgagee and/or mortgage servicer. I have gained

personal knowledge of the facts stated herein through my experience in the mortgage industry,

my job duties and responsibilities, my personal investigation, and my review of the Loan

Records. Prior to serving as a Research and Mediation Manager for Wells Fargo, I have been

employed by Wells Fargo and its predecessor institutions and held various positions, including

the position of vice president in charge of portfolio retention and operations analyst. During my

tenure as vice president of the portfolio and retention group, I managed a team that included all

of the loan servicing functions of the company.        During my 33 years of experience in the

mortgage industry, including 28 years as an employee of Wells Fargo and its predecessor

institutions, I have created, reviewed, and analyzed hundreds of loan records, including

DECLARATION OF MICHAEL DOLAN                                                              PAGE20F4

AUS:0567447/00358:551946v2

                                                                                                      44
amortization schedules to determine total principal and interest payments owed based on the

terms of the loan. I am familiar with Wells Fargo's lending and mortgage servicing practices,

including the various groups and divisions within Wells Fargo through which it carries out those

practices. I am also familiar with Wells Fargo's accounting systems and methods of calculating

and loan payoff and reinstatement quotes. I am familiar with Wells Fargo's record keeping

system. I have had access to and reviewed various corporate and business records of Wells

Fargo, and have had the opportunity to review the business records and account information

related specifically to the Loan at issue in this case. All statements made herein are true and

correct and based upon my personal knowledge.

        7.       The Loan Records reflect that Wells Fargo Bank, N.A. began acting as the Loan's

mortgage servicer on or around January 11, 2007 and continues to be the mortgage servicer.

        8.       "Wells Fargo Home Equity" is a division of"Wells Fargo Bank, N.A." and is not

a separate legal entity. Home equity loans and lines of credit were available through Wells

Fargo Home Equity Group. Wells Fargo Home Equity assisted with the account management of

the Loan at issue in this dispute.

        9.       Plaintiff has not made a payment on the Loan since August 2010.

        10.      The amount required to cure Plaintiffs default on the Loan as of March 22, 2011

was $2,013.30.

        11.      The amount required to cure Plaintiffs default on the Loan as of July 25, 2011

was $4,002.64.

        12.      Because of Plaintiffs default on the Loan, Wells Fargo, through its foreclosure

counsel, filed an Application for Court Order Allowing Foreclosure of Lien Under Tex. Const.




DECLARATION OF MICHAEL DOLAN                                                          PAGE30F4


AUS:0567447/00358:551946v2

                                                                                                   45
WeDs fargo Banlc, N.A,
AGREEMENT DATE: OI-11-2Cill7
ACCOUNT#: 650..~1998
REFERENCE##; 20063367500009
                                            h~
                                        t'\.j '                                                  I....
                                                                                                         - ptt\811'
                                                                                                                      .
                                                                                                                      1

                        Wells Fargo Home Equity Account Agreement
                        and Disclosure Statement (the "Agreement")
                                                                                                    lbt-__
                                                                                                    -
                                                                                                    l


THIS IS AN EXTENSION OF CREDIT AS DI!PJNED BY SECTION SO(a)(6) and (t), ARTICLE XVI OF THE
                                            TEXAS CONSTITUTION.

Borrower NU~e: 1ANOS FARKAS

Pnper&y Addrus: 6315 FARMDALE .LN, AUSTIN, TEXAS 78749

MaiUag Addretl for BUIIna Purposet (If different): PO BOX 180383, AUSTIN, TX 787t8
Credit Line Lfmlt1 103.441.00


SECfiON J: MY ACCOUNT AGREEM£NT
!n thit Agreement, lhe words. "1,'' "me," "my," and "Borrower" (which also means "we," "us," "our," and
 'Borrowers," if more than one customer signs flolow) rofet to eacb person who sipa this Aa-ment. Tho words
"you," ''your," "Lender," and "the Bank" rercr to Wo1l11 Fargo Bantc. N.A. and any successor or assign or
subsequent holder of this Aareemenl. This Agreement governs my Wd/& F11'1q HolM Epi(V .4cuurtt (the
"Account'') with lire Bank. If moro chan OIMI person lllp1 Ibis Aafeement, we arejolatly aacl individually bound
by its cenns. We ue separately llable co lhtt Bank for the entire a1D011nl owed on Cbc AAx:ount. We are each
                                   .
liable as a principal and 1101 merely as a auaranror, even if one or more: ofudoea 1101 use the Aoc:ounL
This Agreement is made whhout r«~ co olher asscr.s of any owoer ofdre property securing this Agreement
or any owner•a spouae, unless dte owner or ownet'8 spouse oblatneclllte loan evidenced by thit Agreement by
a~uaJ fraud. lfl or any person or enlily acting on my direction or will! my lcllowlcdge or oonseat commits ac1ua1
ftaud in oonneclion wllh lho loan appllcatioo procas or die documents executed In co!Diection wilb lhis
A,reement, I will be lblly and personally liable under lhi& Agreement.                                ··
SECfiON 3: SECURITY INTEREST
This Agreement is inteuded 10 evidei!Ge en "Exlension of Ctcdit" as lhat term Is defined by Section SO(al(6) and
(t). Articlo XVI oftbe Texas Constihllion, and is sec:ured by a deed of trust including all modlftcacions, addellda
and amendments thereto (tho "Seourity Jnmumcnt''), signed the same date as lhi.s Agreement. The Security
IIJslnlment pves you a security intcmt In my homeslcad located atlhe address abown abow (the "Propmy").

SECfiON 3: MY WBLLS FARGO BOMB HIJUITY ACCOCINT
My Account ls a revolving account. My credit limit fs shown above and will be displayed oo each of my billing
statements. During !he Draw PCII'iod {del(;n"bcd below}, my available credf& will be my Clfoclit limit minus the
sum of all W198id AdvantcS posted to my AecounL During the Draw Period. as I Rpllf the principal balance J
owe on my Account, my available c:redic will be replenished. (~not to request an Advance Chllt would oause
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                                                                                                                          47
my balance to exceed my credit limiL If at any time lhe balance ofmy Account. exceeds MY CRdit limit,! agree to
immediately repay the amount lhat exceed. my credit Umil.

SECTION 4: MY ACCOUNT DURING THE DRAW PERIOD
DBA'Y PERIOD
My Account has a Dtaw Period of 10 ytat& and one month from the date of this Agreement during which I may
~est    Advance.,. At the end of tbe Dnsw Period, I may requostlhaf the Bank renew the Draw Period for an
addilionalJO year& and one month. The Bank may, at lts option, approve my request ro extond the Draw Period.
I may not obtain Advances after tho Draw Period ends.
Whon the Draw Period ends, the OUUialldln& unpaid Una of Credit Advances will convert to a Final Fi~ted Rate
Advance as detailed below in Section S, MY ACCOUNT DURING THE REPAYMI!NT PP.R.IOD.
ADVANCES DQBJNG DIE DRAW PIRIOD
Tbere are ltypas oC Advances on my Account:
      • UneofCm!itAdwnees
      • Fixed Rato Advances
Tho Bank must llonor my request for Line of Credit Aclveccs aod FjKecJ Rate Advances (collec:tlvely,
''Advances..) • Ions as I am Ill compliance with alltenns or thi.~ Agreeruent, including all modit1c:allons,
addenda and amendmentsiO 11, and the Seourity lnalnlmel\t.
As I liSe my Aceo1111t, my a\llilable oredit will be rny credit limit millu the sum of all unpaid AdvanC811. As I
~ th~ principii balance J owe on my Account, my available credit will be Rplenished. I will not request an
Advance 1hat would lliiUse lhe balance in ruy. Account 10 eJCoeed my credit limit, or which would violate the
terms oftfds Apeen1ent or any law. If J do CKceed my credit limit, lasree to immediately repay tho amount that
e~eceeda my credit limit.

I understand that the Baok may refuse to allow any Advance if the Advanca does not comply with eveey
requirement or thi.o: Agreement. The Bank may choose at its solo discretion to make an Advance Chat does not
comply. The Bank may allow any Advances in any sequence convenient 10 the Bank.
The Bank is authorized to make en Advance &om my Account when it receives a request pvoa by any person
who hu signed this Asreement. If there are conflicting dcmaruls made by any ofua who signed lbi$ A.pcment,
die Bank lias tho option to Rlbse to make any Advance lbal has not been reqlltMed by all of u togelber. The
Bank will not be liable for any loss, expe~~R, or c:osl arising out of any telephone request, including any
fi'auduleat or lllllllthorizcd telepftone te~tuest, when the Bank acts upon such matructloJIB believing tbem to be
genuine.
Section 50(t), Arfiele XVI or tile Texas Constitution Omits rhe maximum principal a1110unt oqtstandlog
and debits and ad¥anetJ apbast tile Account aader ctrt..n tk&!UD!Stamlft. I anderstand that the Baok
may rel\tse co aRow any Advantt If th• Asb'•nse dog not tSJI!PIY with §esdon 9ft), ArJislt XVI of the
Texa' <:oll!tltp!lsn.
LINE OF CUPIT AQVANCE§
Each Lfnet ofCredit AdV811Ce I roq,uest will be In the amount of$4,000.00 or greater.

LINE OF CUDf[ ADVMCJMETWJD§
Wbire my Account is not in default. closed, or siiSpcnded, I may obtain a Line of Credit Advance by:
   Req~atlng a Line of Credit Advance In person at any Bank bnmoh
   Req~~et~ti118 a Line ofcredit Ad~ by phone
  Tfansfc:nins fimcfs by uslns We& Fareo Online""                                                       •
   In other wayx the Bank authorizes ftom time to time, and BS permitted by§ SO(t) Article XVI, of the 1 exas
   Coastitucion.

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LINE Of WDrr AIWAJilCIS PERIQDlC 'INANC§ CHABCIS
Finance clla'les begin to accme on Uno of C~it Advances immediately when fUnds an~ advanced. The
periodic FINANCE CHARGE for a billiJig ~:ycle is the sum of the poriqdic FINANCE CHARGE for each day
in dae bDiiDg cy.. l'o determine the periodic FINANCE CHARGE for a day in the blUing t;yclc, multiply the
Daily Periodic Rite by tha daily balnlce for Une of Credit Mvances (including current lriDsaclions) each day.
To dctennlne the daily balance, take the Line of Cn:clit Advanaes balance at abe beJillllina of each day
(excluding any unpaid FJNA'NCE CHARGES or olhor c1u1rp1c provided for aDder this Apeement), add any
new Uno of Cmlit Advab~:CJ~~, and subtract any paymeJIIs or oredilll that apply to the repayment of Line of
Cm!it Advances. Tile J'e8Ult i& the daBy balaneo.
The Daily Periodic Raro for Line or Cfedit Advances is equal to t/365 (1/366 durin& leap years) of an tndex
plue a Marain. The Index is the hipat Prime Rale as published iJIIho Western Edicion of 'llle Wall SJretJI
Jout7Ull ''Money Rates" table. ~e Marafn, the fnltfal Daily Periodic Rato, and tho initial ANNUAL
PERCENTAGE RATE, are cacb disclosed below. Tbo Margla wiD lncrcaso if the Alllomatic Payment feature
described mSeclfon 6 below is tennllllted for lillY msoJt. Tho ANNUAL PERCENTAGE-RATE dOe$ not
include costs other than intOJeSI.

The Daily Periodic Rate 4Rd eomspond,ina ANNUAL PERCSNTAGE RATE on my Line of Credit Advances
will be acUuatcd on the ftmt day of every billing cyofe, a sin& the lase Index Yatue publithecl darina the precedins
billiDJ cycle. Therefbrc. the Daily Periodic: Rate for Lino of Credit Advances may cbanp (increase or decRase)
• often aa once each billing cycle bwd on change~ in fltc Index. llllllfenlland that any Jmreuo may clluae me
to make larger monthly pa)'Ments.

W!mME RATE CAP FOR Y~E or cu;mT APYANC£S
   DaUy Periodic Rate for Line ofCredit AdYIIt\teS wBiuever exceed 0.049315% (correspondblg ANNUAL
PBRCENTAG8 RATE of J8.00%). Thia is lhe Llfotimo Rato Cap for Uno ofCredit Advances.

LIFETIME llA'rt; fLOOR FOR LINE OF CUPIT .ADVANCE$
The Daiay Periodic Rate for Line of Credit Advances wiU never fall below O.OJ1616% (conespondiq
ANNUAL P.BRCENTAG£ RATEof 4.240%). This is the Llfi:timc: Rate Floor for Line ofCnldit Advances.
MY INWAL ftAD !OR LINI OF QEDITADVANCf.S
As diSClUued abo~. my Dally Periodic Rate is based on the: value of the lmfeJ~ plus a Maraln. Tile lolrial Index
value thai appttea ao my Ai:cowu will be tlte value of the Index oa the day I open my Accouat. The JVUowlng
disclosures ate based on Clio value ofthe Index In e«ect on 01..(19-2007. I UlldemaruJ that ifl open my Acoounc
after this dace, my act~~allndex value, Dally Periodic Rate aud conapondlng ANNUAL PERCENTAGE RATE
may be hialler or lower tllan the£~'" dlaclosed below.                              ·
My Margin for Une ofCmiit Advances Is equal to NEGAnVE FIVE HUNDRED TEN THOUSANO'lliS Of
ONE PERCENTAGE POINT percentage points (-O.SJO%). As &IUIIlt, unleas the Lif'olime Race Cap for Line of
CredltAdvanees or Lifetime Race Floor for Line of Credit Advances require. the Bant to apply a different rate to
my Acoouot, my Initial Dally Periodic Rate 1&0.021205% (cozmpondiiiJ ANNUAL PERCENTAGE KATE of
7.740%).

JdNE OP CBJDIT ADVANCE$ MINIMyM MONTULY PAYMENT
During the Draw Periocl, my Minimum Monthly Payment for Une ofCreclit Advances shall be equal to:
Tbe twm ofall accmedand unpaid periodic FINANCE CHAROES on Line ofCredit Advances, plus credit
iM\11111\Co premiums, Ifany.

£1XEQ MD ARV,ANCIS DURJNGTHE I)MW PERIOD
I haw lhe oplion 111 convert outstanding 1111J1aid Line of Credit Actv.nces to Fixed Rate Advances during the Dra!'
Period based on cmlic limit availability. The minimum Fl~ted Rate' Advance during tbf) Draw" Period .IS
S 10,000.00. I may ~ueat up co 2 FiXed Rate Advallce& esch year. For~ of this nd~. tho. ftiSt )'ear" wtll
beain on the <late of tbfs Apemellt. Subsequent~ will begin on each aunlvcreary date ofthiJ Agree111ent. I
may .bave no more than 3 Fixed RatoAdva!K:C$ oiiiStanamg at any one lime. I must sctcot the repaymen' tenn for
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                                                                                                                            49
lhct Fixed Rate Advance at tbe time J~uest the Fixed Rate AdviiiiCe.
1Dtel'flt·ODI9 Paymtat Option:
If I seteotlhe lntatst-only pa~elll optloa fOI' a fixed Rate Advance during tha Draw P~od (see the Reclion
below titled "fiXfiD RAT£ ADVANCF.S MINIMUM MQNTHLY PAYMENT PYIUNG T1B DRAW
PEBIOJ"), tha repayment term must be at lea&l ono year and not more than the lesser ot J0 yean; or 1he
remainihl tenn otthe Draw Period miRlls one monlh. At the etUI oflhe term, the balance will convert co a Line
of Credit Advance.
Full)' A1110rtizlna PaJntent Optfon:
If I Hlcct the fUlly amortizing payment option for a Fixed Rate Advan~ durinJ the Draw Period (sec tbe secllon
below lftled "EIIIiiR BAD ADVANCf.S MINJMPM MONIJU,X PAYMENT DURING THE DBAW
RBJQJl"), tbct RPII)'mllll term must bt at leas& one year and not more tban the IC~Sfer of 10 years or the
remaining term oftbe Draw Period minus one month.
FIXED BATE ADVMJCE METHODS DUBJNGTIIE DBt\W PgiOD
While my Acc:ountlll not In dcfllult,closed, or saspencled, I may obtain a Fixed Rate Advance by:
       •R.equutlna a Fixed Rate AdVIInoe In penon at any Bank branch.
       ·Requesting a Fixed Rate Advance by phone.

fiXED BAD A~I!S PERIQDIC fiNANCti CQARQIS DYBING THE PBAW PEBIOD
fixed Rare AdVIRm will acc:ruo periodic FINANCE CHARGES beglnnl111 co the: day lhlt the Bank convens any
Uae of Credit Advances to a Fixed Rate Advance. I will bo charged a periodic FINANCE CHARGE on all
ouls1Mdina unpaid Fixed Rate Advances eacb day al a fixed Daily Periodic Rate. To determine lhe periodic
fiNANCE CHARGE for a day In the bOling c~le, mullip!y thtl Dally Periodic Rare by the dally balance for the
Filed Race Ad\IIJIIle (includlq current transactions) each day. To dctennl~ the dally balallce for die fixed
Rete Advance. take the F'IXed Rate Advance balance at the bcginnina of each day (oxoludin& any llnJNiid
FINANCE CIIARGEs·or other dllrges provided for undor Ibis Agreement), and :lllblriiOt any payments or
credi1& that apply co the repaymeat of the Fixed Rate Advance. The ralllt i• tbeclaily balanca.
The Dally Periodic Rate for Fixed Race Advanoes is C4ual to 1136S (11366 dlllina leap ytartl) or an Index plus a
Marsin. The lndu Is the highest Prime Rate as published fo tbe Western Edition of The Wall Sttwl Journal
..MOM)' Rates" table. The Bank will use the valw or the lndox in efttc:t on the last bus IMP clay prec:edin& the day
tbe Bank n:ceivee my request for a Fixed Rate Advuce. The Margba for Fixed Rate Advancte I& eight
poroemase points (8.000%). The Bank may, In its sole dlscmion. apply a Jowor Meq:in. The GOJRSPI)nding
ANNUAL PERCENTAGE RATE for Fixed Rate Advances will ucver be mote thaa the Ufetimo Rate Cap for
Fixed Rate Advances shown below. The ANNUAL PERCENTAGE RATE does 110t include costs other than
interest.                         •

The Mar&in for any oxi&ling Fixed Rare Advai1Ce$ will iucrease by onu quarter of one percentage poilll (0.25%)
if tbe Automatic Payment feature ralmninaled, as described ill SecliOA 6, below. Therefore. tbe Daily Periodic
Rate for Fixed Rate Advances may also increiiK 11 lease o~~ee during the Aocount based en an incroese in dto
Margin wben the Automatic Paymeol fe~ture is tenninated. Any euah increase wfJI RSUit in an increase in the
then outstandlna Fixed Rate Adv•nce Minimum Montllly Payments. If I selected the intmlst-only paymont
optlcn f'or a Fixed Rate Advame, the Fixed Rate Advance Minimum Monthly Payment for that AdvaJU:o will
equal Ole sum of all acc:nu:d and unpaid periodic FINANCE CHARO.ES on the remaining blllmce of the ~ed
Rate Advance at the Increased COJmpandina ANNUAL PERCENTAGE RATE. If I selected thct fUlly
amortizing payment opefon for a Fixed Rate Advance, tha Fixed Rate Advance Minimum MonthlY Payment for
that Advance will be nset at an amount suffieientto repay the remainina balance of the applicable Fixed Rate
Advance widlln its applicable term In $UbstantiaDy equal, fidly amoJtizing monthly payments at its increased
corraspon41ng ANNUAL PERCENTAGE RATE.
YEIJ'IME RATECAf FOR fiXED RATE ADVANCES PURINGTBij pRAW PIRJOD
The Dally Periodic: Rite for Fixed Jt.te Advances wiU oot excad 0.049315% (corresponding ANNUAL
PERCENTAGE RATE of 18.000%). This is the Lifetime Rate Cap for Fixed Rate Advances.

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                                                                                                                       50
II'JXEp RA1] ADVANCE AT ACCOUNT OP£NING
I have requested anlnJdal fixed Rale Advance at Account oponlng in the amount ofS 103,441.00, and for a tenn
of 120 mot'ltbs. My Dally Periodic Rate on tllis initial Fixed Rate Advance Is 0.0198% (<:One.qponding
ANNUAL PERCENTAGE RATE of7.Z40'.4). lllave selected the fully am011lzing paymmt option.
fiXED BAD APYNlQS MINIMUM MQNTHLX PAYMENT DYRINGTHEDMW PERIOJ!
I may select one of lhe following minimum payment options whm I reqUCSJ a F"IXcd Rate Advance duriJig the
Draw Period:
  lnterett.Oaly Payment Option: If I select lhls option, my Minimum Monlhly Payment for lbe Fixed Rate
  Advance during the Dtaw Period wUI be equal to the sum of all llCCJIIed and unpaid periodic FINANCE
  CHARGES on tho Fixed Rate Advance.
· Fully Amortizing Payment Opt!Dn& If 1 solect Ibis option. my Minimum Monthly Payment for the Fixed
  Rete Advance will be equal co the amount of principal plus periodic FINANCE CHARGE suiJ'iciom to repay
  Che Fixed Rate AdvaiiGo within fiS apJJioabfe tcnn in substantially equal, ftllly amonlzing monthly payments
  at the applicable corresponding ANNUAL PERCENTAGE RATE. Thill usumea lhat all pa.y.monts Will be
  made on their due dltCt, wbich will be lhe same at tbe due dates for my Une of Credit Advances Minimum
  Monthly Payment described above. If my paymcn1s Ql'e not conslstenUy macto when due, lhe fixed Rate
  Advance: Minimum Monthly Payment may not fUlly repay the Fixed Ralet Advance over its term 1111d my final
  pa)'lllcml may be hJp.

Durin& the: Dtaw Period, my avallablocredit for new Line of Credit Advance& will be repklnished by tho amount
or prineipal 1 repay on my Fixed Rate Advanoet.

~l{ TOTAL PAVMBNf Dl,lE Dt!RING THE DRAW PERIOD
 Will receive monthlY. bllllnJ statements from lhe Bank. J must pay at least the amount of the Total Payment
Due by tile Date Due, u sllown on each montbfy billitla sllltemcnt.
The "Total Payment Due" durint the Draw Period eoJUJisiS of my l.lne of Credit Advances Minimum Monthly
Payment plus my Fi~~tod Rate Adllllnce Minimum Monthly Payment(&) togotbcr With all past due amount.'! and
overlimll amounts and aU 01hc:r charaes clue.
SECTION 5: MY ACCOUNTDVRING THE REPAYMENT P.ERIOD
BJPAYMEN1 rHJ.Q»
I understand tbat I may not receive new Advances after the Draw Period ends. At that lime. r wiU br.gin the
Repayment Period, wblch wiU continue until tJ. Maturity Date de~cribed below, but in no event moftl Chan 30
years.

aEl"AfMENIQf EJNAL fiXED WE ADVANCE
Al the end of the Draw Period, lhe ouiStanding unpaid Line of Credit .Adv1111ces balance will be eonverted into a
Final Fixed Rate Advance. The Final Fixed Rare Aclvanco will have a renn of JS years if my total Final fixed
Rate Advance balance is less than S20,00D, or 30 years if my FinaJ F"llled Rate Advance balance ia $20,000 or
more.

The Final Fixed Rate Ad"anec Minimum Mondlly Payment will be the pater of S100 or an amo11n.t sufficient
to repay the Fi111l Fixed Rate .Advance balanc" by tbe end of the scbeduted cenn in ~tantially equal, fii.RY
amortizing monthly pa)IMellts of principal and periodic FINANCE CHARGE at the applacabtc corresponcbng
ANNUAL PERCENTAOE RATE.. If my payments are not consistendy made wheo due. the Final Fixed Rate
Advanco Minimum Monthly Payment may not fully rep~~y tile Final Fixed Rate Advanoe over Its ~ and my
fin., paymClll fbr the Final Fixed Rate Advauoo may be lllsJ!er. The Bllllk will notify mo In advance of any
obanges to my Tolal Paymmt Due as a result of !he Final Fixed Rato Aci91111Ce Minimum Monthly Payment. ·
PERIODIC F~giARGJON fiNAL fiXED RATEADYANC£ B,y,ANC£
Periodic FINANCE CHARGES on my Fimal fixed Rate Advance balance Will begin to accrue on lite first day or




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Wells FIIJO tfome Equily A«oollll Agceemenl                                 OlxwlMms Processed Ol-09·2007, 13:44:»




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lhe Repayment Period. 1 will be charged a periodic FINANCE CHARGE based on the unpaid Final fixed Rate
AdVIIICo baladce at tbc end of each day 11 a fixed Daily Periodic Rate.

The Daily Periodic Rate for lhe Final Fixed Rate Advance ls equal to ti36S (Jilfi6 durioaleap years) of an l'adex
plus a Margin. Tho Index is lhe highest Primo Rate u publl&hed in the Wmem Edition or The Wall St~et Journal
"Money RileS" table. 1bo Bank will use \he Index value publi.lfle4 on the lasl busiti0$S day duritis tile Draw
Period. 1'he Margin for the final Fixed Rate Advance is ei&ht pen:entage points (8.000%). The Bank may, in its
10le discretion, apply a lower Mar&in. The corresponding ANNUAL PERCENTAGE RATE on my Final Fixed
Rate Advance will never be m~ than the Lifetime Race Cap for my final fixed Rate Advance shoWD &elow.
The ANNUAL PERCENTAOE RATE does not include costs otbtr than IIUerest.
The Margin lbr 1116 Final Fixed Rate Advance will incre~~Se by one quarter or one percentage point (0.25%) if the
Aucomalfc Payment feature is terminated, as deM!ibed in Section 6, below, duriiiJ tho Repayme~~l Period.
Therefore, lhe D11ily Periodic Rate Cor the final Fixed Rate Advance may also increase at least o~ durins the
Repa)'Jilent Period based on an iiiCIUSC in lhe Margin when the Automatic Payment feature fs temdnated. Any
such fncrease will result in an increase fn the then outstanding Final Fixed Rate Advance Minimum Monthly
Pa)'lnCIIt, which will bo reset at lito woater of$100 or the amount sufliaicnt to repay the rcmalnins balance of the
Final Fi1C.ed Rate Advance witmn fts applicable tenn in substantially equa~ fully amqJtizing monthly paymenta at
it& applicable coneapondlug ANNUAL PERCENTAGE RATE.


LlfUWE 8AD C«\f FOR. MY ITI~AL FIXED MATE ADVANCE
The Dally Periodic Rate for my Final FIIICd Rate Advance will not exceed 0.049315% (COJre8$10Uding
ANNUAL PERCENTAGE RATE of 18.00G%). This is the Lifetime Rate Cap fbr my Final Fixed Rate
Advance.

MY TOTAL PA\'MENJ QUE DURINQ THE R§PAVMENT PERIOD
1 mu&t pay at least the an•ount of tho TOtal Payment Due by the Date Duo, as shoWII on each monthly biDing
lltatcment.

The "Total Pa)'ftlenr Due" during the Repayment Period ir the Final Fixed Rate Advance Minimum Monthly
Payment as described above. together with all past due amounts and overJimil amounts and all other cllarees clue.
MAJtJBITY QATE
Tbe Mahlrity Date on my Account shall be lhe maturity date of the f'inall'lxed Rate Advance, &ut in no ewnt
more chan 30 years from the end oflho Draw Period. At !hat lime, any remaining balucc must bo paid in full.

SECTION 6: AUTOMATIC PAYMENT DISCOUNT
I have cltosen to make Aucomatic Paytnents as specified in lhc Aulhorizaclon for Automatic Transfer. I Jlave
receive4 11'4 illtereac rate: di«<ounr for makina this choice. I unllers1alld that tho ANNUAL PERCENTAGE
RATE and dlo Margin clult apply to my Line ot Credit Advanoes, as desmbed in Section 4 above. reflect a
discount you aave me for ellis Authorization fOr Automatic T.amrcr. Jftho Automatic Payments are tctml~ted
for any J'C8$01\ at any time during 1M Draw Period by anyone, lite Marsin that applies to my Une of ~dit
AdviiiCea, as set fbl1h in Soction 4 above, wiii.IJsBu by ono q~~a~Wr of one percentage point (0.2S%) emouve
the day cbc Automatic Payments are terminated. If l!le Margin increases, the Dally Periodic Race and
corresponding ANNUAL PERCENTAGE RATE applicable to my Line or Credit Advances, and my Line of
Cn~dit Advances Minimum Monthly Paymcnt, may also incrcuc. My monthly billing Slalemcnt wm show me
my new Daily Periodic Rate. comspondiDJ ANNUAL PERCENTAGE RATE and Line of Credit Aclvances
Minimum Monthly Payment as aJllllicable.

SECTION 7: OTHER FINANCE CHAltCES
In addition ro paying periodic FINANCE CHARGES, as described In Sections 4 and 5 above, J also agree to pay
the followiA8 addili011al fees. eacb of which Is a FINANCE CHARGE:

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NIA

SECfiON 8: CLOSING COSTS

I asrcc to pay to the Bank the (ollowing closing COSIS at lhc opening of my Account:
NfA

• This amount Is an eslimate. The actual recording/tiling fee is shown on lh& HUD Settl~ent Statement that is
atcached to and incorporated into tllis AgreemcnL
The folloWins closing costs are .lllNANCE CHARGES:
N/A

SECTION 9: ADDMONAL FEES, COSTS AND CHARGES
lo addidon co the FINANCE CHARGES and etoaing costa desoribed abo\'0. 1 agt'ee to pay lhe following non·
reftlnlfablc feBS, c:osta and charaes, wbiob w1U be owccl once obarged to my AccounL
LATE CHARGE§
Durin& the Draw Period, I will pay alate charge equal to the greater of five dollm ($5.00) or rrve perc;ent ($~)
of the Une ofCrcdil Minimum Monthly Payment if my payment i$ mo~ than 10 days J)88t due.
DurJns the Repayment Period, I win pay a late charge equal to lhe greater of five dollars ($5.00) or five percent
(5%) of' the sum of all Fixed Rate Advam:e Mfnllllllm MoDthly Payme.~~tll If~ payment is more than 10 days
past duo.

PRJPA\'MENT FEI
There is no prepay.mmt fee on my Accoun1.
OTQER WARGJiS                                           .           ..       .
To lbe extent allowed by law, I ape to pay tbu following fees ifll'e4Uest or aulhorize theae additional services:
(a) ll!..fu: Tho Bank will charge a tax fee In die amount of$10 ifl request or aulltorize Other$ to request any
    document or letter to be b'all&milted by facsimile (fax) machin~J.
(b) Regarslt Fee end Pllotpmpy fee: The Bak wiJI c:Jtargc a mearcbfpbotocopy ree In the amount ofSS per
    pbotoaopy if I n~q~~~~at or autllorizo oth~ to request that tJte Batik RSCIIII2h my Aocount or provide
    photocopieB of Aocollftt dooWnents tor any P1J1PO$e o1bcr than a billing error inquiry,
(o) Reconycygu or S!!lsfastlpP rus Tlle Bank wiU charge reconveyance and satisfaction fees as 411owcd
    by applicable law.
(d) Slop PfW!IJCDl Fu: The Bank will ch;nae a stop payment fco in the amount of$25 lfl m~uest or authorize
    otbels to rtqllOSltbat the Bank Slop payment on a draft 1 have used to requost a Uae ofCmlit Advm:o.
(c) Betom Qmkfu: ·The Bank will obaEJc a return clteck fee In Ike amount of$25 if I m1b a payment with
    a check Chat Ia dishonond for any reason.
(I) OVerlmlt ru: The Bllllk will charae an overfimit fc:e In the amount of$25 fbr each billia& oycle in which
    I hvc ox~ my credit limit or have nquested an Advance thai would l!ave caused me to exceed my
      credit limit.
(&) Reapq t\dnnst CfJU'      Fee &wmcltnt ru•ds): The Bllllk will e~~Jrae a ~etum advance check lee in the
    amount of S:l' for each ~~1: or draft ultd 10 fC4lUOSI a Line of Credit Advance C11at is retumed unpaid
    (dishonored) by lhe Bank due to lbr: Rquested Advance11ot mccllna all requhemeuta of this Asreement.

SECTION 10: COLLECTION COSTS AND ATTORNEY'S FEES
If I am in default. I will pay lha Bank's collectio.a CO!Ilt, attomey's rccs ancl o1bet expenses of enforelng the
Baok's ri&hts under this AgRement and the Security Ins11'11Dlent, uulcss probibltcd by applicable law.

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SECTION 11: METHOD OF PAYMENT
The Bank will provfdc me with a monthly billiag statement and auromat~ly charge my qualified 4cposlt accolllll
(UDder the terms of a separate Wlillell AuthorizatiOn for Alllomalic Tmnsfer) for the T01al Paya~em Due. If I owe
0\hcr charges (other than cmfillnsUIIIIICc: promiums and annual fees), I must pay lhem separately. If I owe past due
amounts on my Account, the Bank       wm  1101 collect thw; amo1111ts by using u Automatic Pa)'Dtent, and I JJlllllt pay
litem sepuatoly.

SECTION 12: SCHEDVLEDPAYMENTDUEDATE
My monthly payment due dale f'or my Total Payment Due Is the 15TH day oreach and every month d1arillt both
the Draw and Repayment Periods.

SECTION 13: MY PROMISE TO PAY
I promise to pay lo the order of the Banlc the total of all Advances which I rGCeive or which I authorize to bo
mado from my AccoUD.t. t promise to pay the total of any FINANCE CHARGE, plus all amounts past due,
overlimit amounts, and any late cbiiJICS, fees, other chatBes and olber obligations charatll to my Aceount under
thiR Aareemenl or the Securiry lllstnlment. All payments made under this Apment wiD be made In u.s.
Dollan~. I will not mall any casb payments to the Baftk, I may not usc .Adv.uu:e request checks 10 make
paymenrs 011 my Acc:ount.

The Bank may. at its diaorctlon, withhold a ponlon or the IWallable credit on my A<:count up to tlte amount or
any payment duo in order to assute that my check or olher paymentlnstnlment is 1t011ored.
I will make payments at 1he Bank'$ adcltess fbr receiving a f!llymenl, as indicated on my payment coupon and
billbag atalement, unless another payment melbod Is authorillCd by the Banlc. Each aon-electro.nic payment I
maltc will be accomp~~~~led by the nmiltanco portion of my billing statement.

I unclersrand tbal pa)'llmlts I make by mail to the address indicated on my bOling statement or payment coupon
will be ~mtited to my ,A(:90unt .as of the date ,!'CCejvcd (inC~Ildilll Saturday-. Stlllda)l$, and bolida,p) If the Baslk
receives the payment prior to 5 p.m. local limo for the paymmttaddtut.
J>aymoaus I make ftom a qualified account ("Automatic Payments'? pursuant to an Authorization for Automatic
Transfer will bo c:rcdllecl to my Account on the date received (inctudfna Saturdays, Sundays. and holidays).
Payments 111111b at o Bank b~h and rocei"Wd prior to established cur-offtimos wiD be credited to my Account
oc the busint$11 day tho paynumt'is ~by the Bank. For puxposes of chis rulo, a business day includea any
day other than Saturdays, Suaclays,lllllf Ballk observed holidays. Payments made at a Banlc branch rec:dved on a
Saturday, Sunday, or Bank obilltVed holiday or after estabHshed cut-orr rimes will be credited as of lho next
btL'Ilness day.

PaymcnfS I maJce online, by ATM, by telephone, or by any other means the Bank may make available to me an_d
receiVed prior to atabllshed cut-oiT times will be credited to my ~nl on the bu6iness day the paymmt as
received by th• Bank. For pvtposes of this rule, a bu$1ncas day includes any day other lban Sahlrdays, Sundays,
and federal holidays. Payments made online. by ATM. by telepbOae, or by any other means Che Bank may lllaJce
available to me received on a Saturday, Sunday, or fedend holiday or after eatablislted cut-ofT times Will be
credited a11 of the na~t business day.
I wilt not make payment or autbonze olbms to make payment for me by means of a slnaJo annspted payment.
which includes paymenfS for this AIXO\IIll and any other ac:eount(s), uaJcss tho payment is made In comp1iance
with the Bank's requlramCiliS for multiple account payments.
The Bank may ~~ Jate payments, partial payments, post-dated Qhed<$, or any fQnn of payment c:oneafni~JS a
restrictive endofl!Cment wlthout losing any of the Bank's righiS under Ibis ~eat. The Bank•• acceptance
of checks or money orders labeled "payment In full," or words ro that effect. will not couslitute an accord and
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    satisfaction nor a walvor of any ri&bts lito Bank has to receive full payment. JrJ intend to condition a payment,
    pay 1M Account fa filii with less !han lito total amount owed, or give payment insb'IIC1lons, I will clearly set out
    such intenliOD, conditions enlf fmtructloas in a ~~~to leiter accompanylna my payment, and mail bolh to
    Wells Fargo Bank, N.A., P.O. Box 2993, Portland, OR 97208.

    SECFION 14: TAX DEDUCTmiLITY
    J undcratand that I should COIISUit a cax advlsouegarding the d~uctibllityofintettst and obar&eS Ullder my
    Account.

    SI:Cl'ION 1St REEVALUATION OF CREDIT QUALIFICATIONS AND CRI:DIT REPORTS
    My slpalure on Ibis ABR41ment authorizes dte Bank to obtain credit information about me. including credit
    bureau reports, at any tim11. SUch credit bun:au reports may b$ requested or used in connection with (a) renewal
    or extention of this Aareemont. (b) review or my Acaoont, {c) llklna any collection actlolt, or (d) any other
    legitimate pUI'JIOSU associated wllh my Account. 1 qn:e to aubmil cunent financfallnfonnation to the Bank
    upon U.e Bank'll request. Tba Bank may reexamine and reevaluate my credit qualifioatiOfiS at any time. The
    Bank may rcpon .lea experience with me and my Account 10 odlers. to lite extent allowed by Jaw.

    SECJ'ION 16: PAYOFF BALANCE INFORMATION
    The Bank will toll me lha balanee required on any aiven day to pay oft' my Account in filii, If I so requesl If
    euck requcat ia made on my behalf by an *row holw. settlement agent or other drird 'Party on my bellalf
    during tho Draw Period, th8 Bank may Immediately freeze my Account. I ap that the rtantc•• meipt of such a
    tqt~ost &om an 010r0w holder, se~~tcmenc qent or ollter third party on my ()eJtalf will be consldtR:d to be a
    request by me to suspend cre4it privileges on my Account. While my Account is tro.n. I cannot receive 1I4W
    Advances and tbe Banlc will return unpaid uy Advance reqiiCIII chclclclltlill Bank receives and will refllae to
    ltoaor any odJer Advance: req~~est made on my Account. This payolr licoJ.o will be lifted and my Account
    reopened If lite mauest for payoD' balance infOrmation is withdrawn, lo which event the Bank may require
    written ccmfinnatlon from the escrow bolder, senfement agent or other lhlrd party on my behalf that the escrow
    or odJer settlement has been cancelled. .                     · .                  ·    .    ·         ·    .
    SECTION 17: DEFAULT
    I will be In default if(a) 1 fail to meet 1M repayment 141M!$ of this A&fCelllOrlt for any 0\liSlandlng bala1lw, or (b)
    there is fi'aud or material misrepreselltation by me in eonnection with lhfs Agreement. or (c) any action or
    inaction hy me Adversely ~'' lhe Bank't security in dte Propeny, lncludlna WiU.oul limitation. trariSfer of the
    Property without the Bank's c01111ent, filllure to maintain required iMurance or pay requlml taxes, revocation or
    t«mination or any '-VOCable trusttltat i., an owner of the Property, or the death or aD)' peliOn who hu signed
    this Aammtent. or (d) Jam an.cxccutlveofficerofcbc Bank1111d federal law govt:mlng credit extended b)• a bank
    to its exec:utille officer, including withoul llmltadon Seelfon21S.S(d)(4) of federal Res~ Regulation 0 (12
    CPR f 2JS.S(d)(4)), permits or requires Immediate payment of my entire Ac:cowll balance.
    If I am in defilul~ tlle Bank, aubjectco applicable law, may cJo 1111)1 or all of the ronowlna: (a) dole my Account
    immedlarcly. wllhoutnotice; (b) ~m liiiP•id any outstanding Advance request dlecks drawn on my AOCOilnt
    and refUse tD honor any other Advance request ltlliM on my Accollllt; and (c) require Immediate pa)lmenl of lhe
    entire balanco of my Aecount. and, If I flail to pay, exercise the Bank's rights under tho Security lnslmment.
    wbkh may n:sult in the loss or lho Property. l waive my c:omiDOD law rigbtl 10 n:clrivo llOike or the Bank•s
    intent to accelente tho sum& 1 owe under lhis Agreement and aotfce of aec:eleration. If I am in defa-ult. t~e
    melbod of clotennblina U.O Daily Periodic Ra1e tllld cosresponding ANNUAL PERCENTAGE RATE wm remam
    as doecribed Jn this Agreement.
    11le Blmk amtl agree thatnoiWithstandina any other provision of tbis Agrecme~nt or the Security Tmtn»ment, tbe
    Bank will have dle right to tenninate or suspend my ACGount u, dto Cllltont permitted by applicable law.

    SECfJON 18: CLOSURE OR SUSPENSION OF ACCOUNT, REDUCfiON OF CREDIT
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    LIMIT; REINSTATEMENT OF CREDIT
    Q.OSIJBIOISUSPEN§ION Ot ACCOWf. REDUCTION Of CREPJT LIMIT By BORROWER
    Any one Bonower can close the Aceount by paying in ftd1 and satdilll a signed li:Uer 10 lhc BIJlk at abe address
    indicated on my monthly billing sratement ~uesllnalhat the Accoum be closed. Any one Borrower may
    terminate lhe Advanc:e feature, at any time durlna tile Draw Period, by seadhs& a sianed lcuer to the Bank at lhe
    addRss indicated on m,y monlhly billing statement fCC(UCSthtg lhc tennlnadon of die Advaac:e roature. To
    reactivate Ch& Ad1111nce fe.ttun on the Account durin& tile Draw Period, the Bank will require all Borrowers to
    sign a written request~nd malt to the address indicated 011 my mcmthly billing statement.

    CL9SilBI OR SJJSPEN810N OFACCOWL ppUCTIQN OF CB£D1T LIMIT BY BANK                                             .
    I wall receive a written notfee if tbe B~nk ausperuls 01 &ee1.es m)' Account or reduces my crecHt limit as reqwe4
    under applicable law. The nolice will Include the reason(s) for such accfoa(a). 'Thereafter, irJ wish 10 reinslate
    my Account or increaflb my credit limit, I agree to send a Millen MqUest to the B81Jk at the ecldre.ss specified on
    m)' montht)' billina sta!Jiment, algnc4 by all of1lto Bonower&, along wllh satisfactory evidence to·the Bank lbat lhe
    reuon(s) for susp0118lon or RCI~tlon or my Account no longer exlsl(s). I abo agree 10 provide the Bank
    promptly with IIU' addlti()l)al information necessary to wppm m)' 1equeat.
    The Bank may suspend the use of my Account and ~emporarily problbit ftlturc Mvanoos during the Draw
    Period, or the Bank may !educe my credit limit, ror anyreascm ponnilled by applicable law, Including without
    Umltation, (a) If the annualized Dally Perioclio Rate cqueb or exceeds the Ufillime Rate Cap ll18ted herein, (b)
    there is any material cbanae in my fmaoefal circumllaace& thai tile Bank reasbnably believes will make me
    unablc to fulfill my repayment obll&atlons under this Asreement, (c) the value of the Property declines
    significantly below ils origiualiiPPI81sed 'Y81118, as ftletmined by lito Bank, (d) my .-nuro to comply with any
    material obligaUon unctcr tills Agreement or the SeQUdty JnsiTOment, (o) a fOiUlalOJY 81Hboriry has notified lhe
    Bank 1hat continued Advances would eonsritute an unsafe and unsound business practice, (f) I am in deflllalt
    under Seotfon 17 above. or (I) government action prevenls the Bank &om lmpoafna tho ANNUAL
    P~RCENTA.GE RATE provided for in Ibis A&reetnent or impairs the Bank's security interest ia tho Property,
    such that the value of the security interest is less tllan 120 pen\ent of the em!it limit.

    Jn the event of a suspension of my Account. the Bank ill authorized to ·Oblain ncb Jftformation aR may be
    required by lite Bank, including without limitation, credit reports and appraisals of the Property. to evaluate any
    request by me to RJinstale the AccoUJit, To the extent flC'I'I'IIittcd by applicable law. I agree to pay to the Bank the
    cost of obtaining such addilionallnfonnatlon.
    If my Account is closed or suspancled for any R:ason. lhc Bank may Altum unpaid any outstanding Advance
    requeet checks drawn on my AOI:OIIllt and refUse to honor any other Acl\lllltCe requesl macle on my Account. I
    will continue to be r~onslble for full payment of the balance or my ACCOIIIlt as well as all other Account
    obliaations, ac:cordln& to lbe terms or tbls Aareemcnt.

    SECTION 19: FURTHER ASSURANCES
    I a~ tllat J will take any sleps,lacludlng but notllmiled to, signing, filing or recording any cfocumcals. which
    are necessary or wllicll the Bank deems appropriate. co be sure tbat my obligations 10 the Bank under this
    Apccmenl become and continue to be secured by tbe Securily Jnstrumeqt.

    SECTION Zfl: CHANGE IN RESIDENCE OR OWNERSHIP OF THE PROPERTY
    J aarce to notifY the Bank immediately if (a) the Property I$ my primary realdenae and I ~~~ to live In the
    Property as my primary Rlliidoncc, or (b) lherc Is any change in tho ownCI8bip of the Ptoperty; or (c) I have
    declared the Property my Texas Homostead u clefhled by Chapter 41 of ille Texas Propert)' Code, and lhe
    Proporty or any pare of the Property ceases to be used as Hontestead property or I declare other propertY I own to
    bo my Texas Homes1ead.. 1 aaroe that Ill)' Account shall he closed and that the enUre outstanding balance of my
    Account shall be due and payable immediately on anyaalc or otlter IIQR$fer of the Property, unliiSS prohibited by
    applicable law. rn this reprd, I undeetand dtat my A.tlCOunt i.~ acuml by a Security 1nsuument c:ontainins tbt:
    following or a sulJstanUally similar provision:
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                                                                                                                                 56
         If all or any pan of the Propeny or any Interest in the Property L~ sold or uansferred (or ifBonower Is
         not a llldural person and a benefiCial intereat In Bonower is sold or ln!Mferred) witlloutl.endcr"a prior
         wriUen con~en1, Lencfer may require Immediate paym~l In filii of all sums secured by this Security
         lll."lnlment. Howwer, this option shall not bo ex~ised by Lender If such exerc:ise is prohibited by
         Applicable Law.
         If Lender exorcises this option, Lender sball give Borrower notice or aecelenttion. The nolic:o shall
         provide a period of not Jess than 30 days from tbe date the notice Is given In acc:ordance wilh Section 13
         within which Borrower mll$1 pay all sums .uml by this Security lnS\IIIIIIllnt lrBorrower faDs to pay
         these swns prior to the expiration or this period, Lender may invoke any ~medics permitted by this
         Security Instrument witb0111 filnher notice or demand on Borrower.
SECTION 21: CHANGE IN TERMS
To the extent allowed by law, I aaRC tbat the Bank may make cenain olumJCS to the temas of this Apeemont at
speelfted times or vpon tho oc:cunem::e of S)leolfted events. Tha Bank may make in.,itpdftcant cbanaes, such as
challgos ill tho address for payments, bllllna cycle dates, p&YmMI due dates, day of the month on which Index
values an: dctonnincd, lndelt or intete$t rat~ rounding rules, and balance computation method (if the change
produc~ an insisnillcant differenco in tile lntereat or FINANCE CHARGE I am required r.o pay). The Btmk
may also make c:hanJO$ tllal will benefit me, such as addltl01181 opllons or a lempatary reduction in rates or fees.
In aucordanoo with federal law. the Bank may also c:hiiRJO tho Index and Margin used to determine the ANNUAL
PERCENTAGE RATE(S) that apr.ly to my Line of Credit Advances andfor Fixed Rate Advances if the original
Index Ia no longer available. The Bank may make any of lhe chaoges discu.'llled above without my con.qont,
unless applicable law provides otherwise. Tho Bank will give me any notice or clt!mae tbat is required by Jaw. I
may also agree lo cbanges in wrilina.

So long atlhe Property SC(;urill(l this Asrcemenl is my Texas hometlead n defmed by Chapter 41 of the Texas
Propeny Code, lhe Bank may not, in any ci~umslanco. unlraterally amend the terms or this AgJeement.
SECTION 12: WAIVERS· ·
BOBltQWQ'S WAIVERS
I waive my riahttl to wquire the Bank co do certain things. Those things are: (a) to demand payment or
amounls due (known as "presentment"); (b) to Jive notice lhat amounts due have not been paid (known as
"notice of dishonor'')> (c) to obtain an omciaJ cmnu:atlon of nonpayment (lmown as "protesl").
lANK'S NON•WAIV£R                  •
The Bank may fall to make use or any of ils riJhiS under this Agreement or the Securi&y Jnstnamcnt or under
appllcablo law on one or more oocaslom, or dc:Jay or partially exercise such rights, wlthaut waiving any of its
riJ)ds or amending any of my obligations. Tho Bank may r.n to mab use or any of iL<~ righL~> or delay or
partially exen:lso such righrs against one party, without waiving ally of its rights against any other party to this
Asrecmet~~.

SECTION 23: GOVERNING LAW; SEVERABILITY
All interest., fees and other amounta charged or accruing in connection with this Apeement wbiob are considered
"interest" wilhin tho meanina ofS~tion 8S of tho National Bank Act (12 USC §BS; 12 CFR 7.4001(a)) sball be
governed by and interpreted under South Dakola law. In all other teSpects, this Agreement and all ~lated
document!!, as well as the righfS, remedies, and duties of the Bank and the Borrower(s). shall be governed and
interpreted by federal law 'With respect to nalionel banks and, lo the extent not preempted by federal law, the
laws of the state In which the Property is located, except that Texas Finance Code Chapter 346 (which re&111ates
certain revolvin& credit accounts) does not apply to thi$ Ap:emenl. •
If any provision of this Agreement or the Security Jnstm~nent is detennlned to be invalid or unenforc:eablc by a
coun or competent jurisdiction, che Rj$t of this Agreement will mnllin in tUU fon:e and efreet and enforceable
acconling to its tc:nn!i. All menmce~~ln this Agreemllnt to lhe singular shall include 1M plurallllld vice versa.
                                                                                                                      11115
                                                                              DOCUIDCIIIS 1"ru!ICS$Cd 0t.Q9•2007 t 13:44:53




                                                                                                                              57
    SECTION 14: LOST OR STOLEN ADVANCE REQUEST CHECKS; BILLING ERRORS
    LOST OR 8J'OLEN APXANC£ REOUIST CRECQ fWUER£ AVAJyBLI): RQJ.ING IRRQRS
    I Will immediately contact the Bank at tha phone number oo my monthly billing lllatement 111d confinn by leiter
    if any or my Advance request cheeks arc ever lost or stolen, if tberc arc lillY enors in my monthlY billing statement.
    or iff suspect any 'IIJI8Uihotized use of my Ac:eount.
    The Bank will not rctum to me my canteUed Advance~~ checks or other AdVIII!ce request Jnstnunonts after
    ~)'iftg tham.  The Ban}( wlll make available photocopies of my Advance RlqUCSl chEcks and other Advallee request
    msuuments upon request. I will ewnille mY AceoUIII atatemeniS promptly ift order to ldeatll)r any Improper or
    UllaU1horlzed entries, In coaaideralloa ror t1te Bank's pa)'IIICIIt ofeach Advance request check, I lllf" that even
    thouah I will110t JCCeive the original Advance Rqucst cheeks, all time periods llllder tho UnifOrm Commercial
    Code (UCC) for examinlna my mOIIthly billina statement and ~Jting lmpropor entries, inoludlng tbe UCC's
    statutes of limltalfOD with respect co fbrged, unllUihOrizecf, or missing signatures or endorsements, will begin
    fi'om the time my Ac:c:ount statement is first sent or made available to me.
    IJNAUTHQ.RIZED TRAN$ACTjON$
    I will notity the Bank if someone baa b'anaferred, or may tranarcr IIIOl\e)' liom my A.ceo'lml wilbout my
    pennlssfon, or If I suspect any &audulent activity on my Accolml. I can call the Wells Fargo Pllont: Bank at the
    telephone number on my monthly blllint statement, anytime. 24 hours a day, 7 days a week. or advise my local
    Bank branch omce. l may al5o 5el1d written notice to the Bank at tho addrees incllcated on my billing statement.
    BW!nt lUgh!!- Ketp Dl1 Notlq Fqr Future UH
    This notice contain• lmpoJtanllnt'onnation about my rights and the Bank's responRibililies under the 'Fair Cnldlt
    Billing Act.

     Notify Tbe Bllpk In Case OfiJ'tm Or Ouutlont Abont My BID
     If t think my billing statement Is wrong. or if I need more illformation about a aran.•tion on my billing
     statement. J will &end a Iotter on a separate pqe co tho Dank, a$ soon as possible, at the acldr~ listed on my
    ·billing sratemmt. ·ne Bank must heat &om me nc. later tban 60 days ·after dte Balllc mn me the first billing
     statement on which the &II$JJec:ted error or problem appears. I can telephone the Bank, but doing liO will not
    preserve my rishts.

    In my Jetter.l will proYide the Bank wilh tbo foDowina illfbrmation:
    •   My namo. Ac:c:ouat llllnlber and cfaylimc phone number, and
    •   Tho dollar amount ofthe &UI~ted error, and
    • A closcripllon or tltc error and OJtPianaclon, If possible. as ro why 1 believe thoro is an error. If I need mont
        information, I will describe the Item I am not sure about.
    If 1 have authOrized the Bank to pay my minimum monthly payment automaticaUy ftom my ohecldng acooulll at
    the Bank, I ean stop the paymont of any scheduled automatic payment if I believe a biDing error has oec&~rrcd.
    To atop chc payment, my letter must reaoh lho Blink at tcasr tfiiH businees da,ys before tho automatic payment ia
    scheduled lo occur.
    My lU!hta ADd The Bank's ft.tHIO!l!!!!iiWU After kdol Of fdY }Yrit&p Nallu                             • •
    The Bank must acknowledge my leiter within 30 day:~, uDleas the Bank ha$ coneoted tho error by then. W.ithm
    90 days. lhe Bank must either COI!Ult tho error or explain why 1M Bank believes the bmlng statement was
    concct.
    After the Bank rec:oives my letter, the Bank CIDIIOC 11y to collecl any amouat I question, or report me as
    delinquent. Tho Bank Gan continue to biD me for tho amount I queetlon. includina financ:e chmgcs, and the Bank
    can apply anY Wlp&id amoun1 against my credit limit. I 4o not llave to pay IUIY qucstaoned QIUO\Ull while the
    Bank Is researching my Ac:c:ount, but J am still obligated to pay tho parts of my bill thai are not in question.

                                                                                                                          ll/15
                                                                                    Doc:umenrs Pmc:essod 01.()9.2:007, 13:44:53




I
                                                                                                                                  58
lt the Bank fmds that a mistake was made on my billing stalelllent, I will not have to pay any ftnanee charges
related to lhe questioned amount. lflhe Bank didn't mako a mistake, I will have to pay finaMC charges. and 1
will have lo make up any missed payaJcn~s on lhe questlomd amount. In eilller case, the Bank will send me a
$tatemtlllt of the amom~t I owe and the dalO chat payment is due.

If 1 filii to pay the amount that the Bank dotennines I owe, the Bank may report me as delinquent. However, if
the Bank's explanation docs not satiJfy me and I write to the Bank within ten daya tellina tbe Bank that l still
refuse to pay, the Bank muat ten anyone the Bank repons me to lhatl have a quesclon about my biD. And. the
Bank must tell me the name or anyona the Bank APOI1S me to. When the matter has been souled between the
Bank and me, •II• Bank mllll tell anyone the Bank repc11ts mo to that tile matter has been setllcd.
If die Bank does not follow the above rules, the Bank c:annot collect the fltst $50 of the questioned amoum, even
it my billina statement waa corrc:c:c.
SECTION 25: NOTICES
Unless appllaabla law requires a ditTercnt method, any notice that must be pven to me or to anyone el$e who
sips,a.mranteea or endoi'SOfllhis Aareement may be glwn by 11111ilina it to my addres& as aet forth abo-ve in Ibis
Ap:emont, or to a different address If I have properly notified the Balik of tbat different adns. Any notice
that I may send to the Bank must be afven by maill.q it to the Bank 111 lhe address provided on my billing
statement, unless the aype of notice ls more specifically addreued in this Asreoment alld a different address is
provided herein.
If I contact YOII by phone. I acknowledge that telephone calls between me and the Bank or any of the Bank's
amliaces may be monitored and recorded by the Bank or the Bank•s affiliaccs to ensure that my inquiries aro
bandied prompdy, COIIrtiiOUSiy and ac<:~~raiCiy.
I aaree that the Bank may c:ontact me by telephono. I qree to accept c:aJis &om the Bank at any telephone
number that I provide to tile Bank.
I aare«1 to aoeopt    wls fi'om    the Bank or the Bank's c;leslgnated rllllrest:ntatives which bqin with a verbal
statement or tabbed messllJO IdentifYing the call as a business oan tiom tbe Bank. I ackllowledge and understand
that some of the telephono Galls between me and tho Bank may be monitored and recorded to onsure that abe
Bank handle& these calls courteou.,ly and ac:curately.

SECTION 26: ADDENDA
I agree to llt11 foJiowil\g attached addencla, rnodificalioM or an~elldmente:
      NIA                             '

SECTION 27; STATE DISCLOSURES
N/A

THIS AGREEMENT, mE SECURITY INSTRUMENT AND THE CLOSING DOCUMENTS EXECUTED
HEREWITH CONSTITlJ'I'E A WRITIEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRJO:R.,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS Or THE PARTIES. THERE ARE NO
'UNWRITIEN ORAL AGREEMENTS BETWEENntE PARTIES RELAnNG TO THIS AGREEMENT.

SECTION 28: PERSONAL LIABILITY (Texaa BGmestead PropertyOaly)
                           an
I intend to comply with provitioos and conditions of the Equity Law in orcJer toROI!Ie tbis Aatetment with a
valid lien upon the Property. 1 will exc\lllte any document nccess&IY ro comply wilh all provisions and
conditions of the Equ.lty Law in older to securo this Asreement with a valid lien IIJIOD die Property. If, for any
reason the Property descn"bed in the Security Instrument Is not homesteSd property. due lo mistake,. ~r or
misrepresentation by me or anyone else alping this AgreemeiU, then lite parties intaul and •pe that thas l•ne of
                                                                                                                    l31U
                                                                                Docu!IIUIS Proctssed 01.09-2007. 13:44:53




                                                                                                                            59
credit Is not an eqllity line or credir made under the Equity Law, the non-recourse provisions of lhe Equity law
arc nor applicable:, and lbe: Security Instrument remain$ a wlid lien on the Property.

SECTION ·19: FORFEITlJRE OF PRINCIPAL AND INTEREST; CURE OF VIOLATION
11le Bank sball comply with any of it& obliptlons under sections SO(a)(6), SO(e)-(i), or !O(t) Anicle XVI, Texas
ConslitudOD or olher provisions ofthis Aammcot and related loan documencs (colleclively. the "Obligations'1
within 60 days after the Bank receives 110tlce of tile failure to comply, ullless 1he Bank remedies Chat failllle as
provided in Texas COnstitution Art. XVI, Section SO(a)(6)(Q)(x). AAy 1101iec of non-compliance wJih any
portion of !he Obliptions must b~ In wrili1J8, mailed poatage PJePaid by first eh1sa mall to:
                                         Wells FOJSo Bank Bxet111tive omce
                                                 MACP60.5).016
                                                   POBox4233
                                              Portland, Oteaon 97208
or to a differeDt address If 1 am given notice pursuam to this Agreement of that different address. M a
precondition to taking any action promised on tile fiilure of tile Bank to comply, I will cooperate in reasonable
efforts to eft'ecluate any compliance.


                                         NOTICE TO THE BORROWER
DO NOT SIGN THIS AGREEMENT IF IT CONTAINS BLANK SPACES. ALL SPACES SHOULP BE
COMPLETED BEFORE THIS AGREEMENT IS SIGNED. READ THIS AGREEMENT BEFORE
SIGNINGIT,                                                    .

ACKNOWLEDGMENT

I have reeelved. read aad ntalaed a copy or lhlir w~lls Ftugo Hom• Et•ily Acco11nt Aareement $ad
Ditclosure Staa.ment (tilt "Atmmtat"), tile Security Jnstr11111ent, the Aareement to Provide Insurance,
and the HOD Settlement Statement provided to- me at the closinJ, all of wlllcb I agree to by ttanlna tbiJ
Aareement. The HlJD Stttlemen& Shtement is fDtorporated fnto and made a part or tllis Agmment. I
aclmowltcJ&e receipt or tlae Wells Fmp HtH111 Bqulty Aaeollllt Important Terms dlttlosllre end lbe bome
equity broC!hQre 'Wiata I applied for this Aceouat. In addltloll, I hereby qree tltllt the term• of thlt
Alfeement replace tlte ttrms of any prior oral or written aanemeaD betweea the Bank and me abo~at tbls
AcCGunt. lncludllla. for tumple. any and all commitment letters and pre-approwl leiters bemeea the
B~ank and me abo~Mt.
_                    ~
:B-::::OF-RO~w==E~R~-~..::;..:::.....---------..w~~~~~o~
                                                                         <suo            0C- 1(-t:>
                                                                                        DATESlGNED
                                                                                                           'f.
JANOS F'ARKAS
                                                                         (Set\)
BORROWER                                                                                DATE SIGNED


BORROWER                                                                                DATE SIGNED


BORR.OWER                                                                               DATE SIGNED




••••••
                                                                                                                   14/lS
WeJI5FarpHo-~~= Acc:ount Aa-t                                                  Oocullltll1$1'roc<:$SGIOI.09-2007.13:44:Sl




                                                                                                                            60
I   BORROWER
               !§SAil
                               DATE SIGNED

               fSeall
    BORROWER                    DATE SIGNED

               Uiall
    BORROWER                    DATE SIGNED

               (~tall
    BORROWER                    DATE SIGNED




                                                          &SitS
                        OocumeniC Poousscd 01-4»-2.007. U:#:Sl




I
                                                                  61
..                                                                                                                                                      tf
     After Recording Mail to:
     Wells Farg() Bank, N.A.
     Attn: Document Mgt.
     P.O.Box31557
     MAC 86908-012
                                                                       III~IIIIIJIIMIIII!IImfll~~llltiiiiiii~IIOOIII
                                                                                                                       DT
     Billings, MT 59107-9900
                                                                                                                       14 PGS



     This Instrument Prepared by:
     Wells Fargo Bank, N.A.
     2202 W ROSE GARDEN LN
     PHOENIX, ARIZONA 8S027

     Account Number: 650-650-4349999-lXXX          j   i \ ~ (_;!                      Reference Number: l0063367SOOO!t9

     THIS SECURITY INSTRUMENT SECURES AN EX1'ENSION OF CREDIT AS DEFINED BY SECTION
     5D(a)(6} AND 50(t), ARTICLE XVI OF THE TEXAS CONSTITUTION.

                                               TEXAS DEED OF TRUST
                                               (Securing Future Advances)

     DEFINITIONS

     Words used in multiple sections of this document are defined below and other words are defined elsewhere in this
     document. Certain rules regarding the usage of words ll~ed in this document are also provided in Section l4.

     (A) "Security Instrument" means this document, which is dated JANUARY 11, 2007, together with all Riders to
      Ibis ducwnent.
     (B) ''Borrower" is JANOS FARKAS, AN UNMARRIED PERSON. Borrower is the grantor under this Security
     Instrument. Borrower's Address is 6315 FARl\-IDALE, AUSTIN, TEXAS 78749.
     (C) "l..ender" is .Wells Fargo Rank, N.A .. Lender is a National Bank organized and existing under the laws of the
     United States. Lender's address is 101 North Phillips Avenue, Sioux Falls, SD 57104. Lender includes any holder
     of the Debt Instnnnent who is entitled to receive payment~ under the Debt Instrument. Lender is the beneficiary
     under this Security Instrument.
     (D) ''Trustee" is Stephen F. Marquart.
     Trustee's address is 4406 Piedras Drive West, Suite llO, San Antonio, TX 78228.
     (E) "Debt Instrument" means the Joan agreement or other credit instrument signed by Borrower and d&ted
     .JANUARY II, 2007. The Debt Instrument states that Borrower owes Lender, or may owe Lender, an amount that
     may vary from time to time up to a maximum principal sum outstanding at any one time of, ONE HUNDRED
     THREE THOUSAND FOUR HUNDRED FORTY-ONF: AND 00/lOOTHS DollarS (U.S. $ 103,441.00) plus
     interest. Borrower has promised to pay this debt in Periodic Payments and to pay the debt in full not later than
     January 11,2047.
     (F) "Property.., means the property that is described below under the heading "Transfer of Rights in the Property."
     (G) "Extension of Credit" means the debt evidenced by the Debt Instrument, as defined by Sedion 50(a)(6) and
     50( c), Article XVJ of the Texas Constirotion and all the documents executed in connection with the debt.
     (H) "Riders" means all Riders to this Security Instrument that are executed by Borrower. The following Riders are
     to be executed by Borrower [check box as applicable}:

                  ~ Leasehold Rider                                                                                                            EXHIBIT
                  ~ Trust Rider
                  IN1AI   Other(s) [specify]
                                                       ~ Rcncw!ll and ExtensioiJ Rider
                                                                       N/A
                                                                                                                                     I              ~
     TEXAS-·OPEN-ENP SECURITY INSTRUMENT                                                                                    {page I of' 14 pug~s}


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                                                                                                                                                         70
                                                                                                                                     ()
(0 "Applicable Law" means all control\ing applicable federal law and, to the extent not preempted by federal law,                             .




                                                                                                                                     ~
                                                                                                                                      .
state and local statutes, regulations, ordinances and administrative mles and orders (that have the effect of law) as
                                                                                                                                          .
well as all applicable final, non-appealable judicial opinions.
(J) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges
that may be impo~d on Borrowt:r or the Property by a condominium association, homeo"WneTS association or similar
                                                                                                                                     .
                                                                                                                                     :n       .


organization.
(K) ..Electronic Funds Transfer" means any transfer of funds, other than a transaction originated by check, draft,
or similar paper instrument, which is initiated through an electronic tenninal, telephonic in'l.trument, computer, or
magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an accoWit. Such tenn
includes, but is not limited to, point-of-sale transfers, automated teller machine transactions, transfers initiated by
telephoae, wire tri111Sfers, and automated clearinghouse transfers.
(L) "MisceUaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any
third party (other than insurance proceeds paid under the coverages described in Section 4) for: condemnation or
other taking of all or any part of the Property or conveyance in Jieu of condemnation.
(M) "Periodic Payment, means the amounts as they become due for principal, interest and other charges as
provided for in the Debt Instrument.
(N) "Successor in Interest of Borrower" meall8 any party that has taken title to the Property, whether or not that
party has assumed Borrower's obligation!! under the Debt Instrument and/or this Security Instrument

TRAJ\iSFER OF RJGIITS IN THE PROPERTY

This Security Instrument secures to Lender: (i) the repayment of the Extension of Credit, and all future advances,
renewals. extensions and modifications of   me  Debt Instrument, including any future advances made at a time when
no indebtedness is currently secured by this Security Instrument; and (ii) the performMce of Borrower's covenants
and agreements under this Security Instrument and the Debt Instrument. For this purpose, Dorrower irrevocably
grants and conveys to Trustee, in trust, with power of sale, the following described property located in the
                      County                             of                          TRAVIS
[Type of Recording Jurisdiction j                           [Name of Recording Jurisdiction]




327357
LOT 18, BLOCK 5, OF VILLAGE AT WESTERN OAKS SECTION 14, A SUBDIVISION IN TRAVIS
COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT OF RECORD IN YOLL'ME 86, PAGES 80B-
81A, OF THE PLAT RECORDS OF TR.o\VIS COUNTY, TEXAS.

which currently has the address of                               6315 FARMDALE LN
                                     --------------------~~~~~~~~~--------------------
                                                                        [Street}
---------'A""U-:=-::-ST-=-1::-:N-'------• Texas                        78749                  ("Property Address"):
                     [City]                                          [Zip Code]

        TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements,
appurtenances. and fixtures now or hereafter a part of the property. All replacements and additions shall also he
covered by this Security Tnstmmenl.

          All of the foregoing is referred to in this Security instrument as the "Property"; provided however, that the
Property is limited to homestead property in accordance with Section 50(a)(6)(H), Article XVI of the Texas
Constitution. The Property shall also include any additional property described in Section 20.

          BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the
right to gran£ and convey tbe Property and that the Property is unencumbered. except for encumbrances of record as
of the execution date of this Security Instrument. Borrower warrants and win defend generally the title to the
Property against all clain1s and demands, subject to any encumbrances of record.


TEXAS-OPEN-END SECURITY INSTRUMI!:NT                                                                       fpag('   2 ~( 14 pages;
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                                                                                                                                     71
                                                                                                                                            )
           UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
           1. Payment of Principal, Interest, Prepayment and Other Charges. Borrower shall pay when due the
principal of, and interest on, the debt evidenced by the Debt Insl.nlment and any prepayment charges, late charges
 and other charges due under the Debt Instrument. Payments due under the Debt Instrument and this Security
 Instrument shall be made in U.S. currency. However, if any check or other instrument received by Lender as
payment under the Debt Instrument or !.his Security Instrument is returned to Lender unpaid, Lender may require that
 any or all subsequent payments due under the Debt Instrument and this Security Instnuncnt be made in one or more
 of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's
check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a
 federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer.
           Payments are deemed received by Lender when received at the location designated in (or in accordance
with) the Debt Instrument or at such other location as may be designated by Lender in accordance with the notice
provisions in Section 13. Subject to Applicable Law, Lender may return any payment or partial payment if the
payment or partial payments are insufficient to bring the Extension of Credit current. Lender may accept any
payment or partial payment insufficient to bring the Extension of Credit current, without waiver of any rights
hereunder or prejudice to its rights to refuse such payment or partial payments in the future.
           2. Application of Payments or Proceeds. Unless other procedures are set forth in the Debt Instrument
cr Applicable Law, Lender may apply payments in any order that Lender deems appropriate.
           Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under the
 Debt Instrument shall not extend or postpone the due date, or change the amount, of the Periodic Payments.
           3. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions attributable
 to the Property which can attain priority over rhis Security Instrument, leasehold payments or ground rents on the
Property, if any, and Community Association Dues, Fees, and Assessments, if any.
           Borrower shall promptly discharge any lien which has priority over this Security Instrument unless
Borrower: (a) has disclosed such lien to Lender at application for the Extension of Credit or agrees in writing to the
payment of the obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is
performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal
proceedings which in Lender's opinion operate to prevent the enforcement of the lien while those proceedings are
pending. but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement
satisfactory to Lender subordinating the lien to this Security Instrument. If Lender detern~inM thai any part of the
Property is subject to a lit:n that can attain priority over this Security Instrument and which was not disclosed on the
application for the Extension of Credit that Borrower provided to Lender, Lender may give Borrower a notice
identifying the lien. Within l 0 days of the date on which that notice is given, Borrower shall satisfY the lien or tnkc
one or more of the actions satisfactory to Lender set forth above in this Section 3.
          Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or reporting
service used by Lender in connection with this Extension of Credit.
          4. Property Insuranc~. Borrower shall keep tho: improvements now existing or hereafter erected on the
Property insured against loss by fire, hazards included within !he tenn "extended coverage," and any other hazards
including, but not limited to, earthquakes and floods, for which Lender requires insurance. This insurance shall be
maintained in the amounts (including deductible levels) and for the periods that Lender requires. What Lender
requires pursuant to the preceding sentences can change during the tern~ of the Extension of Credit. The insurance
carrier providing the insurance shall be chosen by Borrower subject to Lender's right to disapprove Borrower's
choice, which right shall not be exercised unrc:asonably. Lender may require Borrower to pay, in connection with
this Extension of Credit, either: {a) a one-time charge for flood zone detennination, certification and tracking
services~ or (b) a one-time charge tor flood zone detennination and certification services and subsequent charges
each time remappings or similar changes occur which reasonably might affect such determination or certification.
Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management
Agency in connection with the review of any flood zone detennination resuJring from an objection by Borrower.
          If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage,
at Lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount
of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrowt:r's
equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater
or lesser coverage than was previously in effect. Borrower acknowledges that the cost of the insurance coverage so
obtained might significantly exceed the cost of insurance that Borrower could have obtained. Any amounts
disbursed by Lender under this Section 4 shall become additional debt of Borrower secured by this Security
TEXAS-OPEN-END SECURITY INSTRUMENT                                                                             (page J of I 4 pag~s)
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                                                                                                                                       72
Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time to time, from
the date of disbursement and shall be payable, with such interest, upon notice from Lender to Harrower requesting
pa;;.ment.
          All insurance policies required by Lender and renewals of such policies shall be subject lo Lender's right to
 disapprove such policies, shaU include a standard mortgage clause, and shall name Lender as mortgagee and/or as an
 additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of
 the Debt Instrument up to the amount of the outstanding loan balance_ Upon Lender's re!juest. Borrower shall
promptly give to lender copies of all policies, renewal certificate.<~, receipts of paid premiums and renewal notices.
If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for damage to, or destruction
of, the Property, such policy shall include a standard mongage clause and shall name Lender as mortgagee and/or as
 an additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of
 the Debt Instrument up to the amount of the outstanding loan balance.
          In the event of loss and subject to the rights of any lienholder with rights to insurance proceeds that are
superior 10 Lender's rights, the following provision_s in this Section 4 shall apply_ Borrower shal1 give prompt notice
to the insmance canier and Lender. Lender may make proof of loss if not made promptly by Borrower. Unless
Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or noc the underlying insurance
was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is
economically feasible and Lender's se<:wily is not lessened. During such repair and restoration period, Lender shall
have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property ro ensure
the work has been completed to Lender's satisfaction, provided that such inspection shall be undertaken promptly.
Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments
as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on
such insurance proceeds, Lender shall not be required to pay Borrower any interest or earnings on such proceeds.
Fees for public adjusters, or other third parties, retained by Borrower shall not be paid out of the insurance proceeds
 and shall be the sole obligation of Borrower_ If the restoration or repair is not economically feasible or Lender's
security would be lessened. the insurance proceeds shall be applied to the sums secured by this Security Instrument,
whether or noc then due, with the excess, if any, paid to Borrower. Such insurance proceeds shall be applied in the
order provided for in Section 2.
          If Borrower abandons the Propeny, Lender may file, negotiate and settle any available insurance claim anll
related matters. If Borrower does not respond within 30 days to a notice from Lender that the insurance cattier has
offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day period will begin when the
notice is given_ In either event, or if Lender acquires the Property under Section 21 or otherwise, Borrower hereby
assigns to Lender (a) Borrower·s rights to any insurance proceeds in an amount not to exceed the amounts Wlpaid
under the Debt lut;trument or this Security Instrument, and (b) any other of Borrower's rights (other than the right to
any refund of unearned premiums pl!id by Borrower) under all insurance policies covering the Property, insofar as
such rights are applicable to the coverage of the Property. Lender may usc the insurance proceeds either to repair or
restore the Property or to pay amounts unpaid undet the Debt Instrument or this Security Instrument, whether or not
then due, subject to the rights of any lienholder with rights to insurance proceeds that are superior to Lender's rights.
          5. Occupancy. Borrower now occupies and uses the Property as BorTOwer's Texas homestead and shall
continue to occupy the Property as Borrower's Texas homestead for at least one year after the date of this Security
Instrumr.:nt, unless Lender otherwise agrees in '1\-riting, which consent shall not be unreasonably withheld, or unless
extenuating circumstances exist which are beyond Borrower's control_
          6. Prcscrvationt Maintenance and Protection of the Property; Inspections. Borrower shall not
destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property. Whether
or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property
from deteriorating or decreasing in value due to its condition_ Unless it is detennined pursuant tu St:ction 4 thai.
repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged to avoid
further deterioration or damage. If insurance or cond~mnation proceeds a1e paid in connection with damage to, or
rhe taking of, the Property, Borrower shall he responsible for repairing or restoring the Property only if Lender has
released proceeds for such putposes_ Lender may disburse proceeds for the repairs and restoration in a single
payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds
are not sufficient to repair or restore the Property, Horrower is not relieved of Borrower's obligation tor the
completion of such repair or restoration.



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           Lender or its agent may make reasonable entries upon and inspections of the Property. If it has reasonable
cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at
the time of or prior to such an interior inspection specifying such reasonable cause.
           1. Borrower's Loan Application. Borrower's actions shall constitute acrual fraud under Section
50{a)(6)(c), Article XVI of the Texas Constitution and Borrower shall be in default and may be held personally
liable for the debt evidenced by the Note and this Security Instrument if, during the Extension of Credit, Borrower or
any persons or entities acting at the direction of Borrower or with Borrower's knowledge or consent gave materially
 false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material
 information} in connection with the Extension of Credit or any other action or inaction that is detennined to be actual
fraud. Material representations include. but are not limited to, representations concerning Borrower's occupancy of
 the Property as a Texas homestead, the representations and warranties contained in the Texas Home Equity
Extension of Credit Agreement and Acknowledgement of Fair Market Value Affidavit as described in Section 27.
           8. Protcctioa of Lender's Interest in the Property and Rights Under this Security Instrument. If (a)
Borrower fails to perform the covenants and agreements contained in this Security Instrument or any obligation that
 is secured by a lien that is superior to this Security Instrument, (b) there is a legal proceeding that might significantly
affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in
bankruptcy, probate, for condemnation or forfeiture, for enforcement of any lien which may attain priority over this
Security Instrument or tu tmforoe laws or n:gulations), or (c) Borrower has abandoned the Property, then lender may
do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this
Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing
the Property. Lender's actions can include, but are not limited to: (a) paying any sum!i secured by a lien which ha<;
priority over this Security lnsnument; (b) appearing in court; and (c) paying reasonable auomeys' fees to protect its
interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy
proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change
 locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or
dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 8,
Lender does not have to do so and is not Wlder any duty or obligation to do so. It is agreed that Lender incurs no
liability for not taking any or all actions authorized under this Section 8.
           Any amounts disbursed by Lender under this Section 8 shan become additional debt of Borrower secured
by this Security Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time
to time, from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower
requesting payment.
           If this Security Instrument i!i on a leasehold, Borrower shall comply with all the provisions of the lease. If
Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Lender agrees to the
merger in writing.
           !). Assignment of Miscellaneous Proceeds; Forfeiture. All Miscellaneous Proceeds are hereby assigned
to and shall be paid to Lender, !iubject to the rights of any lienholder with rights to MisceJlaneous Proceeds that are
superior to Lender's rights.
           If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the
Property, if the restoration or repair is economically feasible and Lender's security is not lessened. During such
repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until Lender has had
an opportunity to inspect such Property to ensure tht: work has been completed to Lender's satisfaction, provided
that such inspection shall be undertaken promptly. Lender may pay for the repairs and restoration in a single
disbursement or in a series of progress payment<~ a'> the work is completed. Unless an agreement is made in writing
or Applicable Law requires interest to be paid on such Miscellaneous Proceeds, Lender shall not be required to pay
Borrower at1y interest or earnings on such MisceUaneous Proceeds. Subject to the rights of any lienholder with
rights to Miscellaneous Proceeds that are superior to Lender's rights, if the restoration or repair is not economical1y
feasible or Lender's security would be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by
this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such Misccllaneou~
Proceeds shall be applied in the order provided for in Section 2.
           Subject to the rights of any lienholder with rights to Miscellaneous Proceeds that are superior to Lender's
rights, in the event of a total taking, destmction, or loss in value of the Property, the Miscellaneous Proceeds shall be
applied to the sums secured by this Security Instrument, whether or not then due, wi1h the excess, if any, paid to
Borrower.

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          In the event of a partial taking, destruction. or loss in value of the Property ir. which the fair market value of
the Property immediately before the partial taking, destruction, or loss in value is equal to or greater than the amount
of the sums secured by this Security Instrument immediately before the panial taking, destruction, or toss in value,
unless Borrower and Lender otherwise agree in writing, the swns securt:d by this Security Instrument shall be
reduced by the amount of the Miscellaneous Proceeds multiplied by the following fraction: (a) the total amount of
the sums secured immediately before the partial taking, destruction, or loss in value divided by (b) tbe fair market
value of the Property immediately before the partial taking, destruction, or loss in value. Subject to the rights of any
lienholder with rights to Miscellaneous Proceeds that are superior to Lender's rights, any balance shall be paid to
Borrower.
          In the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of
the Property immediately before the partial taking, destruction, or loss in value is less than the amount of the sums
secured immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise
agree in writing, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument
whether or not the sum.'l are then due, subject to the rights of any lienholder with rights to Miscellaneous Proceeds
that are superior ro Lender's rights.
          If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that the Opposing Party
(as defined in the next sentence) offers to make an award to settle a claim for damages, Borrower fails to respond to
Lender within 30 days after the date the notice is given, Lender is authorized to collect and apply the Miscellaneous
Proceeds either to restoration or repair of the Property or to the sums secured by this Security Instrument, whether or
not then due, subject to the rights of any lienholder with rights to Miscellaneous Proceeds that are superior to
Lender's rights. "Opposing Party"' means the third party that owes Borrower Miscellaneous Proceeds or the party
against whom Borrower has a right of action in regard to Miscellaneous Proceeds.
          Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that, in Lender's
judgment, could result in forfeiture of the Property or other material impairment of Lender's interest in the Property
or rights under this Security Instrument. Borrower can cure such a default by causing the action or proceeding to be
dismissed with a ruling that, in Lender'!! judgment, precludes forfeiture ofthe Property or other material impainnent
of Lender's interest in the Property or rights under this Security Imtrwnent. The proceeds of any award or claim for
damages that are attributable to lhe impairment of Lender's interest in the Property are hereby assigned and shall be
paid to Lender.
          All Miscellaneous Proceeds that are not applied to restoration or repair of the Property shall be applied in
the order provided for in Section 2, subject to the right'! of any lienholder with rights to Miscellaneous Proceeds that
are superior to Lender's rights.
          10. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time for payment
or modification of amortization of the sums secured by this Security Instrument granted by Lender to Borrower or
any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any Successors in
Interest of Borrower. Lender shaH not be required to conunence proceedings against any Successor in Interest of
Borrower or to refhse to extend time for payment or otherwise modify amortization of the sums secured by this
Security Instrument by reason of any demand made by the original Borrower or any Successors in Interest of
Borro~r. Any forbearance by Lender in exercising any right or remedy including, without limitation, I .ender's
acceptance of payments from third person~. entities or Successors in Interest of Borrower or in amounts less than the
amount then due, shall not be a waiver of ~r preclude the exercise of any right or remedy.
          11. Joint and Several Liability; Co-trustors; Successors and Assigns Bound. llorrower covenants and
agrees that Borrower's obligations and liability shall be joint and several, however, for any extension of credit
subject to Tex. Canst. Art. XVI § 50(a)(6), no O\\'IIer of the Property or spouse of the owner of the Property will be
held personally liable for the amount due under the Deht Instrument, unle~s the owner or the spouse of the owner
obtained the extension of credit under the Debt Instrument by actual fraud. Any Borrower who signs this Security
Instrument but does not execute the Debt Instrument (a "co-trustor''): (a} is signing this Security Instrument only to
mortgage, grant and convey the co--trustor's interest in the Property under the terms of this Security Instrument; (b) is
not personally ob1igated to pay the sums secured by this Security Instrument; and {c) agrees that Lender and nny
other Borrower can agree to extend, modifY, forbear or make any accommodations with regard to the terms of this
Security Instrument or the Debt Instrument without the co-trustor's consent.
          Borrower's obligations are not assumable. The covenants and agreements of this Security Instrument shall
bind (except as provided in Section 17) and benefit the successors and assigns of Lender.



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           12. Loan Charges. Lender may charge Borrower fees for services perfonned in connection with
Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security
 Instrument. including, but not limited to. auomeys· fees. property inspection and valuation fees. In regard to any
 other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not
 be construed as a prohibition. on the charging of such fee. Lender may not charge fees that arc expressly prohibited
 by this Security Instrument or by Applicable Law.
           If the Extension of Credit is subject to a law which sets maximum Joan charges, and that law is finally
 interpreted so that the interest or other loan charges collected or to be collected in connection with the Extension of
 Credit exceed the permitted limits. then: (a) any such loan charge shall be reduced by the amount necessary to reduce
 the charge to the pem1ilted limit; and (b) any sums already collected from Borrower which exceeded permitted limits
 will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed under the
 Debe Instrument or by making a direct payment to Borrower. lf a refund reduces principa1, the reduction will be
 treated as a partial prepayment without any prepayment charge (whether or not a prepayment charge is provided for
 under the Deht Instrument). Borrower's acceptance of any such refund made by direct payment to l:lormwer will
 constitute a waiver of any right of action Borrower might have arising out of such overcharge.
           13. Noti£es. Unless otherwise described in the Debt Instrument or in another agreement between Borrower
 and Lender, the following provisions regar!ling notices shall apply. All notices given by Borrower or Lender in
 connection with this Security Instrument must be in writing. Any notice to Borrower in connection with this Security
 Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually
 delivered to Borrower's notice address if sent by other means. Notice to any one Borrower shall constitute notice to
 all BorroweiS unless Applicable Law expressly requires otherwise. The notice address shall be the PropeJ1y Address
unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly notify
 Lender of Borrower's change of address. If ~nder ~pecifies a procedure for reporting Borrower's change of
 address, then Borrower shall only report a change of address through that specified procedure. There may be only
 one designated notice address for Borrower under the Extension of Credit at any one time. Any notice to Lender
shall be given by delivering it or by mailing it by first class mail to Lender's address stated herein un1ess Lender has
designated another address by notice to Borrower. Any notice in connection with this Security In.-.trument shall not
be deemed to have been given to Lender lllltil actuaUy received by Lender. If any notice required by this Security
 Instrument is also required under Applicable Law, the Applicable Law requirement will satisfy the corresponding
requirement wtder this Security Instrument.
           14. Governing Law; Severability; Rules of Construction. This Security Instrument shall be governed
by federal law and, to the extent not preempted by federal law, the law of the jurisdiction in which the Property is
located. Ali rights and obligations contained in this Security Instrument are subject to any requirements and
limitations of Applicable Law. Applicable Law might ex.plicitly or implicitly allow th~: parti~::s to agree by contract
or it might be silent, but such silence shall not be construed as a prohibition against agreement by contract. In the
event that any provision or clause of this Security Instrument or the Debt Instrument conflicts with Applicable Law,
such conflict shall not affect other provisions of this Security Instrument or the Debt Instrument which can be given
effect without the cont1icting provision_
          As used in this Security Instrument: (a) words of the masculine gender shall mean and include
corresponding neutt:r words or words of the feminine gender; (b) words in the singular shall mean and include the
plural and vice versa; (c) the word "may" gives sole discretion without any obligation to take any a~tion; and (d)
headings that appear at the beginning of the sections of this Security Instrument are inserted for the convenience of
the reader only, shall not be deemed to be a part of this Security Instrument. and shall not limit, extend, or delineate
the scope or provisions of this Security Instrument.
          15. Borrower's Copy. Borro~ shall be given one copy of the Debt Instrument and of this Security
Instrument.
          Hi. Transfer of the Property or a Bencficiallntere!lt in Borrower. As used in this Section 16, ..Interest
in the Property" means any legal or beneficial interest in the Property, including, but not limited to. those beneficial
interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent
of which is the transfer of title by Borrower at a future date to a purchaser.
          If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a
natura! person and a beneficial interest in Borrower is sold or transferred) without Lender's prior written consent.
Lender may require immediate payment in full of all swns secured by this Security Instrument However, this option
shall not be exercised by Lender if such exercise is prohibited by Applicable Law.

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          If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide
a period of not less than 30 days from the date the notice is given in accordance with Section I 3 within which
Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the
expiracion of this period, Lender may invoke any remedies permitted by this Security Instrument without further
notice or demand on Borrower.
          17. Sale of Debt Instrument; Change of Loan Servicer; Notice of Grievance. The Debt Instrument or a
partial interest in the Debt Instrument {together with this Security Instrument) can be sold one or mme times without
prior notice to Borrower. A sale might result in a change in the entity (known as the "Loan Servicer") that collects
Periodic Payments due under the Debt Instrument and this Security Instrument and performs other mortgage loan
servicing obligationJ; under the Debt Instrument, this Se~:urity Instroment, and Applicable Law. There also might be
one or more changes of the Loan Servicer unrelated to a sale of the Debt Instrument. If there is a change of the Loan
Servicer, Borrower will be given written notice of the change as required by Applicable Law. If the Debt Instrument
is sold and thereafter the Extension of Credit is serviced by a Loan Servicer other than the purchaser of the Debt
Instrument, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred
to a successor Loan Servicer and are not assumed by the purchaser of the Debt Instrument unless otherwise provided
by the purchaser of the Debt Instrument.
          Nt:ither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an
individual litigant or the member of a class) that arises from the other party's actions pursuant to this Security
Instrument or that. alleges that the other party has breached any provision of, or any duty owed by reason of, this
Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in
compliance with the requirements of Section 13) of such alleged breach and afforded the other party hereto a
reasonable period after the giving of such notice to take corrective action. If Applicable Law provides a time period
that must elapse before certain action can be taken, that time period will be deemed to be reasonable for purposes of
this paragraph. The notice of acceleration and opportunity to cure given to Borrower pursuant to Section 21 and the
notice of acceleration given to Borrower pursuant to Section 16 shall be deemed to satisfy the notice and opportunity
 to take corrective action provisions of this Section 17. If Borrower and Lender have entered into an agreement to
arbitrate disputes, the provisions of any such arbitration agreement shall supersede any provision in this Section 17
that would conflict with the arbitration agreement.
          18. Hazardous Substances. As used in this Section 18: (a) "Hazardous Substances" are those substances
defined as toxic or hazardous substances, pollutants, or wastes by Environmental Law and the following subst11nces:
gasoline, kerosene, other flanunable or toxic petroleum products, toxic pesticides and hel'bicides, volatile solvents,
materials containing asbestos or formaldehyde, mold, and radioactive materials; (h) ..Environmental Law" means
federal laws and laws of the jurisdiction where the Property is located that relate to health, safety or environmental
protection; (c) "Environmental Cleanup" includes any response action, remedial action, or removal action, as defmed
in Envkoruncntal Law; and (d) an ••Environmental Condition" means a condition that can cause, contJ-ibute to, or
otherwise trigger an Environmental Cleanup.
          Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous
Substances, or threaten to release any Hazardous Substances, on or in the Property_ Borrower shaU not do, nor allow
anyone else to do, anything affecting the Property (a) that is in violation of any Environmental Law, (b) which
create:. an Enviromnental Condition, or (c) whicb, due to the presence, use, or release of a Hazardous Substance,
creates a condition that adversely affects the value of the Property. The preceding two sentences shall not apply to
the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally
recognized to be approprjate to normal residential uses and to maintenance of the Property (including, but not limited
to, hazardous substances in consumer products}.
          Borrower shall promptly give Lender written notice of(a) any investiga!ion, claim, demand, lawsuit or other
action by any governmental or regulatory agency or private party involving the Property and any Hazardous
Substance or Environmental Law of which Borrower has actual knowledge, (b) any Envirorunentat Condition,
including but not limited to, any spilling, leaking, discharge, release or threat of release of any Hazardous Substance,
and (c) any condition caused by the presence. use or release of a Hazardous Substance which adversely affects the
value of the Property. If Borrower learns, or is notified by any governmental or regulatory authority, or any private
pany. that any removal or other remediarion of any Hazardous Substance affecting the Property is necessary,
Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. Nothing herein
shall create any ubligation on Lender for an Environmental Cleanup.


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            19. Condominiums; Planned Unit Developments. Solely 10 the extent permitted by§ 50(a)(6)(H), Anicle
 XVI of the Texas Constitulion, the Property shall include the types of properLy described in this Section 19. If the
 Property is a unit in a condominium project ("Condominium Project"} or is part of a planned unit development
 {"PUD"), Borrower agrees to the following:
            A. Obligations. Borrower shall perfonn all of Borrower's obligation.<~ under the Constituent Documents.
 The "Constituent Documents" are the: (i) Declaration or any other document which creates the Condominium Project
 or Pu"D and any condominiwn association, homeowners association or equivalent entity ("Community
 Association"); (ii} any by-laws or other rules or regulations of the Community Association; and (iii) other equivalent
 documents. Borrower shall promptly pay, when due, all Community Association Dues, Fees, and Assessments.
            B. Property. For units in a Condominium Project, the Property includes the unit in, together 'With an
undivided interest in the common elements of, the Condominium Project, and Borrower's interest in the Community
 Association and the uses, proceeds and benefil~ ofRorrower's interest. For PUDs, the Property includes, but is not
 limited to, a parcel of land improved with a dwelling, together with other such parcels and certain common areas and
 facilities, as described in the Constituent Documents, and Borrower's interest in the Community Association and the
 uses, benefits and proceeds of Borrower's interest.
            C. Property Insurance. So long as the Community Association maintains, with a generally accepted
 insurance carrier, a "master" or "blanket" policy insuring the Property wltich is satisfactory to Lender and which
provides insurance coverage in the amounts (including deductible levels), for the periods, and against loss by fire,
 hazards included within the tenu '\:xlended coverage," and any other hazards, including, but nor Hmited to,
 earthquakes and floods, for which Lender requires insurance, then Borrower's obligation under Section 4 to maintain
 property insurance coverage on the Property is deemed satisfied to the extent that the required coverage is provided
 by the Community Association policy. Borrower shall give Lender prompt notice of any lapse in required property
 insurance coverage provided by the master or blanket policy. In the event of a distribution of property insurance
proceeds in lieu of restoration or repair following a loss to the Property, whether to the unit or to common elements
of the Condominium Project or to common areas and facilities of the PUD. any proceeds payable to Borrower are
hereby assigned and shall be paid to Lender for application to the sums secured by chis Security Instrument, whether
 or not then due, with the excess, if any, paid to Borrower, subject to tht: rights of any lienholder with rights to
 insurance proceeds that are superior to Lender's rights.
            D. Public Liability Insurance. Borrower shall take such actions as may be reasonable to insure that the
Community Association maintains a public liability insurance policy acceptable in form, amount, and extent of
coverage to Lender.
            E. Condemnation. The proceeds of any award or claim for damages, direct or consequential, payable to
Borrower in connection with any condemnation or other raking of all or any part of the Property, whether oftbe unit
or of the common elements of the Condominium Project or the common areas and facilities of the PUD, or for any
conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender, subject to the rights of any
lienholder with rights to such proceeds that are superior to Lender's rights. Su(;h proceeds shall be applied by
Lender to lht:: sums secured by the Security Instmment as provided in Section 9.
            F. Lender's Prior Consent. Borrower shall not, except after notice to Lender and with Lender's prior
written consent, either partition or subdivide the Property or consent to: (i) the abandonment or termination of the
Condominium Project or PUD, except for abandonment or termination required by law in the case of substantial
destruction hy fire or other casualty or in the case of a taking by condemnation or eminent domain; (ii) any
amendment to any provision of the Constituent Documents if the provision is for the express benefit of Lender;
(iii) termination of professional management and assumption of self-management of the Community Association; or
(iv) any action which would have the effect of rendering the public liability insurance coverage maintained by the
Community Association unacceptable to Lender.
            G. Remedies. If Borrower does not pay Community Associa!ion Dues, Fees, and Assessments when due,
then Lender may pay them. Any amounts disbursed by Lender under this paragraph G shall become additional debt
of Borrower secured by this Security Instrument. Unless Borrower and Lender agree to other tenns of payment,
these amounts shall bear interest al the rate applicable to the Debt Instrument from time to time, from the date of
disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.
           20. Acceleration; Remedies. Bon-ower will be in default if (I} any payment required by the Debt
Instrument or this Security Instrument is not made when it is due; (2) Lender discovers that Borrower or any
co-applicant has committed fraud or made a material misrepresentation in connedion with the Extension of
Credit; (3) Borrower takes any action or fails to take any action that adversely affects Lender's rights under
this Security Instrument, any of Lender's other security for the Debt Instrument, or any right Lender has in
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 the Property; or (4) Borrower is an exe.:utive officer of Lender and federal law permits or requires immediate
 payment ofthe Loan. If a default occurs (other than under Section 16 or under subscdion (4) of this Section
 21, unless Applicable Law provides otherwise), Lender wiJI give Borrower notice specifying: (a) the default;
 (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to
 Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date
 specified in the notice will result in acceleration of the sums secured by this Security Instrument and sale or
 the Property. The notice shall further inform Borrower of the right to bring a court action to assert the non-
existellee of a default or any other defense of Borrower to acceleration and sale. If the default is not cured on
 or before the date specified in tbe notice, Lender at its option may require immediate payment in full of all
sums secured by this Security Instrument without further demand and may invoke the power of sale and any
 other remedies permitted by Applinble Law. Insofar as allowed by Section 50(a)(6h Article XVI of the
 Texas Constitution, Lender shall be entitled to collect all expenKs incurred in pursuing the remedies provided
 in this Section 21. including, but not limited to, ~ourt costs, reasonable attorneys• fees and costs of title
 evidence.
          Tbe lien evidenced by this Security Instrument may be foreclosed upon only by a court order.
 Lender may, at its option, follow any rules of civil proeedure promulgated by the Texas Supreme Court for
expedited foreclosure proceedings related to the foredusure of liens under Sediun 50(a)(6), Article XVI of the
Tnas Constitution ("Rules"). as amended from lime to time, which are hereby incorporated by reference.
The power of sale granted herein shall be exercised pursuant to such Rules, and Borrower ••nderstands that
such power of sale is not a confession of judgment or a power of attorney to confess judgment or to appear
for Borrower in a judicial proceeding.
          21. Power of Sale. It is the elepress intention of lender and Borrower that Lender shaU have a fully
 enforceable lien on the Property. It is also the express intention of lender and Borrower that Lender's default
remedies shall include the most expeditious means of foreclosure available by law. Accordingly, Lender and Trustee
shall have all the powers provided herein except insofar as may be limited by tne Texas Supreme Court. To the
extent the Rules do not specifY a procedure for the exercise of a power of sale, the following provisions of this
Section 21 shall apply, if Lender invokes the power of sale. Lender or Trustee shall give notice of the time, place
and terms of sale by posting and filing the notice at least 21 days prior to sale as provided by Applicable Law.
Lender shall mail a copy of the notice of sale to Borrower in the manner prescribed by Applicable Law. Sal..: shall
be made at public venue. The sale must begin at the time stated in the notice of sale or not later than three hours
after that time and between the hours of I 0 a.m. and 4 p.m. on the first Tuesday of the month. Borrower authori<:es
Trustee to sell the Property to the highest bidder for cash in one or more parcels and in any order Trustee detennines.
Lender or its designee may purchase the Property at any sale. In the event of any conflict between such procedure
and the Rules, the Rules shall prevail, and this provision shall automatically be reformed to the extent necessary to
comply.
          Trustee shall deliver to the purchaser who acquires title to the Property pursuant to the foreclosure of the
lien a Trustee's deed conveying indefeasible title to the Property with covenants of general warranty &om Borrower.
Borrower covenants and agrees to defend generally the purchaser's title to the Property against all claims and
demand:s. The recitals in the Tl11Stee's deed shall be prima facie evidence of the truth of the statements made therein.
Trostee shall apply the proceeds of the sale in the following order; (a) to all expenses of the sale, including, but not
limited to, court costs and reasonable Trustee"s and attorneys' fees; (b) to aU sums seemed by this Security
Instrument; and {c) any e"-cess to the person or persons legally entitled to it.
          If the Property is sold pursuant to this Section 21, Borrower or any person holding possession of the
Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale. If
possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ
of possession or other court proceeding.
          22. Release. Within a reasonable time after tennina1ion and fuU payment of the Extension of Credit,
Lender shall cancel and return the Debt Instrument to the oWIJer of the Property and give the owner, in recordable
fonn, a release of the lien securing the Extension of Credit or a copy of an endorsement of the Debt Instrument and
assignment of the lien to a lender thar is refinancing the Extension of Credit Owner shall pay only recordation costs.
OWNER'S ACCEPTANCE OF SUCH RELEASE, OR ENDORSEMENT AND ASSIGNMENT, SHALL
EXTINGUISH ALL OF LENDER'S OBLIGATIONS UNDER SECTION 50(a)(6), ARTICLE XVI OF THE
TEXAS CONSTITUTION.
          23. Non-Recourse Liability. Lender sball.be subrogated to any and all rights, superior title, liens aud
equities owned or claimed by any owner or holder of any liens and debts outstanding immediately prior to execution
TEXAS-OPEN-END SECURITY INSTRUMENT
Hnll62v7 (2/3/0S)
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                                                                                                                                  79
hereof, regardless of whetb.er said liens or debts are acquired by Lender by assignment or are released by the holder
thereof upon payment
          Borrower understands that Section 50(a)(6)(C), Article XVI of the Texas Constitution provides that the
Debt Instrument is given without personal liability against each owner of the Property and against the spouse of each
owner unless the owner or the spouse of lhe owner obtained this Extension of Credit by actual fraud. This means
that, absent such actual fraud, Lender can enforee its rights under this Security Instrument solely against the Property ,_;·2:. ... _XI.,........,~
and not personally against the ov.ner of the Property or the spouse of an owner.
          If this Extension of Credit is obtained by such actual fraud, then, subject to Section I 0, Borrower will be




                                                                                                                                           l!iL '
personally liable for the payment of any amounts due under the Deht Instrument or this Security Instrument. This
means that a personal judgment could be obtained against Borrower, if Borrower fails to perfonn Borrower's
responsibilities under the Debt Instrument or this Security Instrument, including a judgment for any deficiency that
results from Lender's sale of the Property for an amount less than is owing under the Debt Instrument, thereby               .r:. ,, >.          _.rt.'-~·

subjecting Borrower;s other assets to satisfaction of the debt.                                                                              i
                                                                                                                         ((~ -i·~~ r;;:!,i ~~~~· ~\
          If not prohibited by Section SO(a)(6)(C), Article XVI of the Texas Constitution, this Section 23 shall not
impair in any way the lien of this Security Instrument or the right of lender to collect all sums due under the Debt ..::.:1~ g~ ·~~.......
Instrument and this Security Instrunlent or prejudice the right of Lender as to any covenants or conditions of the Debt
Instrument and this Security Instrument.
          24. Substitute Trustee; Trustee Liability. All rights, remedies and duties of Trustee under this Security
Instrument may be exercised or perfonned by one or more trustees acting alone or together. Lender, at its option and
with or without cause, may from time to time, by power of attorney or otherwise, remove or substitute any trustee,                                   '
add one or more trustees, or appoirlt a successor trustee to any Trustee without. the necessity of any fonnality other
than a designation by lender in "'Titing. Without any further act or conveyance of the Property the substitute,
additional or successor trustee shall become vested with the title, righls, remedies, powers and duties conferred upon
Trustee herein and by Applicable Law.
          Trustee shall not be liable if acting upon any notice, request, consent, demand, statement or other document
believed by Trustee to be correct. Trustee shall not be liable for any act or omission unless such act or omission is
willful.
          25. Provisions Related to Section SO(a)(6) and Section SU(t), Article XVI of the Texas Constitution
          (a) Proceeds. Borrower has not been required to apply the proceeds of the Extension of Credit to repay
another debt except a debt secured by the Property or debt to another lender.
          (b) No Assignment of Wages. Borrower has not assigned wdges as security for lhe E~ tension of Credit.
          (c) Acknowledgment of Fair Market Value. Lender and Borrower have executed a written
acknowledgment as to the fair market value of Borrower's Property on the date the Extension of Credit is made.
          (d) Acknowledgment of Waiver by Lender of Additional Collateral. Borrower acknowledges that
Lender waives all tenns in any of Lender's loan documentation (whether existing now or created in the future) which
(a) create cross default; (b) provide for additional collateral; and'or (c) create personal liability for any Borrower
(except in the event of actual fraud), for the Extension of Credit. This waiver includes, but is not limited to, any (a)
guaranty; (b) cross collateralization; (c) future indebtedness; (d) cross default; and/or (e) dragnet provisions 1n any
loan documentation with Lender.

      BY SIGNING HELOW, Borrower accepts and agrees to the terms and covenants contained in this Security
Instrument and in any Rider executed by Borrower and recorded with it.

DO NOT SIGN IF THERE ARE BLANKS LEFT TO BE COMPLETED IN THIS DOCUMENT. THIS
DOCUMENT MUST BE EXECUTED AT THE OFFICE OF LENDER, AN ATTORNEY AT LAW OR A
TITLE COMPANY. YOU MUST RECEIVE A COPY OF THIS DOCUMENT AFTER YOI: HAVE
SIGNED IT.


          YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THIS EXTENSION
          OF CREDIT WITHOUT PENALTY OR CHARGE.




TEXAS-OPEN-END SECURITY INSTRUMENT                                                                               (po.ge II (}{ 14 pageJJ


ilillilillllllllllllllllllll                                                                Docum~nls   Processed 0 ~·09·2007, 13:44:53




                                                                                                                                                   80
                                                                                           ·- ·t              ~~ ~
                                                                                           _J_i-''l-S-(F_-~AR-~KAS-~-~--~--=~~-.---(Seal)
                                                                                            AND                                - Borrower

Printed Name:. __    ':C....::...::c~~~Y.~a'"'.:::..\...-=:,__--'!.~_;C(~v~·..;.;k=.~~~­
                 [Please Complele]



                                                                                           _________________ (Seal)
                                                                                                         -Borrower

Printed Name:
                     [Plea.l'e Complete]



                                                                                           _ _ _ _ _ _ _ _ _ _ _ _ _ (Seal)
                                                                                                                               -Borrower

Printed Name: _ _ _ _ _ _ _ _ _ _ _ _ _ __
                [P/e(lSe Complete]



                                                                                                           _ _ _ _ _ _ _ _ (Seal)
                                                                                                                      -Borrower

Printed Name: _ _ _ _ _ _ _ _ _ _ _ _ __
                [Please Complete)



                                                                                           -~-----------(Seal)
                                                                                                                               -Borrower

Printed Name:._ _ _ _ _ _ _ _ _ _ _ _ _ __
                {Please Complete]




                                                                                           _ _ _ _ _ _ _ _ _ _ _ _ _ (Seal)
                                                                                                               -Borrower

Printed Name:
                     [Please Complete]




TEXAS-O.I'EN-END SECURITY INSTRUMENT                                                                                             fpage 12 r.f 14 pages)
HC#I62v7 (21.3/05)
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                                                                                                                                                          81
        Brice. Vander Linden & Wernick, P.C                                                                      Aitomeys 11nd CtMJnseJon



  LEGAL I'RECF.DENT IS NOT Cl.ED AS :ro Wll1!.7'HER THE SENDING OF THIS l.ET1'6lt MAKES lm A
  DEBT COJ.LEC'ItJR. 1'0 THE J!X1StiT JT DOE$, WE AilE PL&fSED 10 AIJnsE 'fOll rHAT TH1&' IS AN
  ATTEMPT TO COLLECTA DEBT. ANDANYJNIIOBMAf'ION OIT.MNED W.U.L BE IJSED FOR THAT PIJRJIO.fE.
  HO.Jf'EJI'BJt, IF YOV ARE IN lUNKRVPTCY Oll HAn£ BEBN liiSCJIAR.CEJ) IN .84NKRlii'R:Y. TRIG LE1'7ER
  13 FOit INRJAMATIONJIL l'Ul!P<JSES ONLT AND 19 NOT INl'EifDED AS AN AT1EMPT TO COUI!Cr A
  IJEBT OR ASAN ACT             ro
                       COLlECT, ~ Olt RECOYER AU OR ANY POR'I'ION OF THE DEB1' FROM
  'f(J{J PE~U.Y.




                                                                Aprii21,201J

  JANOS fARI<AS
  6)1~ FARMDALE LN
  .AUSTIN, TX 78749

  J<4!;099961706J ;&31SFARMDAU!LN,Al1811N, lx787.49

                                  NOTICE OF DEFAVLT AND JNTENTlONTO ACCELERATE

            W~ ltple!ent Wells. Farao "Holnll Equily. vA~oe~tadd.- is 3476 Slatc'l'iiiWBIVd,         l'ort Mill. SC 29715 "Ydl~. ffil is 1'101
  t~ Cumnt Martpsae, is IIOiin& as IIlii M011111lgo Scnlc~ 1111d rGprOimllln,g the Cu!Ttlll MOifiiPI' p11111m111 10 a Mllrl~
  SorvlclniA~ tllllWIIinlllhtNound D9cl oJTrusr \\fUcl! QTe taSOetmcl with tile abow•~ loan ~U~~ber.

           Our .finn bit been ~ues1ed to pu~JU~: ll(lttoj~ ~ proeessingln acconlal:nw!lh IJie laln8 oflha Nolo and
  Docd of'l'l'lllt andapplica~li: law. As J prwt~~~isila 10 ~illS: the eon1mo:t\la1 risJ>l$ of !lie 'Note and t)e!ed or'l'nllt, ad
  plll~l'lllo lhe pnwl~o~ofllte Taxa• P~ Code. S«tlon !1.002, 1~ fbllowins 111>tiU$ ansproY!d~ 1o ,101t

  I. Tho IO&YI$ inddbult tJr&ihms ID mdce1ht NqpOior n\11mllly )l~Jeqllirl!d by 1M Noll: and Delld ofTna
 2. The aetion IY!quircd 1o cure 1M de6uk isiZ.~ of'all SIIIN d~~& alldertllo Noll: lll'od DeedOfTP!$1:.
 J. I(~ dc!hlllt i~ IICl wed by:lllcllpl.)lllllolllwitltinllllrty l30)dll)" oflllt cbtcoflbis notice, \viiiiOIIIIIuthernolico or demaniS.
     the nullurily dateof'lbll Ntlle\\'111 bucce{orwcl 111111 allauns ~~eetnd by the Doed of'Trusl ~lfbll declared m N.lmmedi#lely
     due- and payablt. Tlw~u, U b i"tendld lhatll>epmpettybe ~d by ltSubsliN!e Trusleo eu public iorealo.moolltll~.
 4. Alletii.C«<uatmn, IIIOUrillg ofIll~ dmllllllllll ~ oNhr: 10111 will~ p$1!1\ll!ad:priorto tl1'1Ui1111 ot'$G.It by paying ik
     put d~ mBUTIIr mtllllhly JKiyrnents anct other SU111S due olldv ~ Nalllencl Deed ofTrustli!ICI bywmplyins "Wilb 111 terms of'
     n:instoCemenr.

              Accor4ing to~ mRlm!a!icm PIOYidfd lO 115 by01H ~liant, as of Mwcb 2.2, 201 J.!he llllDUIIIIIQuired to e'llle !be default
 is $2,Dil.:l0. Betallil'l ofacfditionaJ iM181lmenlt11•11 mol)'~ dPe lll!d Q!JI!f' eharges N ~ vmy ftOIP 41;ay co d!IY, the
 0111011111 "'(UirCII to CUR>dle de!IIPlr·an~dJyyoudoODio IOptll 111111 bcp:mr. lien~», i1)V8payi~MUIPI1\Iib0Wil~ an
 &djtlslmenl may be nt:Ce$111IY aftet yo11r e!lodc il ~ved ill ...ticb euem we ll'ill intonn you befbre tile cl1eck is cl~ for
 collec&n. 'I'or ftl11flef illf'N>N~oliol!, ..nit us It 8ri'e~~, Vandet Lilldeft 1r. W<!rnii:k, P£,. Fondow~e Dl:pq.11o-nt~oL. 9441 LSJ
 F~, SUi1~2SO, Dallo.s, TI!Xll» 7S243w~11VB81972~.

             Persons •IIIIo ""' nbliS"UUd on lbe debt e\'idenc~ lJy 'lids Note 1111d DMd ot'Tru£1 «\\~otherwise purebascl! a00 howe
 &n   irte1e61 in lhe I""J'Cf1Y ~d by II$ De:d orTitl$1 lltC hereb)o given llOik:c nfT!te fi!rqgin&toac'her wilb lba tilllowill&
 additional matrer.s:

  I. Yo1.1 b!l~tbe ril!htt.r>brinsa <:auructimr loa$1Zllllll~non-4:xi51enc:eo!ade~u!1QI'enyothcrdellmst 111111 mayel>ist
                                                                  ar
. 2. tr.,sal preoeden! is I10t dear as·IO ~ile!hcr 11\e setxling 111illcllcc-l1llllleS 1l$ 8 debt (O!)r:o:~c~r. To llle ~IC!II ildoos. \W: 8/Y!
     pleastcl 10 advise you lha!llli$1e\ter ~antl!et'llpl10 c;ollocl o. debt and any illfonnnliM obl1ll'ltll win b1: IHCd 1brlbat pllfll0$C..
  J. Yll~tllre Cl1cour:~g.~ 10 .send 10 us~ inlllnnatio11 you have that SU&g851$1119t the lo~m is 1'01 in defAillc cr th:~r the tl'l'IOll111 of
     dcl'aulr is diffi!tenl liom Ill( l1111(Jlln1 lndicabi i1t this ltller. Upcm meiJ)t ofstldt iPfll!mlion, WI: will be pJI!aselJ 10 fo!Vo'iUd
     the-inlbi'WUlliOA to the lender tor""~"' Sind Mill.-~.




 B~. Vlllldcr    Linden 11 Wem~, P..C.

                                                                                                                                          EXHIBIT

                                                                                                                                          3-Pr


                                                                                                                                                    87
        Brice. Vander Linden & Wernick, P.C.                                                Attorneys and Counselors
                                                                                                   9441 LBJ Freeway, Suite 250
                                                                                                           Dallas, Texas 75243
                                                                                                         Office (972) 643-6600
                                                      May24,20II

LEGAL PRECEDENT IS NOT CLEAR AS TO WHETHER THE SENDING OF THIS LETTER MAKES US
A DEBT COLLECTOR. TO THE EXTENT IT DOES, WE ARE PLEASED TO ADVISE YOU THAT TmS
IS AN ATTEMPT TO COLLECT A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR
THAT PURPOSE. HOWEVER, IF YOU ARE IN BANKRUPTCY OR HAVE BEEN DISCHARGED IN
BANKRUPTCY, THIS LETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT
INTENDED AS AN ATTEMPT TO COLLECT A DEBT OR AS AN ACT TO COLLECT, ASSESS, OR
RECOVER ALL OR ANY PORTION OF THE DEBT FROM YOU PERSONALLY.

JANOS FARKAS
9600 ESCARPMENT BLVD STE 745-4
AUSTIN, TX 78749-I982

         Re:        63I5 FARMDALE LN, AUSTIN, TX 78749
                    Loan No. 09996I706I
                    Our File No. 9508-0790
                    Our Case No. VS-09996I7061-FC

                                       DEFAULT CURE INQUIRY RESPONSE

          In response to your recent inquiry, we are pleased to provide the attached default cure information from your
lender. We encourage you to read it carefully. The following brief summary is provided as an aid but not an alternative
to your reading of the attached.

Default Cure Amount:            $19,604.23
Good Through Date:              06/20/20 I I
Receipt Deadline:               10:00 A.M. (Central) on II/OI/20II, or the good through date above, whichever is
                                earlier.
Certified Funds Payable To:     Wells Fargo Home Equity
Deliver Payment To:             A TrN: FRCL Inquiry Unit
                                Brice, Vander Linden & Wernick, P.C.
                                9441 LBJ Freeway. Suite 250
                                Dallas, Texas 75243

         Foreclosure processing will continue and will not be stopped unless the default cure amount is received in our
office before the receipt deadline. If the default cure amount is not received by the receipt deadline and the good
through date expires before the scheduled sale date, you must submit a request for an updated default cure amount.

         The default cure amount reported in the attached may not include amounts incurred or accrued but not
currently appearing in your lender's records. Your timely tendering of the default cure amount will stop the current
foreclosure processing; however, you will have to arrange for the timely payment of any additional amounts incurred or
accrued or your loan may be returned to foreclosure processing.

           The foreclosure fees and costs reported in the attached may include both fees and costs already incurred and
fees and costs projected to be incurred on/or before the good through date. Upon receipt of your timely payment, we
will determine the actual fees and costs due to us at that time, invoice that amount to our client, and report the difference,
if any, to your lender for further handling.

        Should you have any questions concerning the attached information, please do not hesitate to contact us at
972/643-6600.

Very truly yours,

Brice, Vander Linden & Wernick, P.C.




Selim Taherzadeh

Attachment




                                                                                                                                 203
                                                                                                              File: 9508-0790
  Brice, Vander Linden & Wernick, P.C.                                                       Attorneys and Counselors
                                                                                                    9441 LBJ Freeway, Suite 250
                                                                                                            Dallas, Texas 75243
                                                                                                          Office (972) 643-6600
                                                       May 24,2011

LEGAL PRECEDENT IS NOT CLEAR AS TO WHETHER THE SENDING OF THIS LETTER MAKES US
A DEBT COLLECTOR. TO THE EXTENT IT DOES9 WE ARE PLEASED TO ADVISE YOU THAT THIS
IS AN ATTEMPT TO COLLECT A DEBT9 AND ANY INFORMATION OBTAINED WILL BE USED FOR
THAT PURPOSE. HOWEVE~ IF YOU ARE IN BANKRUPTCY OR HAVE BEEN DISCHARGED IN
BANKRUPTCY9 THIS LETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT
INTENDED AS AN ATTEMPT TO COLLECT A DEBT OR AS AN ACT TO COLLECT9 ASSESS 9 OR
RECOVER ALL OR ANY PORTION OF THE DEBT FROM YOU PERSONALLY.

JANOS FARKAS
9600 ESCARPMENT BLVD STE 745-4
AUSTIN, TX 78749-1982

Re:                       6315 FARMDALE LN, AUSTIN, TX 78749
Loan No.:                 0999617061
Our File No.:             9508-0790
Our Case No.:             VS-0999617061-FC

                                        LOAN PAYOFF INQUIRY RESPONSE

In response to your recent inquiry, we are pleased to provide the attached payoff information from your lender. We
encourage you to read it carefully. The following brief summary is provided as an aid but not an alternative to your
reading of the attached.

 Payoff Amount:                 $123,127.31
Good Through Date:              06/20/2011
 Receipt Deadline:             10:00 A.M. (Central) on 11/01/2011, or the good through date above, whichever is
                               earlier.
Certified Funds Payable To:     Wells Fargo Home Equity
Deliver Payment To:             A1TN: FRCL Inquiry Unit
                                Brice, Vander Linden & Wernick, P.C.
                                9441 LBJ Freeway, Suite 250
                                Dallas, Texas 75243

         Foreclosure processing will continue and will not be stopped unless the payoff amount is received in our office
before the receipt deadline. If the payoff amount is not received by the receipt deadline and the good through date
expires before the scheduled sale date, you must submit a request for an updated payoff amount.

         The payoff amount reported in the attached may not include amounts incurred or accrued but not currently
appearing in your lender's records. Your timely tendering of the payoff amount will stop the current foreclosure
processing; however, you will have to arrange for the timely payment of any additional amounts incurred or accrued or
your loan may be returned to foreclosure processing.

           The foreclosure fees and costs reported in the attached may include both fees and costs already incurred and
fees and costs projected to be incurred on/or before the good through date. Upon receipt of your timely payment, we
will determine the actual fees and costs due to us at that time, invoice that amount to our client, and report the difference,
if any, to your lender for further handling.

        Should you have any questions concerning the attached information, please do not hesitate to contact us at
972/643-6600.

Very truly yours,

Brice, Vander Linden & Wernick, P.C.




Selim Taherzadeh


Attachment




                                                                                                                                  204
PAYOFF INQUIRY RESPONSE
                                                                                                        File: 9508-0790
                                     DC         BK14295 PG59




                                 CAUSE NO. D-1-GN-11-003692

JANOS FARKAS,                                  §                     IN THE DISTRICT COURT OF
          Plaintiff,                           §
                                               §
v.                                             §
                                               §                       TRAVIS COUNTY, TEXAS
WELLS FARGO BANK, N.A. AND BRICE,              §
VANDER LINDEN & WERNICK, P.C.,                 §
n/k/a BUCKLEY MADOLE, P.C.                     §
           Defendants.                         §                      201ST ruDICIAL DISTRICT

                                FINAL ORDER AND JUDGMENT

        On this day, the Court considered the First Amended Traditional and No-Evidence
Motion for Summary Judgment and Motion to Sever ("Wells Fargo's Motion") filed by

Defendant Wells Fargo Bank, N.A.; the Motion for Partial Summary Judgment ("Plaintiffs

Motion") filed by Plaintiff Janos Farkas; Plaintiffs Objections and Motion to Strike and Exclude

the Summary Judgment Evidence of Defendant Wells Fargo Bank, N.A. (the ("Objections"); and

Defendant Brice, Vander Linden & Wernick, P.C. 's Traditional and No-Evidence Motion for
Summary Judgment ("Brice's Motion").

        After careful consideration of Wells Fargo's Motion, Plaintiffs Motion, the Objections,

and Brice's Motion, any timely responses thereto, the competent evidence, all pleadings properly
before the Court, the arguments of counsel, and all other matters properly before the Court, the

Court rules as follows:

        Wells Fargo's First Amended Traditional and No-Evidence Motion for Summary

Judgment is GRANTED and Plaintiff Janos Farkas shall take nothing by his claims against

Defendant Wells Fargo Bank, N.A.

        Plaintiffs Motion for Partial Summary Judgment is hereby DENIED.

        Plaintiffs Objections are hereby OVERRULED and Plaintiffs motion to strike and

exclude Defendant Wells Fargo Bank, N.A. 's summary judgment evidence is hereby DENIED.
ORDER
                                                                                    PAGE 1 OF 2
AUS:056744 7/003 58 :551442v3




                                                               604
                                          DC        BK14295 PG60




       Defendant Brice, Vander Linden & Wernick, P.C.'s Traditional and No-Evidence Motion

for Summary Judgment is GRANTED and Plaintiff Janos Farkas shall take nothing by his claims

against Defendant Brice, Vander Linden & Wernick, P.C.

       Defendant Wells Fargo Bank, N.A.'s Motion to Sever is DENIED as moot.

       This judgment finally disposes of all claims by Plaintiff and is appealable.

                                 n -(~
                             '?
       SIGNED this the       J     day of October, 2014.
                                                                          )


                                                THE HONORA E LORA      IVINGSTON
                                                TRAVIS COUNTY DISTRICT JUDGE




AGREED AS TO FORM:




William D. Davis                                     Sammy Hooda
DAVIS & ASSOCIATES                                   Michael Bums
P.O. Box 1093                                        BUCKLEY MADOLE,      P.C.
Dripping Springs, Texas 78620                        9441 LBJ Freeway, Suite 250
Attorneys for Plaintiff                              Dallas, Texas 75243
                                                     Attorneys for Brice, Vander Linden & Wernick,
                                                     P.C. nlkla Buckley Madole, P.C.



B. David L. Foster
John W. Ellis
LOCKE LORD LLP
600 Congress Ave., Suite 2200
Austin, Texas 78701
Attorneys for Wells Fargo Bank, N.A.

ORDER
                                                                                      PAGE20F2
AUS:0567447/00358:551442v3




                                                                   605
                                                                                                       Page 1
440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




                                                               266 Mortgages
                                                                    266VII Payment or Performance of Condition, Re-
                Supreme Court of Texas.                        lease, and Satisfaction
  Frankie SIMS, on Behalf of Himself and all Others                    266k306 k. Change in time or mode of payment.
Similarly Situated; and Patsy Sims, on Behalf of Herself       Most Cited Cases
     and all Others Similarly Situated, Appellants,                 The restructuring of a home equity loan that in-
                           v.                                  volved capitalization of past-due amounts owed under
CARRINGTON MORTGAGE SERVICES, L.L.C., Ap-                      the terms of the initial loan and a lowering of the in-
                         pellee.                               terest rate and the amount of installment payments, but
                                                               did not involve the satisfaction or replacement of the
                    No. 13–0638.
                                                               original note, an advancement of new funds, or an in-
                Argued Dec. 4, 2013.
                                                               crease in the obligations created by the original note,
               Decided May 16, 2014.
                                                               was not a new extension of credit that was required to
            Rehearing Denied Oct. 3, 2014.
                                                               meet the constitutional requirements for a new loan;
Background: Borrowers brought putative class action            capitalization of past-due amounts was simply a mech-
against loan servicer for their home equity loans, al-         anism for deferring payments of obligations already
leging that parties' post-loan transactions violated Texas     owed in a way that allowed borrowers to retain their
Constitution. The United States District Court for the         homes. Vernon's Ann.Texas Const. Art. 16, § 50.
Northern District of Texas, John McBryde, J., 889
                                                               *11 David M. Gottfried, Law Office of David Gottfried,
F.Supp.2d 883, granted servicer's motion to dismiss.
                                                               P.C., Austin, Earl Berry Jr., Hurt & Berry, LLP, Edom,
Borrowers appealed. The United States Court of Ap-
                                                               James Patrick Sutton, The Law Office of J. Patrick Sut-
peals for the Fifth Circuit, 538 Fed.Appx. 537, affirmed
                                                               ton, Austin, Jeffrey W. Hurt, Hurt & Berry LLP, Dallas,
in part and certified questions to the Texas Supreme
                                                               TX, for Appellant.
Court.
                                                               Amanda Schaeffer, Benjamin David Lee Foster, Daron
Holding: The Supreme Court, Hecht, C.J., held that re-
                                                               L. Janis, Robert T. Mowrey, Thomas G. Yoxall, Willi-
structuring of home equity loan was not extension of
                                                               am Scott Hastings, Locke Lord LLP, Austin, TX, for
new credit required to comply with constitutional re-
                                                               Appellee.
quirements for new loan.
     Questions answered.                                       Ken Carroll, Carrington Coleman Sloman & Blumenth-
                                                               al, Dallas, TX, for Amicus Curiae Federal National
                    West Headnotes
                                                               Mortgage Association.
Homestead 202         99
                                                               Karen M. Neeley, Cox Smith Matthews, Inc., Austin,
202 Homestead                                                  TX, for Amicus Curiae Independent Bankers Associ-
   202I Nature, Acquisition, and Extent                        ation of Texas.
              202I(E) Liabilities Enforceable Against
                                                               B. Scott Daugherty, for Amicus Curiae, Texas Bankers
Homestead
                                                               Association.
           202k99 k. Loans and advances. Most Cited
Cases                                                          John C. Fleming, Law Office of John C. Fleming, Aus-
                                                               tin, TX, for Amicus Curiae Texas Bankers Association.
Mortgages 266        306




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440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




Chief Justice HECHT delivered the opinion of the                                                I
Court.                                                            Frankie and Patsy Sims obtained a 30–year home equity
To avoid foreclosure, homeowners and lenders often try            loan in 2003. In 2009, the Simses, behind on their pay-
to restructure underwater home mortgage loans that are            ments, reached what was entitled a “Loan Modification
in default by capitalizing past-due amounts as principal,         Agreement” with Carrington Mortgage Services, L.L.C.
lowering the interest rate, and reducing monthly pay-             The agreements involved capitalizing past-due interest
ments, thereby easing the burden on the homeowners.               and other charges, including fees and unpaid taxes and
But home equity loans are subject to the requirements             insurance premiums, and reducing the interest rate and
of Article XVI, Section 50 of the Texas Constitution.             monthly payments. Two years later, the Simses were
The United States Court of Appeals for the Fifth Circuit          again behind, and this time CMS sought foreclosure.
has asked whether those requirements apply to such                The Simses resisted, asserting that the 2009 restructur-
                    FN1
loan restructuring.      We answer that as long as the            ing violated constitutional requirements for home equity
original note is not satisfied and replaced, and there is         loans. The parties then reached a second “Loan Modi-
no additional extension of credit, as we define it, the re-       fication Agreement”, further reducing the interest rate
structuring is valid and need not *12 meet the constitu-          and payments. The following chart summarizes the loan
tional requirements for a new loan.                               data at the outset and after the two restructurings:

         FN1. 538 Fed.Appx. 537 (5th Cir.2013) (per
         curiam); see TEX. CONST. art. V, § 3–c(a)
         (“The supreme court [has] jurisdiction to an-
         swer questions of state law certified from a fed-
         eral appellate court.”).

                    Principal         Amt. Cap'd              New Prin.          Rate        Payment        Appraisal
2003 Loan           $76,000.00        —                       —                  9%          $611.51        $96,000
2009 Mod.           $72,145.50        $2,200.00               $74,345.50         6.5%        $511.16        $72,300
2011 Mod.           $72,655.61        $7,368.44               $80,023.95         4.75%       $492.34        $73,000
                                                                           return for a loan that I have received, I promise
     The original note required the Simses to pay prin-                    to pay U.S. $76,000.00 (this amount is called
                                   FN2
cipal, interest, and late charges.     The security agree-                 ‘principal’), plus interest, to the order of the
ment echoed that requirement and added an obligation                       Lender.” The note also provided for a 5% late
for the Simses to make payments for “Escrow Items”,                        charge on overdue principal and interest.
such as taxes, assessments, and insurance premiums.
FN3
      The security agreement also authorized the lender                    FN3. The security instrument stated:
to “do and pay for whatever is reasonable or appropri-                     “Borrower shall pay to Lender on the day Peri-
ate” to protect its interest in the property and its rights                odic Payments are due under the Note, until the
under the agreement and provided that any amount the                       Note is paid in full, a sum (the ‘Funds') to
lender disbursed to that end “shall become additional                      provide for payment of amounts due for: (a)
debt of Borrower secured by this Security Instrument.”                     taxes and assessments and other items which
The 2009 and 2011 “Loan Modification Agreements”                           can attain priority over this Security Instrument
provided that all the Simses' obligations and all the loan                 as a lien or encumbrance on the Property; ...
                                    FN4
documents remained unchanged.                                              and (c) premiums for any and all insurance re-
                                                                           quired by Lender under Section 5. These items
         FN2. The note signed by the Simses stated: “In                    are called ‘Escrow Items.’ ”




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440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




        FN4. The 2009 agreement stated: “All coven-                 If the transaction is a modification rather than a re-
        ants, agreements, stipulations, and conditions           finance, the following questions also arise:
        in your Note and Mortgage will remain in full
        force and effect, except as modified herein, and           2. Does the capitalization of past-due interest, fees,
        none of your obligations or liabilities under            property taxes, or insurance premiums constitute an
        your Note and Mortgage will be diminished or             impermissible “advance of additional funds” under
        released by any provisions hereof, nor will this         Section 153.14(2)(B) of the Texas Administrative
        Agreement in any way impair, diminish, or af-            Code?
        fect [the] rights under or remedies on your
                                                                   3. Must such a modification comply with the re-
        Note and Mortgage.”
                                                                 quirements of Section 50(a)(6), including subsection
          Similarly, the 2011 Agreement stated: “[A]ll           (B), which mandates that a home equity loan have a
          terms and provisions of the Loan Documents,            maximum loan-to-value ratio of 80%?
          except as expressly modified by this Agree-
                                                                   4. Do repeated modifications like those in this case
          ment, remain in full force and effect; nothing
                                                                 convert a home equity loan into an open-end account
          in this Agreement shall be understood or
                                                                 that must comply with Section 50(t)?
          construed to be a satisfaction or release in
          whole or in part of the obligations contained                                    II
          in the Loan Documents; and [ ] except as                  As we have more fully explained in prior decisions,
          otherwise specifically provided in, and ex-          because of Texas' strong, historic protection of the
          pressly modified by, this Agreement, the             homestead, home equity loans are regulated, not by stat-
          Lender and you will be bound by, and will            ute as one might suppose, but by the “elaborate, detailed
          comply with, all of the terms and conditions         provisions” of Article XVI, Section 50 of the Texas
          of the Loan Documents.”                                            FN6
                                                               Constitution.      To provide guidance to lenders, the
                                                               Finance Commission and the Credit Union Commission
     Two months after the 2011 agreement, the Simses
                                                               have been authorized by the Constitution and by statute
brought this class action *13 against CMS in the United
                                                               to interpret these provisions, subject to judicial review,
States District Court, alleging that CMS's loan modific-       FN7
                                                                     and the Commissions have done so in Chapter 153
ations for them and other similarly situated borrowers                                            FN8
                                                               of the Texas Administrative Code.        “A lender's com-
violated Article XVI, Section 50 of the Texas Constitu-
                                                               pliance with an agency interpretation of Section 50,
tion. Before considering certification, the court dis-
                                                               even a wrong interpretation, is compliance with Section
missed the case under Federal Rule of Civil Procedure                      FN9
                                                  FN5          50 itself.”       Thus, in answering the certified ques-
12(b)(6) for failure to state a cause of action,      and
                                                               tions, we look to the constitutional text and the Com-
the Simses appealed. After oral argument, the Fifth Cir-
                                                               missions' interpretations. However, those interpretations
cuit certified the following four questions to us:
                                                               “can do no more than interpret the constitutional text,
                                                                                       FN10
        FN5. 889 F.Supp.2d 883, 884 (N.D.Tex.2012).            just as a court would.”        The issue is not whether a
                                                               lending practice or policy is advisable, something the
    1. After an initial extension of credit, if a home         Commissions would decide in exercising their regulat-
  equity lender enters into a new agreement with the           ory functions; the issue is what the Constitution re-
                                                                       FN11
  borrower that capitalizes past-due interest, fees, prop-     quires.
  erty taxes, or insurance premiums into the principal of
  the loan but neither satisfies nor replaces the original             FN6. Fin. Comm'n of Tex. v. Norwood, 418
  note, is the transaction a modification or a refinance               S.W.3d 566, 571 (Tex.2013); see also LaSalle
  for purposes of Section 50 of Article XVI of the                     Bank Nat'l Ass'n v. White, 246 S.W.3d 616, 618
  Texas Constitution?                                                  (Tex.2007) (per curiam) (“Texas became the




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440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




        last state in the nation to permit home-equity                 new disclosures” that “occurs when an existing
        loans when constitutional amendments voted                     obligation that was subject to [federal ‘closed
        on by referendum took effect in 1997.”).                       end credit’ disclosure requirements] is satisfied
                                                                       and replaced by a new obligation”. 12 C.F.R. §
        FN7. Norwood, 418 S.W.3d at 573; TEX.                          226.20(a); 12 C.F.R. pt. 226, supp. 1, cmt.
        CONST. art. XVI, § 50(u).                                      20(a) (Official Staff Interpretations). Some
                                                                       transactions, however, will not be treated as a
        FN8. 7 TEX. ADMIN. CODE §§ 153.1–.96
                                                                       refinancing under this section, including “[a]
        FN9. Norwood, 418 S.W.3d at 573.                               change in the payment schedule or a change in
                                                                       collateral requirements as a result of the con-
        FN10. Id. at 585.                                              sumer's default or delinquency, unless the rate
                                                                       is increased, or the new amount financed ex-
        FN11. Id.                                                      ceeds the unpaid balance plus earned finance
                                                                       charge and premiums for continuation insur-
                             A
                                                                       ance....” Id. § 226.20(a)(4). The Federal Na-
     The certified questions assume a distinction
                                                                       tional Mortgage Association, in an amicus
between a loan modification and a refinancing that, if
                                     FN12                              brief, references the same regulation but does
understood in financial *14 circles,       is not clear in
                                                                       not otherwise attempt to define a distinction
the text of Section 50. Neither concept is defined in
                                                                       between refinancings and modifications. An
Section 50. The word “refinance” is used eleven times
                                        FN13                           amicus brief by the Independent Bankers Asso-
in Section 50, and “refinancing” once.         In each in-
                                                                       ciation of Texas, the Texas Bankers Associ-
stance, the reference seems to be to a redone transac-
                                                                       ation, and the Texas Mortgage Bankers Associ-
tion. A form of the word “modify” is used in three
                                                                       ation refers to the distinction but does not at-
places in Section 50. In one, lenders are authorized to
                                                                       tempt to define it. Other federal entities, like
“modify” previously provided documentation at closing
                           FN14                                        HUD and FDIC, have their own glossaries re-
in exigent circumstances.       In the other two, lenders
                                                                       ferring to and defining general terms like
can correct noncompliance with Section 50 by sending a
                                                                       “modification,”     “mortgage       modification,”
borrower “notice modifying any ... amount, percentage,
                                                                       “refinancing,” and “debt restructuring,” but
term, or other provision prohibited by this section”,
FN15                                                                   these agencies, to fulfill their specific missions,
        or, if noncompliance cannot be cured under the
                                                                       also define and apply more specific classifica-
other provisions, by offering the borrower a $1,000
                                                                       tions or limitations.
credit and “the right to refinance the extension of cred-
it” for the remaining term at no cost “with any modific-               FN13. TEX. CONST. art. XVI, § 50(a)(4),
ations necessary to comply” or that the parties agree                  (a)(6)(M)(iii), (a)(6)(Q)(vii), (a)(6)(Q)(x)(f),
               FN16
will comply.        In these two instances, if not also in             (a)(8); § 50(e) and (f).
the first, a modification could substantially alter the
loan; indeed, in the last situation, modifications can                 FN14. Id. § 50(a)(6)(M)(ii).
                       FN17
shape the refinancing.
                                                                       FN15. Id. § 50(a)(6)(Q)(x)(c).
        FN12. CMS points to the Federal Reserve
        Board's definition of a “refinancing” requiring                FN16. Id. § 50(a)(6)(Q)(x)(f).
        new Truth In Lending Act disclosures under
                                                                       FN17. Section 153.96(b) of the Commissions'
        Regulation Z when refinancing is undertaken
                                                                       interpretations contemplates that in order to
        by the original creditor, or a holder or servicer
                                                                       comply with constitutional requirements, “the
        of the original obligation. Under this definition,
                                                                       lender ... and borrower may ... modify the
        a refinancing is “a new transaction requiring




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440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




        equity loan without completing the require-                     and replaced. A home equity loan and a sub-
        ments of a refinance”. 7 TEX. ADMIN.                            sequent modification will be considered a
        CODEE § 153.96(b)(2)(A).                                        single transaction. The home equity require-
                                                                        ments of Section 50(a)(6) will be applied to
     The modification-refinancing distinction is one                    the original loan and the subsequent modific-
drawn by the Commissions in interpreting Section                        ation as a single transaction.
50(a)(6)(M)(iii). The effect of that provision is to pro-
hibit a second home equity loan within a year of the                    “(A) A modification of an equity loan must
first, with certain exceptions. As interpreted by the                   be agreed to in writing by the borrower and
Commissions, the provision prohibits a “refinancing”                    lender, unless otherwise required by law. An
                                                    FN18
like a “new equity loan” but not a “modification”.                      example of a modification that is not re-
According to the *15 Commissions, a modification does                   quired to be in writing is the modification re-
not involve satisfaction or replacement of the original                 quired under the Soldiers' and Sailors' Civil
note, an “advance of additional funds”, or new terms                    Relief Act.
that would not have been permitted for the original
                       FN19                                             “(B) The advance of additional funds to a
“extension of credit”.        Further, the original loan
and a subsequent modification are treated as a single                   borrower is not permitted by modification of
transaction, including for purposes of the 3% fee cap.                  an equity loan.
FN20
                                                                        “(C) A modification of an equity loan may
        FN18. “ § 153.14. One Year Prohibition: Sec-                    not provide for new terms that would not
        tion 50(a)(6)(M)(iii)                                           have been permitted by applicable law at the
                                                                        date of closing of the extension of credit.
          “An equity loan may not be closed before the
          first anniversary of the closing date of any                  “(D) The 3% fee cap required by Section
          other equity loan secured by the same                         50(a)(6)(E) applies to the original home
          homestead property.                                           equity loan and any subsequent modification
                                                                        as a single transaction.”
          “(1) Section 50(a)(6)(M)(iii) prohibits an
          owner who has obtained an equity loan from:                   7. TEX. ADMIN. CODE § 153.14 (emphasis
                                                                        added).
          “(A) refinancing the equity loan before one
          year has elapsed since the loan's closing date;             FN19. Id. § 153.14(2).
          or
                                                                      FN20. Id. § 153.14(2)(D).
          “(B) obtaining a new equity loan on the same
                                                                  But Section 50(a)(6)(M)(iii) of the Constitution
          homestead property before one year has
                                                              does not mention refinancing or modification. It states:
          elapsed since the previous equity loan's clos-
          ing date, regardless of whether the previous            (a) The homestead ... is ... protected from forced
          equity loan has been paid in full.                    sale[ ] for the payment of all debts except for: ...
          “(2) Section 50(a)(6)(M)(iii) does not prohib-            (6) an extension of credit that: ...
          it modification of an equity loan before one
          year has elapsed since the loan's closing date.           (M) is closed not before: ...
          A modification of a home equity loan occurs
          when one or more terms of an existing equity              (iii) the first anniversary of the closing date of
          loan is modified, but the note is not satisfied         any other extension of credit described by Subsec-




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440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
(Cite as: 440 S.W.3d 10)




    tion (a)(6) of this section secured by the same                     sions of credit” for purposes of TEX.
    homestead property [with certain exceptions]....                    FIN.CODE § 34.201 as including various trans-
    FN21
                                                                        actions involving an advance of funds to be re-
                                                                        paid over time).

        FN21. TEX. CONST. art. XVI,                §   50           The Simses argue that any increase in the principal
        (a)(6)(M)(iii) (emphasis added).                       amount of a loan is a new extension of credit within the
                                                               meaning of Section 50(a)(6), in effect equating the loan
     The applicability of this particular provision, as
                                                               principal with an extension of credit. The Constitution
well as all of Section 50(a)(6), which governs home
                                                               contradicts the Simses' argument. Section 50(a)(6)(E)
equity loans, depends not on whether the transaction is
                                                               refers to principal as a component of an extension of
a modification or a refinance but on whether it is an
                                                               credit, capping fees at “three percent of the original
“extension of credit”. If the restructuring of a home                                                          FN23
                                                               principal amount of the extension of credit”.          The
equity loan does not involve a new extension of credit,
                                                               extension of credit for purposes of Section 50(a)(6) con-
the requirements of Section 50(a)(6) do not apply. Thus,
                                                               sists not merely of the creation of a principal debt but
we restate the first certified question as follows:
                                                               includes all the terms of the loan transaction. Terms re-
    1. After an initial extension of credit, if a home         quiring the borrower to pay taxes, insurance premiums,
  equity lender enters into a new agreement with the           and other such expenses when due protect the lender's
  borrower that capitalizes past-due interest, fees, prop-     security and are as much a part of the extension of cred-
  erty taxes, or insurance premiums into the principal of      it as terms requiring timely payments of principal and
  the loan but neither satisfies nor replaces the original     interest. The Simses argue that in restructuring a loan to
  note, is the transaction a new extension of credit for       capitalize past-due amounts, the lender is actually ad-
  purposes of section 50 of Article XVI of the Texas           vancing additional funds to itself (past-due interest) or
  Constitution?                                                others (past-due taxes and insurance) to pay those
                                                               amounts for the borrower, and that this constitutes a
                            B                                  new extension of credit. But the borrower's obligation
     Neither the Constitution nor the Commissions' in-         for such amounts, and the lender's right to pay them to
terpretations define an “extension of credit”, but its         protect its security, were all terms of the original exten-
meaning is clear. Credit is simply the ability to assume       sion of credit. The Simses argue that requiring interest
a debt repayable over time, and an extension of credit         on capitalized, past-due amounts is really a new loan,
affords the right to do so in a *16 particular situation.      but it is simply a mechanism for deferring payment of
FN22
                                                               obligations already owed in a way that allows the bor-
                                                               rower to retain his home.
        FN22. See, e.g., TEX. FIN.CODE §
        31.002(a)(34) (“ ‘Loans and extensions of cred-                 FN23. TEX. CONST. art. XVI, § 50(a)(6)(E)
        it’ means direct or indirect advances of money                  (emphasis added).
        ... to a person that are conditioned on the oblig-
        ation of the person to repay....”); id. §                   The Simses argue that a loan that can be restruc-
        181.002(a)(28) (same); id. § 350.001(a)                tured to change the amount of the periodic payments
        (“credit means the right granted to a debtor to        does not meet the requirement of Section 50(a)(6)(L)(i)
        defer payment of debt or to incur debt and de-         that loans be “scheduled to be repaid ... in substantially
                                                                                                      FN24
        fer its payment”); id. § 393.001(4) (“                 equal successive period installments”.        But the re-
        ‘extension of consumer credit’ means the right         quired schedule is not one that, when initially set, can
        to defer payment”); see also 7 TEX. ADMIN.             never be altered. After all, whenever a payment is
        CODE § 12.3(a)(2) (defining “[l]oans or exten-         missed, the schedule is altered. Further, Section 50(g)
                                                                                                                   FN25
                                                               gives the borrower the right to prepay the loan,




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(Cite as: 440 S.W.3d 10)




which would alter the initial schedule. Section 50(a)(6)       ment of new funds, or an increase in the obligations cre-
does not forbid a revision of the initial repayment            ated by the original note, is not a new extension of cred-
schedule that merely adjusts the regular installment           it that must meet the requirements of Section 50.
amount.
                                                                                           C
         FN24. Id. § 50(a)(6)(L)(i).                                Our reasons for answering the first question as we
                                                               have largely dictate our answers to the other three certi-
         FN25. TEX. CONST. art. XVI, § 50(g).                  fied questions.

     CMS argues that restructuring a loan does not in-              Is the capitalization of past-due interest, taxes, in-
volve a new extension of credit so long as the borrow-         surance premiums, and fees an “advance of additional
er's note is not satisfied or replaced and no new money        funds” under the Commissions' interpretations of Sec-
is extended. We agree that these two conditions are ne-                  FN26
                                                               tion 50?        No, if those amounts were among the ob-
cessary, but we cannot say with assurance that they are        ligations assumed by the borrower under the terms of
sufficient. For example, a restructuring to make the           the original loan. And more importantly, such capitaliz-
homestead lien security for another indebtedness, such         ation is not a new extension of credit under Section 50
as the borrower's consumer or credit card debt, would          (a)(6).
certainly be a new extension of credit. The test should
be whether the secured obligations are those incurred                   FN26. 7 TEX. ADMIN. CODE § 153.14.
under the terms of the original loan.
                                                                   Must a restructuring like the Simses' comply with
     *17 The Simses object that this test provides no ef-      Section 50(a)(6)? No, because it does not involve a new
fective limit on the size or frequency of additions to         extension of credit, for the reasons we have explained.
principal. But the terms of the original loan supply the       The Simses argue that any restructuring must satisfy
limit. The Simses' argument is that any change in prin-        Section 50(a)(6)(B), which requires a home equity loan
cipal is a new extension of credit, but as we have             to be
shown, their position is inconsistent with Section 50.
                                                                 of a principal amount that when added to the aggreg-
     The Simses argue that it matters not that, as in their      ate total of the outstanding principal balances of all
own situation, restructuring lowers the interest rate and        other indebtedness secured by valid encumbrances of
the amount of installment payments, and makes it pos-            record against the homestead does not exceed 80 per-
sible for borrowers to keep their homes and meet their           cent of the fair market value of the homestead on the
                                                                                                          FN27
obligations. Lenders have two options other than fore-           date the extension of credit is made....
closing on loans in default: further forbearance and for-
giveness. Nevertheless, the Simses' argument encour-
                                                                        FN27. TEX. CONST. art. XVI, § 50(a)(6)(B)
ages lenders to foreclose, which is certainly at odds
                                                                        (emphasis added).
with the fundamental purpose of Section 50: to protect
the homestead.                                                      The Simses' argument incorrectly assumes that the
                                                                                                           FN28
                                                               restructuring is a new extension of credit.
     To the first certified question, we answer: the re-
structuring of a home equity loan that, as in the context               FN28. The Circuit noted that if the highlighted
from which the question arises, involves capitalization                 phrase modified the word “value” and not the
of past-due amounts owed under the terms of the initial                 word “exceed”, the provision would never al-
loan and a lowering of the interest rate and the amount                 low the loan principal, during the life of the
of installment payments, but does not involve the satis-                loan, to exceed the amount that was the value
faction or replacement of the original note, an advance-                of the property when the loan was closed. 538




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        Fed.Appx. 537, 545–546 (5th Cir.2013) (per            closure while maintaining the terms of the original ex-
        curiam). This could happen if the loan-to-value       tension of credit. We answer the certified questions ac-
        ratio was very close to the limit at the time the     cordingly.
        loan closed, and when the loan was restruc-
        tured, the amount capitalized caused the total        Tex.,2014.
        principal indebtedness to exceed the limit. But       Sims v. Carrington Mortg. Services, L.L.C.
        nothing in Section 50 suggests that a loan's          440 S.W.3d 10, 57 Tex. Sup. Ct. J. 588
        compliance is to be determined at any time oth-
                                                              END OF DOCUMENT
        er than when it is made.

     Finally, would repeated restructuring convert a
home equity loan into an open-*18 end account subject
to Section 50(t)? Section 50(t) applies to a home equity
line of credit—“a form of an open-end account that may
be debited from time to time, under which credit may be
extended from time to time and under which ... the own-
er requests advances, repays money, and reborrows
money”. The repeat transactions are clearly contem-
                         FN29
plated from the outset.        This description does not
remotely resemble a loan with a stated principal that is
to be repaid as scheduled from the outset but must be
restructured to avoid foreclosure.

        FN29. See also TEX. FIN.CODE §
        301.002(a)(14)(A) (“In this subtitle ...
        ‘Open-end account’ ... means an account under
        a written contract between a creditor and an ob-
        ligor in connection with which: (i) the creditor
        reasonably contemplates repeated transactions
        and the obligor is authorized to make purchases
        or borrow money; (ii) an interest or time price
        differential may be charged from time to time
        on an outstanding unpaid balance; and (iii) the
        amount of credit that may be extended during
        the term of the account is generally made avail-
        able to the extent that any outstanding balance
        is repaid....”).

        ******

     Fundamentally, the requirements of Article XIV,
Section 50 of the Texas Constitution for extensions of
credit secured by the homestead are designed to protect
the homestead, not endanger it. The Constitution does
not prohibit the restructuring of a home equity loan that
already meets its requirements in order to avoid fore-




                              © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
THE TEXAS CONSTITUTION ARTICLE 16. GENERAL PROVISIONS         Page 1 of 49




                                 THE TEXAS CONSTITUTION

                            ARTICLE 16. GENERAL PROVISIONS

      Sec. 1. OFFICIAL OATH. (a) All elected and appointed officers,
before they enter upon the duties of their offices, shall take the
following Oath or Affirmation:
      "I, _______________________, do solemnly swear (or affirm), that
I will faithfully execute the duties of the office of
___________________ of the State of Texas, and will to the best of my
ability preserve, protect, and defend the Constitution and laws of the
United States and of this State, so help me God."
      (b) All elected or appointed officers, before taking the Oath
or Affirmation of office prescribed by this section and entering upon
the duties of office, shall subscribe to the following statement:
      "I, _______________________, do solemnly swear (or affirm) that
I have not directly or indirectly paid, offered, promised to pay,
contributed, or promised to contribute any money or thing of value, or
promised any public office or employment for the giving or withholding
of a vote at the election at which I was elected or as a reward to
secure my appointment or confirmation, whichever the case may be, so
help me God."
      (c) Members of the Legislature, the Secretary of State, and all
other elected and appointed state officers shall file the signed
statement required by Subsection (b) of this section with the
Secretary of State before taking the Oath or Affirmation of office
prescribed by Subsection (a) of this section. All other officers
shall retain the signed statement required by Subsection (b) of this
section with the official records of the office.

(Amended Nov. 8, 1938, and Nov. 6, 1956; Subsecs. (a)-(c) amended and
(d)-(f) added Nov. 7, 1989; Subsecs. (a) and (b) amended, Subsecs. (c)
and (d) deleted, and Subsecs. (e) and (f) amended and redesignated as
Subsec. (c) Nov. 6, 2001.) (TEMPORARY TRANSITION PROVISION for Sec.
1: See Appendix, Note 3.)


      Sec. 2. EXCLUSIONS FROM OFFICE, JURY SERVICE AND RIGHT OF
SUFFRAGE; PROTECTION OF RIGHT OF SUFFRAGE. Laws shall be made to




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      exclude from office persons who have been convicted of bribery,
perjury, forgery, or other high crimes.

(Amended Nov. 6, 2001.)            (TEMPORARY TRANSITION PROVISION for Sec. 2:
See Appendix, Note 3.)


        Sec. 3.     (Repealed Aug. 5, 1969.)


        Sec. 4.     (Repealed Aug. 5, 1969.)

      Sec. 5. DISQUALIFICATION TO HOLD OFFICE BY GIVING OR OFFERING
BRIBE. Every person shall be disqualified from holding any office of
profit, or trust, in this State, who shall have been convicted of
having given or offered a bribe to procure his election or appointment.


      Sec. 6. APPROPRIATIONS FOR PRIVATE PURPOSES; STATE
PARTICIPATION IN PROGRAMS FINANCED WITH PRIVATE OR FEDERAL FUNDS FOR
REHABILITATION OF BLIND, CRIPPLED, OR PHYSICALLY OR MENTALLY
HANDICAPPED PERSONS. (a) No appropriation for private or individual
purposes shall be made, unless authorized by this Constitution. A
regular statement, under oath, and an account of the receipts and
expenditures of all public money shall be published annually, in such
manner as shall be prescribed by law.
      (b) State agencies charged with the responsibility of providing
services to those who are blind, crippled, or otherwise physically or
mentally handicapped may accept money from private or federal sources,
designated by the private or federal source as money to be used in and
establishing and equipping facilities for assisting those who are
blind, crippled, or otherwise physically or mentally handicapped in
becoming gainfully employed, in rehabilitating and restoring the
handicapped, and in providing other services determined by the state
agency to be essential for the better care and treatment of the
handicapped. Money accepted under this subsection is state money.
State agencies may spend money accepted under this subsection, and no
other money, for specific programs and projects to be conducted by
local level or other private, nonsectarian associations, groups, and
nonprofit organizations, in establishing and equipping facilities for
assisting those who are blind, crippled, or otherwise physically or




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      mentally handicapped in becoming gainfully employed, in
rehabilitating and restoring the handicapped, and in providing other
services determined by the state agency to be essential for the better
care or treatment of the handicapped.
      The state agencies may deposit money accepted under this
subsection either in the state treasury or in other secure
depositories. The money may not be expended for any purpose other
than the purpose for which it was given. Notwithstanding any other
provision of this Constitution, the state agencies may expend money
accepted under this subsection without the necessity of an
appropriation, unless the Legislature, by law, requires that the money
be expended only on appropriation. The Legislature may prohibit state
agencies from accepting money under this subsection or may regulate
the amount of money accepted, the way the acceptance and expenditure
of the money is administered, and the purposes for which the state
agencies may expend the money. Money accepted under this subsection
for a purpose prohibited by the Legislature shall be returned to the
entity that gave the money.
      This subsection does not prohibit state agencies authorized to
render services to the handicapped from contracting with privately-
owned or local facilities for necessary and essential services,
subject to such conditions, standards, and procedures as may be
prescribed by law.

(Amended Nov. 8, 1966.)


        Sec. 7.     (Repealed Aug. 5, 1969.)


        Sec. 8.     (Redesignated as Sec. 14, Art. IX, Nov. 6, 2001.)

(TEMPORARY TRANSITION PROVISION for Sec. 8: See Appendix, Note 3.)


      Sec. 9. FORFEITURE OF RESIDENCE BY ABSENCE ON PUBLIC BUSINESS.
Absence on business of the State, or of the United States, shall not
forfeit a residence once obtained, so as to deprive any one of the
right of suffrage, or of being elected or appointed to any office
under the exceptions contained in this Constitution.




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      Sec. 10. DEDUCTIONS FROM SALARY FOR NEGLECT OF DUTY. The
Legislature shall provide for deductions from the salaries of public
officers who may neglect the performance of any duty that may be
assigned them by law.


      Sec. 11. USURY; RATE OF INTEREST IN ABSENCE OF LEGISLATION.
The Legislature shall have authority to define interest and fix
maximum rates of interest; provided, however, in the absence of
legislation fixing maximum rates of interest all contracts for a
greater rate of interest than ten per centum (10%) per annum shall be
deemed usurious; provided, further, that in contracts where no rate of
interest is agreed upon, the rate shall not exceed six per centum (6%)
per annum.

(Amended Aug. 11, 1891, Nov. 8, 1960, and Nov. 6, 2001.)      (TEMPORARY
TRANSITION PROVISION for Sec. 11: See Appendix, Note 3.)


      Sec. 12. MEMBERS OF CONGRESS; OFFICERS OF UNITED STATES OR
FOREIGN POWER; INELIGIBILITY TO HOLD OFFICE. No member of Congress,
nor person holding or exercising any office of profit or trust, under
the United States, or either of them, or under any foreign power,
shall be eligible as a member of the Legislature, or hold or exercise
any office of profit or trust under this State.


      Sec. 13. UNOPPOSED CANDIDATE FOR OFFICE. For an office for
which this constitution requires an election, the legislature may
provide by general law for a person to take the office without an
election if the person is the only candidate to qualify in an election
to be held for that office.

(Former Sec. 13 repealed Aug. 5, 1969; current Sec. 13 added Sept. 13,
2003.)


      Sec. 13A. UNOPPOSED CANDIDATE FOR OFFICE OF POLITICAL
SUBDIVISION. For an office of a political subdivision for which this
constitution requires an election, the legislature may provide by
general law for a person to assume the office without an election if
the person is the only candidate to qualify in an election to be held




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        for that office.

(Added Sept. 13, 2003.)


      Sec. 14. CIVIL OFFICERS; RESIDENCE; LOCATION OF OFFICES. All
civil officers shall reside within the State; and all district or
county officers within their districts or counties, and shall keep
their offices at such places as may be required by law; and failure to
comply with this condition shall vacate the office so held.

      Sec. 15. SEPARATE AND COMMUNITY PROPERTY. All property, both
real and personal, of a spouse owned or claimed before marriage, and
that acquired afterward by gift, devise or descent, shall be the
separate property of that spouse; and laws shall be passed more
clearly defining the rights of the spouses, in relation to separate
and community property; provided that persons about to marry and
spouses, without the intention to defraud pre-existing creditors, may
by written instrument from time to time partition between themselves
all or part of their property, then existing or to be acquired, or
exchange between themselves the community interest of one spouse or
future spouse in any property for the community interest of the other
spouse or future spouse in other community property then existing or
to be acquired, whereupon the portion or interest set aside to each
spouse shall be and constitute a part of the separate property and
estate of such spouse or future spouse; spouses also may from time to
time, by written instrument, agree between themselves that the income
or property from all or part of the separate property then owned or
which thereafter might be acquired by only one of them, shall be the
separate property of that spouse; if one spouse makes a gift of
property to the other that gift is presumed to include all the income
or property which might arise from that gift of property; spouses may
agree in writing that all or part of their community property becomes
the property of the surviving spouse on the death of a spouse; and
spouses may agree in writing that all or part of the separate property
owned by either or both of them shall be the spouses' community
property.

(Amended Nov. 2, 1948, Nov. 4, 1980, Nov. 3, 1987, and Nov. 2, 1999.)




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      Sec. 16. CORPORATIONS WITH BANKING AND DISCOUNTING PRIVILEGES.
(a) The Legislature shall by general laws, authorize the incorporation
of state banks and savings and loan associations and shall provide for
a system of State supervision, regulation and control of such bodies
which will adequately protect and secure the depositors and creditors
thereof.
      No state bank shall be chartered until all of the authorized
capital stock has been subscribed and paid in full in cash. Except as
may be permitted by the Legislature pursuant to Subsections (b), (d),
and (e) of this Section 16, a state bank shall not be authorized to
engage in business at more than one place which shall be designated in
its charter; however, this restriction shall not apply to any other
type of financial institution chartered under the laws of this state.
      No foreign corporation, other than the national banks of the
United States domiciled in this State, shall be permitted to exercise
banking or discounting privileges in this State.
      (b) If it finds that the convenience of the public will be
served thereby, the Legislature may authorize State and national banks
to establish and operate unmanned teller machines within the county or
city of their domicile. Such machines may perform all banking
functions. Banks which are domiciled within a city lying in two or
more counties may be permitted to establish and operate unmanned
teller machines within both the city and the county of their
domicile. The Legislature shall provide that a bank shall have the
right to share in the use of these teller machines, not situated at a
banking house, which are located within the county or the city of the
bank's domicile, on a reasonable, nondiscriminatory basis, consistent
with anti-trust laws. Banks may share the use of such machines within
the county or city of their domicile with savings and loan
associations and credit unions which are domiciled in the same county
or city.
      (c) A state bank created by virtue of the power granted by this
section, notwithstanding any other provision of this section, has the
same rights and privileges that are or may be granted to national
banks of the United States domiciled in this State.
      (d) The Legislature may authorize a state bank or national bank
of the United States domiciled in this State to engage in business at
more than one place if it does so through the purchase and assumption




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      of certain assets and liabilities of a failed state bank or a
failed national bank of the United States domiciled in this State.
      (e) The Legislature shall authorize a state bank or national
bank of the United States domiciled in this State to establish and
operate banking facilities at locations within the county or city of
its domicile, subject to limitations the Legislature imposes. The
Legislature may permit a bank domiciled within a city located in two
or more counties to establish and operate branches within both the
city and the county of its domicile, subject to limitations the
Legislature imposes.
      (f) A bank may not be considered a branch or facility of
another bank solely because it is owned or controlled by the same
stockholders as the other bank, has common accounting and
administrative systems with the other bank, or has a name similar to
the other bank's or because of a combination of those factors.

(Amended Nov. 8, 1904, and Aug. 23, 1937; Subsecs. (a) and (b) amended
Nov. 4, 1980; Subsec. (c) added Nov. 6, 1984; Subsecs. (a) and (c)
amended and (d)-(f) added Nov. 4, 1986.)


      Sec. 17. OFFICERS TO SERVE UNTIL SUCCESSORS QUALIFIED. All
officers within this State shall continue to perform the duties of
their offices until their successors shall be duly qualified.


        Sec. 18.      (Repealed Nov. 2, 1999.)

(TEMPORARY TRANSITION PROVISIONS for Sec. 18: See Appendix, Note 1.)


        Sec. 19.      (Repealed Nov. 6, 2001.)

(TEMPORARY TRANSITION PROVISION for Sec. 19: See Appendix, Note 3.)


      Sec. 20. MIXED ALCOHOLIC BEVERAGES; INTOXICATING LIQUORS;
WINES; REGULATION; LOCAL OPTION. (a) The Legislature shall have the
power to enact a Mixed Beverage Law regulating the sale of mixed
alcoholic beverages on a local option election basis. The Legislature
shall also have the power to regulate the manufacture, sale,
possession and transportation of intoxicating liquors, including the
power to establish a State Monopoly on the sale of distilled liquors.




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      Should the Legislature enact any enabling laws in anticipation
of this amendment, no such law shall be void by reason of its
anticipatory nature.
      (b) The Legislature shall enact a law or laws whereby the
qualified voters of any county, justice's precinct or incorporated
town or city, may, by a majority vote of those voting, determine from
time to time whether the sale of intoxicating liquors for beverage
purposes shall be prohibited or legalized within the prescribed
limits; and such laws shall contain provisions for voting on the sale
of intoxicating liquors of various types and various alcoholic content.
      (c) In all counties, justice's precincts or incorporated towns
or cities wherein the sale of intoxicating liquors had been prohibited
by local option elections held under the laws of the State of Texas
and in force at the time of the taking effect of Section 20, Article
XVI of the Constitution of Texas, it shall continue to be unlawful to
manufacture, sell, barter or exchange in any such county, justice's
precinct or incorporated town or city, any spirituous, vinous or malt
liquors or medicated bitters capable of producing intoxication or any
other intoxicants whatsoever, for beverage purposes, unless and until
a majority of the qualified voters in such county or political
subdivision thereof voting in an election held for such purpose shall
determine such to be lawful; provided that this subsection shall not
prohibit the sale of alcoholic beverages containing not more than 3.2
per cent alcohol by weight in cities, counties or political
subdivisions thereof in which the qualified voters have voted to
legalize such sale under the provisions of Chapter 116, Acts of the
Regular Session of the 43rd Legislature.
      (d) The legislature may enact laws and direct the Alcoholic
Beverage Commission or its successor to set policies for all wineries
in this state, regardless of whether the winery is located in an area
in which the sale of wine has or has not been authorized by local
option election, for the manufacturing of wine, including the on-
premises selling of wine to the ultimate consumer for consumption on
or off the winery premises, the buying of wine from or the selling of
wine to any other person authorized under general law to purchase and
sell wine in this state, and the dispensing of wine without charge,
for tasting purposes, for consumption on the winery premises, and for
any purpose to promote the wine industry in this state.




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(Amended Aug. 11, 1891, May 24, 1919, Aug. 26, 1933, Aug. 24, 1935,
and Nov. 3, 1970; Subsec. (d) added Sept. 13, 2003.)


      Sec. 21. PUBLIC PRINTING AND BINDING; REPAIRS AND FURNISHINGS;
CONTRACTS. All stationery, printing, fuel used in the legislature and
departments of the government other than the judicial department,
printing and binding of the laws, journals, and department reports,
and all other printing and binding and the repairing and furnishing of
the halls and rooms used during meetings of the legislature and in
committees, except proclamations and such products and services as may
be done by handicapped individuals employed in nonprofit
rehabilitation facilities providing sheltered employment to the
handicapped in Texas, shall be performed under contract, to be given
to the lowest responsible bidder, below such maximum price and under
such regulations as shall be prescribed by law. No member or officer
of any department of the government shall in any way have a financial
interest in such contracts, and all such contracts or programs
involving the state use of the products and services of handicapped
individuals shall be subject to such requirements as might be
established by the legislature.

(Amended Nov. 7, 1978.)


        Sec. 22.      (Repealed Nov. 6, 2001.)

(TEMPORARY TRANSITION PROVISION for Sec. 22: See Appendix, Note 3.)


      Sec. 23. REGULATION OF LIVE STOCK; PROTECTION OF STOCK RAISERS;
INSPECTIONS; BRANDS. The Legislature may pass laws for the regulation
of live stock and the protection of stock raisers in the stock raising
portion of the State, and exempt from the operation of such laws other
portions, sections, or counties; and shall have power to pass general
and special laws for the inspection of cattle, stock and hides and for
the regulation of brands; provided, that any local law thus passed
shall be submitted to the qualified voters of the section to be
affected thereby, and approved by them, before it shall go into
effect.

(Amended Nov. 6, 2001.)            (TEMPORARY TRANSITION PROVISION for Sec. 23:




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See Appendix, Note 3.)


        Sec. 24.      ROADS AND BRIDGES.          The Legislature shall make
provision for laying out and working public roads, for the building of
bridges, and for utilizing fines, forfeitures, and convict labor to
all these purposes.

      Sec. 25. DRAWBACKS AND REBATEMENT TO CARRIERS, SHIPPERS,
MERCHANTS, ETC. That all drawbacks and rebatement of insurance,
freight, transportation, carriage, wharfage, storage, compressing,
baling, repairing, or for any other kind of labor or service of, or to
any cotton, grain, or any other produce or article of commerce in this
State, paid or allowed or contracted for, to any common carrier,
shipper, merchant, commission merchant, factor, agent, or middleman of
any kind, not the true and absolute owner thereof, are forever
prohibited, and it shall be the duty of the Legislature to pass
effective laws punishing all persons in this State who pay, receive or
contract for, or respecting the same.


      Sec. 26. HOMICIDE; LIABILITY IN DAMAGES. Every person,
corporation, or company, that may commit a homicide, through wilful
act, or omission, or gross neglect, shall be responsible, in exemplary
damages, to the surviving husband, widow, heirs of his or her body, or
such of them as there may be, without regard to any criminal
proceeding that may or may not be had in relation to the homicide.

      Sec. 27. VACANCIES FILLED FOR UNEXPIRED TERM. In all elections
to fill vacancies of office in this State, it shall be to fill the
unexpired term only.

      Sec. 28. GARNISHMENT OF WAGES. No current wages for personal
service shall ever be subject to garnishment, except for the
enforcement of court-ordered:
           (1) child support payments; or
           (2) spousal maintenance.

(Amended Nov. 8, 1983, and Nov. 2, 1999.)




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        Sec. 29.      (Repealed Aug. 5, 1969.)

      Sec. 30. DURATION OF OFFICES; RAILROAD COMMISSION. (a) The
duration of all offices not fixed by this Constitution shall never
exceed two years.
      (b) When a Railroad Commission is created by law it shall be
composed of three Commissioners who shall be elected by the people at
a general election for State officers, and their terms of office shall
be six years. And one Railroad Commissioner shall be elected every
two years. In case of vacancy in said office the Governor of the
State shall fill said vacancy by appointment until the next general
election.
      (c) The Legislature may provide that members of the governing
board of a district or authority created by authority of Article III,
Section 48-e, Article III, Section 52(b)(1) or (2), or Article XVI,
Section 59, of this Constitution serve terms not to exceed four years.
      (d) The Legislature by general or special law may provide that
members of the governing board of a hospital district serve terms not
to exceed four years.

(Amended Nov. 6, 1894, and Nov. 2, 1982; Subsec. (d) added Nov. 7,
1989; Subsec. (b) amended Nov. 2, 1999; Subsec. (c) amended Nov. 3,
2009.) (TEMPORARY TRANSITION PROVISIONS for Sec. 30: See Appendix,
Note 1.)


      Sec. 30a. MEMBERS OF BOARDS; TERMS OF OFFICE. The Legislature
may provide by law that the Board of Regents of the State University
and boards of trustees or managers of the educational, eleemosynary,
and penal institutions of the State, and such boards as have been, or
may hereafter be established by law, may be composed of an odd number
of three or more members who serve for a term of six (6) years, with
one-third, or as near as one-third as possible, of the members of such
boards to be elected or appointed every two (2) years in such manner
as the Legislature may determine; vacancies in such offices to be
filled as may be provided by law, and the Legislature shall enact
suitable laws to give effect to this section. The Legislature may
provide by law that a board required by this constitution be composed
of members of any number divisible by three (3) who serve for a term




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      of six (6) years, with one-third of the members elected or
appointed every two (2) years.

(Added Nov. 5, 1912; amended Nov. 2, 1999.)


      Sec. 30b. CIVIL SERVICE OFFICES; DURATION. Wherever by virtue
of Statute or charter provisions appointive offices of any
municipality are placed under the terms and provisions of Civil
Service and rules are set up governing appointment to and removal from
such offices, the provisions of Article 16, Section 30, of the Texas
Constitution limiting the duration of all offices not fixed by the
Constitution to two (2) years shall not apply, but the duration of
such offices shall be governed by the provisions of the Civil Service
law or charter provisions applicable thereto.

(Added Nov. 5, 1940.)


      Sec. 31. PRACTITIONERS OF MEDICINE. The Legislature may pass
laws prescribing the qualifications of practitioners of medicine in
this State, and to punish persons for mal-practice, but no preference
shall ever be given by law to any schools of medicine.

        Sec. 32.      (Repealed Aug. 5, 1969.)


      Sec. 33. SALARY OR COMPENSATION PAYMENTS TO PERSONS HOLDING
MORE THAN ONE OFFICE. The accounting officers in this State shall
neither draw nor pay a warrant or check on funds of the State of
Texas, whether in the treasury or otherwise, to any person for salary
or compensation who holds at the same time more than one civil office
of emolument, in violation of Section 40.

(Amended Nov. 2, 1926, Nov. 8, 1932, Nov. 11, 1967, and Nov. 7, 1972.)


        Sec. 34.      (Repealed Aug. 5, 1969.)

        Sec. 35.      (Repealed Aug. 5, 1969.)

        Sec. 36.      (Repealed Aug. 5, 1969.)




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      Sec. 37. LIENS OF MECHANICS, ARTISANS, AND MATERIAL MEN.
Mechanics, artisans and material men, of every class, shall have a
lien upon the buildings and articles made or repaired by them for the
value of their labor done thereon, or material furnished therefor; and
the Legislature shall provide by law for the speedy and efficient
enforcement of said liens.

        Sec. 38.      (Repealed Aug. 5, 1969.)

      Sec. 39. APPROPRIATIONS FOR HISTORICAL MEMORIALS. The
Legislature may, from time to time, make appropriations for preserving
and perpetuating memorials of the history of Texas, by means of
monuments, statues, paintings and documents of historical value.

      Sec. 40. HOLDING MORE THAN ONE OFFICE; EXCEPTIONS; RIGHT TO
VOTE. (a) No person shall hold or exercise at the same time, more
than one civil office of emolument, except that of Justice of the
Peace, County Commissioner, Notary Public and Postmaster, Officer of
the National Guard, the National Guard Reserve, and the Officers
Reserve Corps of the United States and enlisted men of the National
Guard, the National Guard Reserve, and the Organized Reserves of the
United States, and retired officers of the United States Army, Air
Force, Navy, Marine Corps, and Coast Guard, and retired warrant
officers, and retired enlisted men of the United States Army, Air
Force, Navy, Marine Corps, and Coast Guard, and officers and enlisted
members of the Texas State Guard and any other active militia or
military force organized under state law, and the officers and
directors of soil and water conservation districts, unless otherwise
specially provided herein. Provided, that nothing in this Constitution
shall be construed to prohibit an officer or enlisted man of the
National Guard, the National Guard Reserve, the Texas State Guard, and
any other active militia or military force organized under state law,
or an officer in the Officers Reserve Corps of the United States, or
an enlisted man in the Organized Reserves of the United States, or
retired officers of the United States Army, Air Force, Navy, Marine
Corps, and Coast Guard, and retired warrant officers, and retired
enlisted men of the United States Army, Air Force, Navy, Marine Corps,
and Coast Guard, and officers of the State soil and water conservation




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      districts, from holding at the same time any other office or
position of honor, trust or profit, under this State or the United
States, or from voting at any election, general, special or primary in
this State when otherwise qualified.
      (b) State employees or other individuals who receive all or
part of their compensation either directly or indirectly from funds of
the State of Texas and who are not State officers, shall not be barred
from serving as members of the governing bodies of school districts,
cities, towns, or other local governmental districts. Such State
employees or other individuals may not receive a salary for serving as
members of such governing bodies, except that:
           (1) a schoolteacher, retired schoolteacher, or retired
school administrator may receive compensation for serving as a member
of a governing body of a school district, city, town, or local
governmental district, including a water district created under
Section 59, Article XVI, or Section 52, Article III; and
           (2) a faculty member or retired faculty member of a public
institution of higher education may receive compensation for serving
as a member of a governing body of a water district created under
Section 59 of this article or under Section 52, Article III, of this
constitution.
      (c) It is further provided that a nonelective State officer may
hold other nonelective offices under the State or the United States,
if the other office is of benefit to the State of Texas or is required
by the State or Federal law, and there is no conflict with the
original office for which he receives salary or compensation.
      (d) No member of the Legislature of this State may hold any
other office or position of profit under this State, or the United
States, except as a notary public if qualified by law.

(Amended Nov. 2, 1926, Nov. 8, 1932, Nov. 7, 1972, Nov. 6, 2001, and
Sept. 13, 2003; Subsec. (a) amended Nov. 3, 2009.)


        Sec. 41.      BRIBERY AND ACCEPTANCE OF BRIBES.       Any person who
shall, directly or indirectly, offer, give, or promise, any money or
thing of value, testimonial, privilege or personal advantage, to any
executive or judicial officer or member of the Legislature to
influence him in the performance of any of his public or official




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      duties, shall be guilty of bribery, and be punished in such
manner as shall be provided by law. And any member of the Legislature
or executive or judicial officer who shall solicit, demand or receive,
or consent to receive, directly or indirectly, for himself, or for
another, from any company, corporation or person, any money,
appointment, employment, testimonial, reward, thing of value or
employment, or of personal advantage or promise thereof, for his vote
or official influence, or for withholding the same, or with any
understanding, expressed or implied, that his vote or official action
shall be in any way influenced thereby, or who shall solicit, demand
and receive any such money or other advantage matter or thing
aforesaid for another, as the consideration of his vote or official
influence, in consideration of the payment or promise of such money,
advantage, matter or thing to another, shall be held guilty of
bribery, within the meaning of the Constitution, and shall incur the
disabilities provided for said offenses, with a forfeiture of the
office they may hold, and such other additional punishment as is or
shall be provided by law.

        Sec. 42.      (Repealed Aug. 5, 1969.)


        Sec. 43.      (Repealed Nov. 6, 2001.)

(TEMPORARY TRANSITION PROVISION for Sec. 43: See Appendix, Note 3.)


      Sec. 44. COUNTY TREASURER AND COUNTY SURVEYOR. (a) Except as
otherwise provided by this section, the Legislature shall prescribe
the duties and provide for the election by the qualified voters of
each county in this State, of a County Treasurer and a County
Surveyor, who shall have an office at the county seat, and hold their
office for four years, and until their successors are qualified; and
shall have such compensation as may be provided by law.
      (b) The office of County Treasurer or County Surveyor does not
exist in those counties in which the office has been abolished
pursuant to constitutional amendment or pursuant to the authority of
Subsection (c) of this section.
      (c) The Commissioners Court of a county may call an election to
abolish the office of County Surveyor in the county. The office of




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      County Surveyor in the county is abolished if a majority of the
voters of the county voting on the question at that election approve
the abolition. If an election is called under this subsection, the
Commissioners Court shall order the ballot for the election to be
printed to provide for voting for or against the
proposition: "Abolishing the office of county surveyor of this
county." If the office of County Surveyor is abolished under this
subsection, the maps, field notes, and other records in the custody of
the County Surveyor are transferred to the county officer or employee
designated by the Commissioners Court of the county in which the
office is abolished, and the Commissioners Court may from time to time
change its designation as it considers appropriate.

(Amended Nov. 2, 1954; Subsec. (a) amended and (b) and (c) added Nov.
2, 1982; Subsec. (a) amended and (b)(1) added Nov. 6, 1984; Subsecs.
(a)-(c) amended and (d)-(f) added Nov. 5, 1985; Subsecs. (c) and (d)
amended and (f) and (g) added Nov. 3, 1987; Subsec. (f) added Nov. 7,
1989; Subsec. (e) amended and two Subsecs. (h) added Nov. 2, 1993;
Subsec. (h), as added by Acts 1993, 73rd Leg., R.S., H.J.R. 21,
relating to the office of County Surveyor in Jackson County, repealed
Nov. 4, 1997; Subsec. (b) amended, Subsecs. (c)-(g) deleted, and
Subsec. (h), as added by Acts 1993, 73rd Leg., R.S., H.J.R. 37,
relating to abolition of the office of County Surveyor, redesignated
as Subsec. (c) Nov. 2, 1999.) (TEMPORARY TRANSITION PROVISIONS for
Sec. 44: See Appendix, Note 1.)


        Sec. 45.      (Repealed Aug. 5, 1969.)


        Sec. 46.      (Repealed Aug. 5, 1969.)

        Sec. 47.      (Repealed Nov. 2, 1999.)

(TEMPORARY TRANSITION PROVISIONS for Sec. 47: See Appendix, Note 1.)


      Sec. 48. EXISTING LAWS TO CONTINUE IN FORCE. All laws and
parts of laws now in force in the State of Texas, which are not
repugnant to the Constitution of the United States, or to this
Constitution, shall continue and remain in force as the laws of this




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      State, until they expire by their own limitation or shall be
amended or repealed by the Legislature.

      Sec. 49. PROTECTION OF PERSONAL PROPERTY FROM FORCED SALE. The
Legislature shall have power, and it shall be its duty, to protect by
law from forced sale a certain portion of the personal property of all
heads of families, and also of unmarried adults, male and female.

      Sec. 50. HOMESTEAD; PROTECTION FROM FORCED SALE; MORTGAGES,
TRUST DEEDS, AND LIENS. (a) The homestead of a family, or of a single
adult person, shall be, and is hereby protected from forced sale, for
the payment of all debts except for:
               (1)    the purchase money thereof, or a part of such purchase
money;
           (2) the taxes due thereon;
           (3) an owelty of partition imposed against the entirety of
the property by a court order or by a written agreement of the parties
to the partition, including a debt of one spouse in favor of the other
spouse resulting from a division or an award of a family homestead in
a divorce proceeding;
           (4) the refinance of a lien against a homestead, including
a federal tax lien resulting from the tax debt of both spouses, if the
homestead is a family homestead, or from the tax debt of the owner;
           (5) work and material used in constructing new
improvements thereon, if contracted for in writing, or work and
material used to repair or renovate existing improvements thereon if:
                (A) the work and material are contracted for in
writing, with the consent of both spouses, in the case of a family
homestead, given in the same manner as is required in making a sale
and conveyance of the homestead;
                (B) the contract for the work and material is not
executed by the owner or the owner's spouse before the fifth day after
the owner makes written application for any extension of credit for
the work and material, unless the work and material are necessary to
complete immediate repairs to conditions on the homestead property
that materially affect the health or safety of the owner or person
residing in the homestead and the owner of the homestead acknowledges
such in writing;




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                (C) the contract for the work and material expressly
provides that the owner may rescind the contract without penalty or
charge within three days after the execution of the contract by all
parties, unless the work and material are necessary to complete
immediate repairs to conditions on the homestead property that
materially affect the health or safety of the owner or person residing
in the homestead and the owner of the homestead acknowledges such in
writing; and
                (D) the contract for the work and material is
executed by the owner and the owner's spouse only at the office of a
third-party lender making an extension of credit for the work and
material, an attorney at law, or a title company;
               (6)    an extension of credit that:
                      (A) is secured by a voluntary lien on the homestead
created under a written agreement with the consent of each owner and
each owner's spouse;
                (B) is of a principal amount that when added to the
aggregate total of the outstanding principal balances of all other
indebtedness secured by valid encumbrances of record against the
homestead does not exceed 80 percent of the fair market value of the
homestead on the date the extension of credit is made;
                (C) is without recourse for personal liability
against each owner and the spouse of each owner, unless the owner or
spouse obtained the extension of credit by actual fraud;
                (D) is secured by a lien that may be foreclosed upon
only by a court order;
                (E) does not require the owner or the owner's spouse
to pay, in addition to any interest, fees to any person that are
necessary to originate, evaluate, maintain, record, insure, or service
the extension of credit that exceed, in the aggregate, three percent
of the original principal amount of the extension of credit;
                (F) 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 the open-end account is a home equity line of
credit;
                (G) is payable in advance without penalty or other
charge;
                (H) is not secured by any additional real or personal




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                property other than the homestead;
                (I) is not secured by homestead property that on the
date of closing is designated for agricultural use as provided by
statutes governing property tax, unless such homestead property is
used primarily for the production of milk;
                (J) may not be accelerated because of a decrease in
the market value of the homestead or because of the owner's default
under other indebtedness not secured by a prior valid encumbrance
against the homestead;
                (K) is the only debt secured by the homestead at the
time the extension of credit is made unless the other debt was made
for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)
(8) of this section;
                (L) is scheduled to be repaid:
                     (i) in substantially equal successive periodic
installments, not more often than every 14 days and not less often
than monthly, beginning no later than two months from the date the
extension of credit is made, each of which equals or exceeds the
amount of accrued interest as of the date of the scheduled
installment; or
                     (ii) if the extension of credit is a home equity
line of credit, in periodic payments described under Subsection (t)(8)
of this section;
                (M) is closed not before:
                     (i) the 12th day after the later of the date
that the owner of the homestead submits a loan application to the
lender for the extension of credit or the date that the lender
provides the owner a copy of the notice prescribed by Subsection (g)
of this section;
                             (ii)    one business day after the date that the
owner of the homestead receives a copy of the loan application if not
previously provided and a final itemized disclosure of the actual
fees, points, interest, costs, and charges that will be charged at
closing. If a bona fide emergency or another good cause exists and the
lender obtains the written consent of the owner, the lender may
provide the documentation to the owner or the lender may modify
previously provided documentation on the date of closing; and
                     (iii) the first anniversary of the closing date




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                     of any other extension of credit described by
Subsection (a)(6) of this section secured by the same homestead
property, except a refinance described by Paragraph (Q)(x)(f) of this
subdivision, unless the owner on oath requests an earlier closing due
to a state of emergency that:
                          (a) has been declared by the president of
the United States or the governor as provided by law; and
                          (b) applies to the area where the homestead
is located;
                (N) is closed only at the office of the lender, an
attorney at law, or a title company;
                (O) permits a lender to contract for and receive any
fixed or variable rate of interest authorized under statute;
                (P) is made by one of the following that has not been
found by a federal regulatory agency to have engaged in the practice
of refusing to make loans because the applicants for the loans reside
or the property proposed to secure the loans is located in a certain
area:
                     (i) a bank, savings and loan association,
savings bank, or credit union doing business under the laws of this
state or the United States;
                     (ii) a federally chartered lending
instrumentality or a person approved as a mortgagee by the United
States government to make federally insured loans;
                     (iii) a person licensed to make regulated loans,
as provided by statute of this state;
                     (iv) a person who sold the homestead property to
the current owner and who provided all or part of the financing for
the purchase;
                             (v)    a person who is related to the homestead
property owner within the second degree of affinity or consanguinity;
or
                     (vi) a person regulated by this state as a
mortgage broker; and
                (Q) is made on the condition that:
                     (i) the owner of the homestead is not required
to apply the proceeds of the extension of credit to repay another debt
except debt secured by the homestead or debt to another lender;




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                     (ii) the owner of the homestead not assign wages
as security for the extension of credit;
                     (iii) the owner of the homestead not sign any
instrument in which blanks relating to substantive terms of agreement
are left to be filled in;
                     (iv) the owner of the homestead not sign a
confession of judgment or power of attorney to the lender or to a
third person to confess judgment or to appear for the owner in a
judicial proceeding;
                     (v) at the time the extension of credit is made,
the owner of the homestead shall receive a copy of the final loan
application and all executed documents signed by the owner at closing
related to the extension of credit;
                     (vi) the security instruments securing the
extension of credit contain a disclosure that the extension of credit
is the type of credit defined by Section 50(a)(6), Article XVI, Texas
Constitution;
                     (vii) within a reasonable time after termination
and full payment of the extension of credit, the lender cancel and
return the promissory note to the owner of the homestead and give the
owner, in recordable form, a release of the lien securing the
extension of credit or a copy of an endorsement and assignment of the
lien to a lender that is refinancing the extension of credit;
                     (viii) the owner of the homestead and any spouse
of the owner may, within three days after the extension of credit is
made, rescind the extension of credit without penalty or charge;
                     (ix) the owner of the homestead and the lender
sign a written acknowledgment as to the fair market value of the
homestead property on the date the extension of credit is made;
                     (x) except as provided by Subparagraph (xi) of
this paragraph, the lender or any holder of the note for the extension
of credit shall forfeit all principal and interest of the extension of
credit if the lender or holder fails to comply with the lender's or
holder's obligations under the extension of credit and fails to
correct the failure to comply not later than the 60th day after the
date the lender or holder is notified by the borrower of the lender's
failure to comply by:
                          (a) paying to the owner an amount equal to




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                          any overcharge paid by the owner under or
related to the extension of credit if the owner has paid an amount
that exceeds an amount stated in the applicable Paragraph (E), (G), or
(O) of this subdivision;
                          (b) sending the owner a written
acknowledgement that the lien is valid only in the amount that the
extension of credit does not exceed the percentage described by
Paragraph (B) of this subdivision, if applicable, or is not secured by
property described under Paragraph (H) or (I) of this subdivision, if
applicable;
                          (c) sending the owner a written notice
modifying any other amount, percentage, term, or other provision
prohibited by this section to a permitted amount, percentage, term, or
other provision and adjusting the account of the borrower to ensure
that the borrower is not required to pay more than an amount permitted
by this section and is not subject to any other term or provision
prohibited by this section;
                          (d) delivering the required documents to
the borrower if the lender fails to comply with Subparagraph (v) of
this paragraph or obtaining the appropriate signatures if the lender
fails to comply with Subparagraph (ix) of this paragraph;
                          (e) sending the owner a written
acknowledgement, if the failure to comply is prohibited by Paragraph
(K) of this subdivision, that the accrual of interest and all of the
owner's obligations under the extension of credit are abated while any
prior lien prohibited under Paragraph (K) remains secured by the
homestead; or
                          (f) if the failure to comply cannot be
cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the
failure to comply by a refund or credit to the owner of $1,000 and
offering the owner the right to refinance the extension of credit with
the lender or holder for the remaining term of the loan at no cost to
the owner on the same terms, including interest, as the original
extension of credit with any modifications necessary to comply with
this section or on terms on which the owner and the lender or holder
otherwise agree that comply with this section; and
                     (xi) the lender or any holder of the note for
the extension of credit shall forfeit all principal and interest of




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                     the extension of credit if the extension of
credit is made by a person other than a person described under
Paragraph (P) of this subdivision or if the lien was not created under
a written agreement with the consent of each owner and each owner's
spouse, unless each owner and each owner's spouse who did not
initially consent subsequently consents;
           (7) a reverse mortgage; or
           (8) the conversion and refinance of a personal property
lien secured by a manufactured home to a lien on real property,
including the refinance of the purchase price of the manufactured
home, the cost of installing the manufactured home on the real
property, and the refinance of the purchase price of the real property.
      (b) An owner or claimant of the property claimed as homestead
may not sell or abandon the homestead without the consent of each
owner and the spouse of each owner, given in such manner as may be
prescribed by law.
      (c) No mortgage, trust deed, or other lien on the homestead
shall ever be valid unless it secures a debt described by this
section, whether such mortgage, trust deed, or other lien, shall have
been created by the owner alone, or together with his or her spouse,
in case the owner is married. All pretended sales of the homestead
involving any condition of defeasance shall be void.
      (d) A purchaser or lender for value without actual knowledge
may conclusively rely on an affidavit that designates other property
as the homestead of the affiant and that states that the property to
be conveyed or encumbered is not the homestead of the affiant.
      (e) A refinance of debt secured by a homestead and described by
any subsection under Subsections (a)(1)-(a)(5) that includes the
advance of additional funds may not be secured by a valid lien against
the homestead unless:
           (1) the refinance of the debt is an extension of credit
described by Subsection (a)(6) of this section; or
           (2) the advance of all the additional funds is for
reasonable costs necessary to refinance such debt or for a purpose
described by Subsection (a)(2), (a)(3), or (a)(5) of this section.
      (f) A refinance of debt secured by the homestead, any portion
of which is an extension of credit described by Subsection (a)(6) of
this section, may not be secured by a valid lien against the homestead




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      unless the refinance of the debt is an extension of credit
described by Subsection (a)(6) or (a)(7) of this section.
      (g) An extension of credit described by Subsection (a)(6) of
this section may be secured by a valid lien against homestead property
if the extension of credit is not closed before the 12th day after the
lender provides the owner with the following written notice on a
separate instrument:
      "NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)
(6), ARTICLE XVI, TEXAS CONSTITUTION:
      "SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS
CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME. SUCH
LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY THE
LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY
FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT:
      "(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF
EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE;
      "(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE MUST
NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES OF ALL
OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE FAIR
MARKET VALUE OF YOUR HOME;
      "(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY
AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS
EXTENSION OF CREDIT BY ACTUAL FRAUD;
      "(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY WITH
A COURT ORDER;
      "(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 3 PERCENT
OF THE LOAN AMOUNT;
      "(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE DEBITED
FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM TIME TO
TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT;
      "(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;
      "(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;
      "(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS
DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE
AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION
OF MILK;
      "(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED
SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE




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      YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR HOME;
      "(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI,
OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY GIVEN
TIME;
      "(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT
EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT PERIOD;
      "(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A
LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE
THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR CONSENT
CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE A
COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED AND A FINAL
ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, INTEREST, COSTS, AND
CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF YOUR HOME WAS SECURITY
FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN SECURED BY
THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED FROM THE
CLOSING DATE OF THE OTHER LOAN, UNLESS ON OATH YOU REQUEST AN EARLIER
CLOSING DUE TO A DECLARED STATE OF EMERGENCY;
      "(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER, TITLE
COMPANY, OR AN ATTORNEY AT LAW;
      "(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF
INTEREST AUTHORIZED BY STATUTE;
      "(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED
BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
      "(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE
TEXAS CONSTITUTION MUST:
      "(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT
EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER LENDER;
      "(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;
      "(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS
FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN;
      "(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR POWER
OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN A LEGAL
PROCEEDING ON YOUR BEHALF;
      "(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN
APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING;
      "(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A DISCLOSURE
THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6), ARTICLE XVI, OF
THE TEXAS CONSTITUTION;




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      "(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER WILL
SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE LIEN,
WHICHEVER IS APPROPRIATE;
      "(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND
THE LOAN WITHOUT PENALTY OR CHARGE;
      "(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR MARKET
VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND
      "(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND
INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S OBLIGATIONS
UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS PROVIDED BY SECTION 50
(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS CONSTITUTION; AND
      "(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:
      "(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW MONEY
UNDER THE LINE OF CREDIT;
      "(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST         BE IN AN AMOUNT
OF AT LEAST $4,000;
      "(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD,         OR SIMILAR
DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT,         TO OBTAIN
ADVANCES UNDER THE LINE OF CREDIT;
      "(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED         AND COLLECTED
ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER MAY
NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE;
      "(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN
ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80
PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF
CREDIT IS ESTABLISHED;
      "(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY
TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS
DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY NOT
CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE
BALANCE IS LESS THAN 50 PERCENT OF THE FAIR MARKET VALUE; AND
      "(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE LINE
OF CREDIT.
      "THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS
CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, OF
THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE."
      If the discussions with the borrower are conducted primarily in
a language other than English, the lender shall, before closing,




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      provide an additional copy of the notice translated into the
written language in which the discussions were conducted.
      (h) A lender or assignee for value may conclusively rely on the
written acknowledgment as to the fair market value of the homestead
property made in accordance with Subsection (a)(6)(Q)(ix) of this
section if:
           (1) the value acknowledged to is the value estimate in an
appraisal or evaluation prepared in accordance with a state or federal
requirement applicable to an extension of credit under Subsection (a)
(6); and
           (2) the lender or assignee does not have actual knowledge
at the time of the payment of value or advance of funds by the lender
or assignee that the fair market value stated in the written
acknowledgment was incorrect.
      (i) This subsection shall not affect or impair any right of the
borrower to recover damages from the lender or assignee under
applicable law for wrongful foreclosure. A purchaser for value
without actual knowledge may conclusively presume that a lien securing
an extension of credit described by Subsection (a)(6) of this section
was a valid lien securing the extension of credit with homestead
property if:
           (1) the security instruments securing the extension of
credit contain a disclosure that the extension of credit secured by
the lien was the type of credit defined by Section 50(a)(6), Article
XVI, Texas Constitution;
           (2) the purchaser acquires the title to the property
pursuant to or after the foreclosure of the voluntary lien; and
           (3) the purchaser is not the lender or assignee under the
extension of credit.
      (j) Subsection (a)(6) and Subsections (e)-(i) of this section
are not severable, and none of those provisions would have been
enacted without the others. If any of those provisions are held to be
preempted by the laws of the United States, all of those provisions
are invalid. This subsection shall not apply to any lien or extension
of credit made after January 1, 1998, and before the date any
provision under Subsection (a)(6) or Subsections (e)-(i) is held to be
preempted.
      (k) "Reverse mortgage" means an extension of credit:




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           (1) that is secured by a voluntary lien on homestead
property created by a written agreement with the consent of each owner
and each owner's spouse;
           (2) that is made to a person who is or whose spouse is 62
years or older;
           (3) that is made without recourse for personal liability
against each owner and the spouse of each owner;
           (4) under which advances are provided to a borrower:
                (A) based on the equity in a borrower's homestead; or
                (B) for the purchase of homestead property that the
borrower will occupy as a principal residence;
           (5) that does not permit the lender to reduce the amount
or number of advances because of an adjustment in the interest rate if
periodic advances are to be made;
               (6)    that requires no payment of principal or interest
until:
                (A) all borrowers have died;
                (B) the homestead property securing the loan is sold
or otherwise transferred;
                (C) all borrowers cease occupying the homestead
property for a period of longer than 12 consecutive months without
prior written approval from the lender;
                (C-1) if the extension of credit is used for the
purchase of homestead property, the borrower fails to timely occupy
the homestead property as the borrower's principal residence within a
specified period after the date the extension of credit is made that
is stipulated in the written agreement creating the lien on the
property; or
                      (D)    the borrower:
                             (i) defaults on an obligation specified in the
loan documents to repair and maintain, pay taxes and assessments on,
or insure the homestead property;
                     (ii) commits actual fraud in connection with the
loan; or
                     (iii) fails to maintain the priority of the
lender's lien on the homestead property, after the lender gives notice
to the borrower, by promptly discharging any lien that has priority or
may obtain priority over the lender's lien within 10 days after the




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                             date the borrower receives the notice, unless the
borrower:
                          (a) agrees in writing to the payment of the
obligation secured by the lien in a manner acceptable to the lender;
                          (b) contests in good faith the lien by, or
defends against enforcement of the lien in, legal proceedings so as to
prevent the enforcement of the lien or forfeiture of any part of the
homestead property; or
                          (c) secures from the holder of the lien an
agreement satisfactory to the lender subordinating the lien to all
amounts secured by the lender's lien on the homestead property;
           (7) that provides that if the lender fails to make loan
advances as required in the loan documents and if the lender fails to
cure the default as required in the loan documents after notice from
the borrower, the lender forfeits all principal and interest of the
reverse mortgage, provided, however, that this subdivision does not
apply when a governmental agency or instrumentality takes an
assignment of the loan in order to cure the default;
           (8) that is not made unless the prospective borrower and
the spouse of the prospective borrower attest in writing that the
prospective borrower and the prospective borrower's spouse received
counseling regarding the advisability and availability of reverse
mortgages and other financial alternatives that was completed not
earlier than the 180th day nor later than the 5th day before the date
the extension of credit is closed;
           (9) that is not closed before the 12th day after the date
the lender provides to the prospective borrower the following written
notice on a separate instrument, which the lender or originator and
the borrower must sign for the notice to take effect:
                    "IMPORTANT NOTICE TO BORROWERS

                          RELATED TO YOUR REVERSE MORTGAGE

"UNDER THE TEXAS TAX CODE, CERTAIN ELDERLY PERSONS MAY DEFER THE
COLLECTION OF PROPERTY TAXES ON THEIR RESIDENCE HOMESTEAD. BY
RECEIVING THIS REVERSE MORTGAGE YOU MAY BE REQUIRED TO FORGO ANY
PREVIOUSLY APPROVED DEFERRAL OF PROPERTY TAX COLLECTION AND YOU MAY BE
REQUIRED TO PAY PROPERTY TAXES ON AN ANNUAL BASIS ON THIS PROPERTY.
"THE LENDER MAY FORECLOSE THE REVERSE MORTGAGE AND YOU MAY LOSE YOUR




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HOME IF:
      "(A) YOU DO NOT PAY THE TAXES OR OTHER ASSESSMENTS ON THE HOME
EVEN IF YOU ARE ELIGIBLE TO DEFER PAYMENT OF PROPERTY TAXES;
      "(B) YOU DO NOT MAINTAIN AND PAY FOR PROPERTY INSURANCE ON THE
HOME AS REQUIRED BY THE LOAN DOCUMENTS;
      "(C) YOU FAIL TO MAINTAIN THE HOME IN A STATE OF GOOD CONDITION
AND REPAIR;
      "(D) YOU CEASE OCCUPYING THE HOME FOR A PERIOD LONGER THAN 12
CONSECUTIVE MONTHS WITHOUT THE PRIOR WRITTEN APPROVAL FROM THE LENDER
OR, IF THE EXTENSION OF CREDIT IS USED FOR THE PURCHASE OF THE HOME,
YOU FAIL TO TIMELY OCCUPY THE HOME AS YOUR PRINCIPAL RESIDENCE WITHIN
A PERIOD OF TIME AFTER THE EXTENSION OF CREDIT IS MADE THAT IS
STIPULATED IN THE WRITTEN AGREEMENT CREATING THE LIEN ON THE HOME;
      "(E) YOU SELL THE HOME OR OTHERWISE TRANSFER THE HOME WITHOUT
PAYING OFF THE LOAN;
      "(F) ALL BORROWERS HAVE DIED AND THE LOAN IS NOT REPAID;
      "(G) YOU COMMIT ACTUAL FRAUD IN CONNECTION WITH THE LOAN; OR
      "(H) YOU FAIL TO MAINTAIN THE PRIORITY OF THE LENDER'S LIEN ON
THE HOME, AFTER THE LENDER GIVES NOTICE TO YOU, BY PROMPTLY
DISCHARGING ANY LIEN THAT HAS PRIORITY OR MAY OBTAIN PRIORITY OVER THE
LENDER'S LIEN WITHIN 10 DAYS AFTER THE DATE YOU RECEIVE THE NOTICE,
UNLESS YOU:
           "(1) AGREE IN WRITING TO THE PAYMENT OF THE OBLIGATION
SECURED BY THE LIEN IN A MANNER ACCEPTABLE TO THE LENDER;
           "(2) CONTEST IN GOOD FAITH THE LIEN BY, OR DEFEND AGAINST
ENFORCEMENT OF THE LIEN IN, LEGAL PROCEEDINGS SO AS TO PREVENT THE
ENFORCEMENT OF THE LIEN OR FORFEITURE OF ANY PART OF THE HOME; OR
           "(3) SECURE FROM THE HOLDER OF THE LIEN AN AGREEMENT
SATISFACTORY TO THE LENDER SUBORDINATING THE LIEN TO ALL AMOUNTS
SECURED BY THE LENDER'S LIEN ON THE HOME.
"IF A GROUND FOR FORECLOSURE EXISTS, THE LENDER MAY NOT COMMENCE
FORECLOSURE UNTIL THE LENDER GIVES YOU WRITTEN NOTICE BY MAIL THAT A
GROUND FOR FORECLOSURE EXISTS AND GIVES YOU AN OPPORTUNITY TO REMEDY
THE CONDITION CREATING THE GROUND FOR FORECLOSURE OR TO PAY THE
REVERSE MORTGAGE DEBT WITHIN THE TIME PERMITTED BY SECTION 50(k)(10),
ARTICLE XVI, OF THE TEXAS CONSTITUTION. THE LENDER MUST OBTAIN A
COURT ORDER FOR FORECLOSURE EXCEPT THAT A COURT ORDER IS NOT REQUIRED
IF THE FORECLOSURE OCCURS BECAUSE:




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           "(1) ALL BORROWERS HAVE DIED; OR
           "(2) THE HOMESTEAD PROPERTY SECURING THE LOAN IS SOLD OR
OTHERWISE TRANSFERRED."
"YOU SHOULD CONSULT WITH YOUR HOME COUNSELOR OR AN ATTORNEY IF YOU
HAVE ANY CONCERNS ABOUT THESE OBLIGATIONS BEFORE YOU CLOSE YOUR
REVERSE MORTGAGE LOAN. TO LOCATE AN ATTORNEY IN YOUR AREA, YOU MAY
WISH TO CONTACT THE STATE BAR OF TEXAS."
"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS
CONSTITUTION. YOUR RIGHTS ARE GOVERNED IN PART BY SECTION 50, ARTICLE
XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE.";
           (10) that does not permit the lender to commence
foreclosure until the lender gives notice to the borrower, in the
manner provided for a notice by mail related to the foreclosure of
liens under Subsection (a)(6) of this section, that a ground for
foreclosure exists and gives the borrower at least 30 days, or at
least 20 days in the event of a default under Subdivision (6)(D)(iii)
of this subsection, to:
                (A) remedy the condition creating the ground for
foreclosure;
                (B) pay the debt secured by the homestead property
from proceeds of the sale of the homestead property by the borrower or
from any other sources; or
                (C) convey the homestead property to the lender by a
deed in lieu of foreclosure; and
           (11) that is secured by a lien that may be foreclosed upon
only by a court order, if the foreclosure is for a ground other than a
ground stated by Subdivision (6)(A) or (B) of this subsection.
      (l) Advances made under a reverse mortgage and interest on
those advances have priority over a lien filed for record in the real
property records in the county where the homestead property is located
after the reverse mortgage is filed for record in the real property
records of that county.
      (m) A reverse mortgage may provide for an interest rate that is
fixed or adjustable and may also provide for interest that is
contingent on appreciation in the fair market value of the homestead
property. Although payment of principal or interest shall not be
required under a reverse mortgage until the entire loan becomes due
and payable, interest may accrue and be compounded during the term of




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      the loan as provided by the reverse mortgage loan agreement.
      (n) A reverse mortgage that is secured by a valid lien against
homestead property may be made or acquired without regard to the
following provisions of any other law of this state:
           (1) a limitation on the purpose and use of future advances
or other mortgage proceeds;
           (2) a limitation on future advances to a term of years or
a limitation on the term of open-end account advances;
           (3) a limitation on the term during which future advances
take priority over intervening advances;
           (4) a requirement that a maximum loan amount be stated in
the reverse mortgage loan documents;
               (5)    a prohibition on balloon payments;
               (6)    a prohibition on compound interest and interest on
interest;
           (7) a prohibition on contracting for, charging, or
receiving any rate of interest authorized by any law of this state
authorizing a lender to contract for a rate of interest; and
           (8) a requirement that a percentage of the reverse
mortgage proceeds be advanced before the assignment of the reverse
mortgage.
      (o) For the purposes of determining eligibility under any
statute relating to payments, allowances, benefits, or services
provided on a means-tested basis by this state, including supplemental
security income, low-income energy assistance, property tax relief,
medical assistance, and general assistance:
           (1) reverse mortgage loan advances made to a borrower are
considered proceeds from a loan and not income; and
           (2) undisbursed funds under a reverse mortgage loan are
considered equity in a borrower's home and not proceeds from a loan.
      (p) The advances made on a reverse mortgage loan under which
more than one advance is made must be made according to the terms
established by the loan documents by one or more of the following
methods:
           (1) an initial advance at any time and future advances at
regular intervals;
           (2) an initial advance at any time and future advances at
regular intervals in which the amounts advanced may be reduced, for




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           one or more advances, at the request of the borrower;
           (3) an initial advance at any time and future advances at
times and in amounts requested by the borrower until the credit limit
established by the loan documents is reached;
           (4) an initial advance at any time, future advances at
times and in amounts requested by the borrower until the credit limit
established by the loan documents is reached, and subsequent advances
at times and in amounts requested by the borrower according to the
terms established by the loan documents to the extent that the
outstanding balance is repaid; or
           (5) at any time by the lender, on behalf of the borrower,
if the borrower fails to timely pay any of the following that the
borrower is obligated to pay under the loan documents to the extent
necessary to protect the lender's interest in or the value of the
homestead property:
                (A) taxes;
                (B) insurance;
                (C) costs of repairs or maintenance performed by a
person or company that is not an employee of the lender or a person or
company that directly or indirectly controls, is controlled by, or is
under common control with the lender;
                (D) assessments levied against the homestead
property; and
                (E) any lien that has, or may obtain, priority over
the lender's lien as it is established in the loan documents.
      (q) To the extent that any statutes of this state, including
without limitation, Section 41.001 of the Texas Property Code, purport
to limit encumbrances that may properly be fixed on homestead property
in a manner that does not permit encumbrances for extensions of credit
described in Subsection (a)(6) or (a)(7) of this section, the same
shall be superseded to the extent that such encumbrances shall be
permitted to be fixed upon homestead property in the manner provided
for by this amendment.
      (r) The supreme court shall promulgate rules of civil procedure
for expedited foreclosure proceedings related to the foreclosure of
liens under Subsection (a)(6) of this section and to foreclosure of a
reverse mortgage lien that requires a court order.
      (s) The Finance Commission of Texas shall appoint a director to




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      conduct research on the availability, quality, and prices of
financial services and research the practices of business entities in
the state that provide financial services under this section. The
director shall collect information and produce reports on lending
activity of those making loans under this section. The director shall
report his or her findings to the legislature not later than December
1 of each year.
      (t) A home equity line of credit is a form of an open-end
account that may be debited from time to time, under which credit may
be extended from time to time and under which:
           (1) the owner requests advances, repays money, and
reborrows money;
               (2)    any single debit or advance is not less than $4,000;
               (3)    the owner does not use a credit card, debit card, or
similar device, or preprinted check unsolicited by the borrower, to
obtain an advance;
           (4) any fees described by Subsection (a)(6)(E) of this
section are charged and collected only at the time the extension of
credit is established and no fee is charged or collected in connection
with any debit or advance;
           (5) the maximum principal amount that may be extended
under the account, when added to the aggregate total of the
outstanding principal balances of all indebtedness secured by the
homestead on the date the extension of credit is established, does not
exceed an amount described under Subsection (a)(6)(B) of this section;
           (6) no additional debits or advances are made if the total
principal amount outstanding exceeds an amount equal to 50 percent of
the fair market value of the homestead as determined on the date the
account is established;
           (7) the lender or holder may not unilaterally amend the
extension of credit; and
           (8) repayment is to be made in regular periodic
installments, not more often than every 14 days and not less often
than monthly, beginning not later than two months from the date the
extension of credit is established, and:
                (A) during the period during which the owner may
request advances, each installment equals or exceeds the amount of
accrued interest; and




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                (B) after the period during which the owner may
request advances, installments are substantially equal.
      (u) The legislature may by statute delegate one or more state
agencies the power to interpret Subsections (a)(5)-(a)(7), (e)-(p),
and (t), of this section. An act or omission does not violate a
provision included in those subsections if the act or omission
conforms to an interpretation of the provision that is:
           (1) in effect at the time of the act or omission; and
           (2) made by a state agency to which the power of
interpretation is delegated as provided by this subsection or by an
appellate court of this state or the United States.
      (v) A reverse mortgage must provide that:
           (1) the owner does not use a credit card, debit card,
preprinted solicitation check, or similar device to obtain an advance;
           (2) after the time the extension of credit is established,
no transaction fee is charged or collected solely in connection with
any debit or advance; and
           (3) the lender or holder may not unilaterally amend the
extension of credit.

(Amended Nov. 6, 1973, and Nov. 7, 1995; Subsecs. (a)-(d) amended and
(e)-(s) added Nov. 4, 1997; Subsecs. (k), (p), and (r) amended Nov.
2, 1999; Subsec. (a) amended Nov. 6, 2001; Subsecs. (a), (f), and (g)
amended and (t) and (u) added Sept. 13, 2003; Subsec. (p) amended and
(v) added Nov. 8, 2005; Subsecs. (a), (g), and (t) amended Nov. 6,
2007; Subsec. (k) amended Nov. 5, 2013.)


      Sec. 51. AMOUNT OF HOMESTEAD; USES. The homestead, not in a
town or city, shall consist of not more than two hundred acres of
land, which may be in one or more parcels, with the improvements
thereon; the homestead in a city, town or village, shall consist of
lot or contiguous lots amounting to not more than 10 acres of land,
together with any improvements on the land; provided, that the
homestead in a city, town or village shall be used for the purposes of
a home, or as both an urban home and a place to exercise a calling or
business, of the homestead claimant, whether a single adult person, or
the head of a family; provided also, that any temporary renting of the
homestead shall not change the character of the same, when no other




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      homestead has been acquired; provided further that a release or
refinance of an existing lien against a homestead as to a part of the
homestead does not create an additional burden on the part of the
homestead property that is unreleased or subject to the refinance, and
a new lien is not invalid only for that reason.
(Amended Nov. 3, 1970, Nov. 6, 1973, Nov. 8, 1983, and Nov. 2, 1999.)
      NOTE: The joint resolution amending Sec. 51 in 1983 included a
section that did not purport to amend the constitution and that
provided the following: "This amendment applies to all homesteads in
this state, including homesteads acquired before the adoption of this
amendment."


      Sec. 52. DESCENT AND DISTRIBUTION OF HOMESTEAD; RESTRICTIONS ON
PARTITION. On the death of the husband or wife, or both, the
homestead shall descend and vest in like manner as other real property
of the deceased, and shall be governed by the same laws of descent and
distribution, but it shall not be partitioned among the heirs of the
deceased during the lifetime of the surviving husband or wife, or so
long as the survivor may elect to use or occupy the same as a
homestead, or so long as the guardian of the minor children of the
deceased may be permitted, under the order of the proper court having
the jurisdiction, to use and occupy the same.

        Sec. 53.      (Repealed Nov. 2, 1999.)

(TEMPORARY TRANSITION PROVISIONS for Sec. 53: See Appendix, Note 1.)


        Sec. 54.      (Repealed Aug. 5, 1969.)

        Sec. 55.      (Repealed Aug. 5, 1969.)

        Sec. 56.      (Repealed Nov. 6, 2001.)

(TEMPORARY TRANSITION PROVISION for Sec. 56: See Appendix, Note 3.)


        Sec. 57.      (Repealed Aug. 5, 1969.)

        Sec. 58.      (Repealed Aug. 5, 1969.)




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      Sec. 59. CONSERVATION AND DEVELOPMENT OF NATURAL RESOURCES AND
PARKS AND RECREATIONAL FACILITIES; CONSERVATION AND RECLAMATION
DISTRICTS. (a) The conservation and development of all of the natural
resources of this State, and development of parks and recreational
facilities, including the control, storing, preservation and
distribution of its storm and flood waters, the waters of its rivers
and streams, for irrigation, power and all other useful purposes, the
reclamation and irrigation of its arid, semiarid and other lands
needing irrigation, the reclamation and drainage of its overflowed
lands, and other lands needing drainage, the conservation and
development of its forests, water and hydro-electric power, the
navigation of its inland and coastal waters, and the preservation and
conservation of all such natural resources of the State are each and
all hereby declared public rights and duties; and the Legislature
shall pass all such laws as may be appropriate thereto.
      (b) There may be created within the State of Texas, or the
State may be divided into, such number of conservation and reclamation
districts as may be determined to be essential to the accomplishment
of the purposes of this amendment to the constitution, which districts
shall be governmental agencies and bodies politic and corporate with
such powers of government and with the authority to exercise such
rights, privileges and functions concerning the subject matter of this
amendment as may be conferred by law.
      (c) The Legislature shall authorize all such indebtedness as
may be necessary to provide all improvements and the maintenance
thereof requisite to the achievement of the purposes of this
amendment. All such indebtedness may be evidenced by bonds of such
conservation and reclamation districts, to be issued under such
regulations as may be prescribed by law. The Legislature shall also
authorize the levy and collection within such districts of all such
taxes, equitably distributed, as may be necessary for the payment of
the interest and the creation of a sinking fund for the payment of
such bonds and for the maintenance of such districts and
improvements. Such indebtedness shall be a lien upon the property
assessed for the payment thereof. The Legislature shall not authorize
the issuance of any bonds or provide for any indebtedness against any
reclamation district unless such proposition shall first be submitted




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      to the qualified voters of such district and the proposition
adopted.
      (c-1) In addition and only as provided by this subsection, the
Legislature may authorize conservation and reclamation districts to
develop and finance with taxes those types and categories of parks and
recreational facilities that were not authorized by this section to be
developed and financed with taxes before September 13, 2003. For
development of such parks and recreational facilities, the Legislature
may authorize indebtedness payable from taxes as may be necessary to
provide for improvements and maintenance only for a conservation and
reclamation district all or part of which is located in Bexar County,
Bastrop County, Waller County, Travis County, Williamson County,
Harris County, Galveston County, Brazoria County, Fort Bend County, or
Montgomery County, or for the Tarrant Regional Water District, a water
control and improvement district located in whole or in part in
Tarrant County. All the indebtedness may be evidenced by bonds of the
conservation and reclamation district, to be issued under regulations
as may be prescribed by law. The Legislature may also authorize the
levy and collection within such district of all taxes, equitably
distributed, as may be necessary for the payment of the interest and
the creation of a sinking fund for the payment of the bonds and for
maintenance of and improvements to such parks and recreational
facilities. The indebtedness shall be a lien on the property assessed
for the payment of the bonds. The Legislature may not authorize the
issuance of bonds or provide for indebtedness under this subsection
against a conservation and reclamation district unless a proposition
is first submitted to the qualified voters of the district and the
proposition is adopted. This subsection expands the authority of the
Legislature with respect to certain conservation and reclamation
districts and is not a limitation on the authority of the Legislature
with respect to conservation and reclamation districts and parks and
recreational facilities pursuant to this section as that authority
existed before September 13, 2003.
      (d) No law creating a conservation and reclamation district
shall be passed unless notice of the intention to introduce such a
bill setting forth the general substance of the contemplated law
shall have been published at least thirty (30) days and not more than
ninety (90) days prior to the introduction thereof in a newspaper or




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      newspapers having general circulation in the county or counties
in which said district or any part thereof is or will be located and
by delivering a copy of such notice and such bill to the Governor who
shall submit such notice and bill to the Texas Water Commission, or
its successor, which shall file its recommendation as to such bill
with the Governor, Lieutenant Governor and Speaker of the House of
Representatives within thirty (30) days from date notice was received
by the Texas Water Commission. Such notice and copy of bill shall
also be given of the introduction of any bill amending a law creating
or governing a particular conservation and reclamation district if
such bill (1) adds additional land to the district, (2) alters the
taxing authority of the district, (3) alters the authority of the
district with respect to the issuance of bonds, or (4) alters the
qualifications or terms of office of the members of the governing body
of the district.
      (e) No law creating a conservation and reclamation district
shall be passed unless, at the time notice of the intention to
introduce a bill is published as provided in Subsection (d) of this
section, a copy of the proposed bill is delivered to the commissioners
court of each county in which said district or any part thereof is or
will   be located and to the governing body of each incorporated city or
town   in whose jurisdiction said district or any part thereof is or
will   be located. Each such commissioners court and governing body may
file   its written consent or opposition to the creation of the proposed
district with the governor, lieutenant governor, and speaker of the
house of representatives. Each special law creating a conservation
and reclamation district shall comply with the provisions of the
general laws then in effect relating to consent by political
subdivisions to the creation of conservation and reclamation districts
and to the inclusion of land within the district.
      (f) A conservation and reclamation district created under this
section to perform any or all of the purposes of this section may
engage in fire-fighting activities and may issue bonds or other
indebtedness for fire-fighting purposes as provided by law and this
constitution.

(Added Aug. 21, 1917; Subsec. (d) added Nov. 3, 1964; Subsec. (e)
added Nov. 6, 1973; Subsec. (f) added Nov. 7, 1978; Subsec. (c)
amended Nov. 2, 1999; Subsec. (a) amended and (c-1) added Sept. 13,




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2003.) (TEMPORARY TRANSITION PROVISIONS for Sec. 59: See Appendix,
Note 1.)


        Sec. 60.      (Repealed Aug. 5, 1969.)

      Sec. 61. COMPENSATION OF DISTRICT, COUNTY, AND PRECINCT
OFFICERS; SALARY OR FEE BASIS; DISPOSITION OF FEES. (a) All district
officers in the State of Texas and all county officers in counties
having a population of twenty thousand (20,000) or more, according to
the then last preceding Federal Census, shall be compensated on a
salary basis.
      (b) In all counties in this State, the Commissioners Courts
shall be authorized to determine whether precinct officers shall be
compensated on a fee basis or on a salary basis, with the exception
that it shall be mandatory upon the Commissioners Courts, to
compensate all justices of the peace, constables, deputy constables
and precinct law enforcement officers on a salary basis.
      (c) In counties having a population of less than twenty
thousand (20,000), according to the then last preceding Federal
Census, the Commissioners Courts have the authority to determine
whether county officers shall be compensated on a fee basis or on a
salary basis, with the exception that it shall be mandatory upon the
Commissioners Courts to compensate all sheriffs, deputy sheriffs,
county law enforcement officers including sheriffs who also perform
the duties of assessor and collector of taxes, and their deputies, on
a salary basis.
      (d) All fees earned by district, county and precinct officers
shall be paid into the county treasury where earned for the account of
the proper fund, provided that fees incurred by the State, county and
any municipality, or in case where a pauper's oath is filed, shall be
paid into the county treasury when collected and provided that where
any officer is compensated wholly on a fee basis such fees may be
retained by such officer or paid into the treasury of the county as
the Commissioners Court may direct.
      (e) All Notaries Public, county surveyors and public weighers
shall continue to be compensated on a fee basis.

(Added Aug. 24, 1935; amended Nov. 2, 1948, Nov. 7, 1972, and Nov. 2,




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1999.) (TEMPORARY TRANSITION PROVISIONS for Sec. 61: See Appendix,
Note 1.)


        Sec. 62.      (Repealed April 22, 1975.)

        Sec. 63.      (Repealed April 22, 1975.)

      Sec. 64. TERMS OF OFFICE, CERTAIN OFFICES. The elective
district, county, and precinct offices which have heretofore had terms
of two years, shall hereafter have terms of four years; and the
holders of such offices shall serve until their successors are
qualified.

(Added Nov. 2, 1954; amended Nov. 6, 2007.)


      Sec. 65. TERMS OF OFFICE; AUTOMATIC RESIGNATION. (a) This
section applies to the following offices: District Clerks; County
Clerks; County Judges; Judges of the County Courts at Law, County
Criminal Courts, County Probate Courts and County Domestic Relations
Courts; County Treasurers; Criminal District Attorneys; County
Surveyors; County Commissioners; Justices of the Peace; Sheriffs;
Assessors and Collectors of Taxes; District Attorneys; County
Attorneys; Public Weighers; and Constables.
      (b) If any of the officers named herein shall announce their
candidacy, or shall in fact become a candidate, in any General,
Special or Primary Election, for any office of profit or trust under
the laws of this State or the United States other than the office then
held, at any time when the unexpired term of the office then held
shall exceed one year and 30 days, such announcement or such candidacy
shall constitute an automatic resignation of the office then held, and
the vacancy thereby created shall be filled pursuant to law in the
same manner as other vacancies for such office are filled.

(Added Nov. 2, 1954; amended Nov. 4, 1958, and Nov. 2, 1999; Subsec.
(a) amended Nov. 6, 2007; Subsec. (b) amended Nov. 8, 2011.)
(TEMPORARY TRANSITION PROVISIONS for Sec. 65: See Appendix, Note 1.)


        Sec. 65A.      (Repealed Nov. 6, 2001.)




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(TEMPORARY TRANSITION PROVISION for Sec. 65A: See Appendix, Note 3.)


        Sec. 66.      PROTECTED BENEFITS UNDER CERTAIN PUBLIC RETIREMENT
SYSTEMS. (a) This section applies only to a public retirement system
that is not a statewide system and that provides service and
disability retirement benefits and death benefits to public officers
and employees.
      (b) This section does not apply to a public retirement system
that provides service and disability retirement benefits and death
benefits to firefighters and police officers employed by the City of
San Antonio.
      (c) This section does not apply to benefits that are:
               (1)    health benefits;
               (2)    life insurance benefits; or
           (3) disability benefits that a retirement system
determines are no longer payable under the terms of the retirement
system as those terms existed on the date the retirement system began
paying the disability benefits.
      (d) On or after the effective date of this section, a change in
service or disability retirement benefits or death benefits of a
retirement system may not reduce or otherwise impair benefits accrued
by a person if the person:
           (1) could have terminated employment or has terminated
employment before the effective date of the change; and
           (2) would have been eligible for those benefits, without
accumulating additional service under the retirement system, on any
date on or after the effective date of the change had the change not
occurred.
      (e) Benefits granted to a retiree or other annuitant before the
effective date of this section and in effect on that date may not be
reduced or otherwise impaired.
      (f) The political subdivision or subdivisions and the
retirement system that finance benefits under the retirement system
are jointly responsible for ensuring that benefits under this section
are not reduced or otherwise impaired.
      (g) This section does not create a liability or an obligation
to a retirement system for a member of the retirement system other
than the payment by active members of a required contribution or a




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      future required contribution to the retirement system.
      (h) A retirement system described by Subsection (a) and the
political subdivision or subdivisions that finance benefits under the
retirement system are exempt from the application of this section if:
           (1) the political subdivision or subdivisions hold an
election on the date in May 2004 that political subdivisions may use
for the election of their officers;
           (2) the majority of the voters of a political subdivision
voting at the election favor exempting the political subdivision and
the retirement system from the application of this section; and
           (3) the exemption is the only issue relating to the
funding and benefits of the retirement system that is presented to the
voters at the election.

(Former Sec. 66 repealed Nov. 2, 1999; current Sec. 66 added Sept. 13,
2003.)


      Sec. 67. STATE AND LOCAL RETIREMENT SYSTEMS. (a) General
Provisions. (1) The legislature may enact general laws establishing
systems and programs of retirement and related disability and death
benefits for public employees and officers. Financing of benefits
must be based on sound actuarial principles. The assets of a system
are held in trust for the benefit of members and may not be diverted.
           (2) A person may not receive benefits from more than one
system for the same service, but the legislature may provide by law
that a person with service covered by more than one system or program
is entitled to a fractional benefit from each system or program based
on service rendered under each system or program calculated as to
amount upon the benefit formula used in that system or program.
Transfer of service credit between the Employees Retirement System of
Texas and the Teacher Retirement System of Texas also may be
authorized by law.
           (3) Each statewide benefit system must have a board of
trustees to administer the system and to invest the funds of the
system in such securities as the board may consider prudent
investments. In making investments, a board shall exercise the
judgment and care under the circumstances then prevailing that persons
of ordinary prudence, discretion, and intelligence exercise in the




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           management of their own affairs, not in regard to
speculation, but in regard to the permanent disposition of their
funds, considering the probable income therefrom as well as the
probable safety of their capital. The legislature by law may further
restrict the investment discretion of a board.
           (4) General laws establishing retirement systems and
optional retirement programs for public employees and officers in
effect at the time of the adoption of this section remain in effect,
subject to the general powers of the legislature established in this
subsection.
      (b) State Retirement Systems. (1) The legislature shall
establish by law a Teacher Retirement System of Texas to provide
benefits for persons employed in the public schools, colleges, and
universities supported wholly or partly by the state. Other employees
may be included under the system by law.
           (2) The legislature shall establish by law an Employees
Retirement System of Texas to provide benefits for officers and
employees of the state and such state-compensated officers and
employees of appellate courts and judicial districts as may be
included under the system by law.
           (3) The amount contributed by a person participating in
the Employees Retirement System of Texas or the Teacher Retirement
System of Texas shall be established by the legislature but may not be
less than six percent of current compensation. The amount contributed
by the state may not be less than six percent nor more than 10 percent
of the aggregate compensation paid to individuals participating in the
system. In an emergency, as determined by the governor, the
legislature may appropriate such additional sums as are actuarially
determined to be required to fund benefits authorized by law.
      (c) Local Retirement Systems. (1) The legislature shall
provide by law for:
                (A) the creation by any city or county of a system of
benefits for its officers and employees;
                (B) a statewide system of benefits for the officers
and employees of counties or other political subdivisions of the state
in which counties or other political subdivisions may voluntarily
participate; and
                (C) a statewide system of benefits for officers and




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                      employees of cities in which cities may voluntarily
participate.
           (2) Benefits under these systems must be reasonably
related to participant tenure and contributions.
      (d) Judicial Retirement System. (1) Notwithstanding any other
provision of this section, the system of retirement, disability, and
survivors' benefits heretofore established in the constitution or by
law for justices, judges, and commissioners of the appellate courts
and judges of the district and criminal district courts is continued
in effect. Contributions required and benefits payable are to be as
provided by law.
           (2) General administration of the Judicial Retirement
System of Texas is by the Board of Trustees of the Employees
Retirement System of Texas under such regulations as may be provided
by law.
      (e) Anticipatory Legislation. Legislation enacted in
anticipation of this amendment is not void because it is anticipatory.
      (f) Retirement Systems Not Belonging to a Statewide System.
The board of trustees of a system or program that provides retirement
and related disability and death benefits for public officers and
employees and that does not participate in a statewide public
retirement system shall:
           (1) administer the system or program of benefits;
           (2) hold the assets of the system or program for the
exclusive purposes of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the
system or program; and
           (3) select legal counsel and an actuary and adopt sound
actuarial assumptions to be used by the system or program.
      (g) If the legislature provides for a fire fighters' pension
commissioner, the term of office for that position is four years.

(Added April 22, 1975; Subsec. (f) added Nov. 2, 1993; Subsec. (g)
added Nov. 6, 2001.)


      Sec. 68. ASSOCIATIONS OF AGRICULTURAL PRODUCERS; ASSESSMENTS ON
PRODUCT SALES TO FINANCE PROGRAMS OF MARKETING, PROMOTION, RESEARCH,
AND EDUCATION. The legislature may provide for the advancement of




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      food and fiber in this state by providing representative
associations of agricultural producers with authority to collect such
refundable assessments on their product sales as may be approved by
referenda of producers. All revenue collected shall be used solely to
finance programs of marketing, promotion, research, and education
relating to that commodity.

(Added Nov. 8, 1983.)


      Sec. 69. PRIOR APPROVAL OF EXPENDITURE OR EMERGENCY TRANSFER OF
APPROPRIATED FUNDS. The legislature may require, by rider in the
General Appropriations Act or by separate statute, the prior approval
of the expenditure or the emergency transfer of any funds appropriated
to the agencies of state government.

(Added Nov. 5, 1985.)


        Sec. 70.      (Added Nov. 8, 1988;           expired Sept. 1, 2008.)


      Sec. 71. TEXAS PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATOR
FUNDS; BONDS. (a) The legislature by law may establish a Texas
product development fund to be used without further appropriation
solely in furtherance of a program established by the legislature to
aid in the development and production of new or improved products in
this state. The fund shall contain a program account, an interest and
sinking account, and other accounts authorized by the legislature. To
carry out the program authorized by this subsection, the legislature
may authorize loans, loan guarantees, and equity investments using
money in the Texas product development fund and the issuance of up to
$25 million of general obligation bonds to provide initial funding of
the Texas product development fund. The Texas product development
fund is composed of the proceeds of the bonds authorized by this
subsection, loan repayments, guarantee fees, royalty receipts,
dividend income, and other amounts received by the state from loans,
loan guarantees, and equity investments made under this subsection and
any other amounts required to be deposited in the Texas product
development fund by the legislature.
      (b) The legislature by law may establish a Texas small business




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      incubator fund to be used without further appropriation solely
in furtherance of a program established by the legislature to foster
and stimulate the development of small businesses in the state. The
fund shall contain a project account, an interest and sinking account,
and other accounts authorized by the legislature. A small business
incubator operating under the program is exempt from ad valorem
taxation in the same manner as an institution of public charity under
Article VIII, Section 2, of this constitution. To carry out the
program authorized by this subsection, the legislature may authorize
loans and grants of money in the Texas small business incubator fund
and the issuance of up to $20 million of general obligation bonds to
provide initial funding of the Texas small business incubator fund.
The Texas small business incubator fund is composed of the proceeds of
the bonds authorized by this subsection, loan repayments, and other
amounts received by the state for loans or grants made under this
subsection and any other amounts required to be deposited in the Texas
small business incubator fund by the legislature.
      (c) The legislature may require review and approval of the
issuance of bonds under this section, of the use of the bond proceeds,
or of the rules adopted by an agency to govern use of the bond
proceeds. Notwithstanding any other provision of this constitution,
any entity created or directed to conduct this review and approval may
include members, or appointees of members, of the executive,
legislative, and judicial departments of state government.
      (d) Bonds authorized under this section constitute a general
obligation of the state. While any of the bonds or interest on the
bonds is outstanding and unpaid, there is appropriated out of the
first money coming into the treasury in each fiscal year, not
otherwise appropriated by this constitution, the amount sufficient to
pay the principal of and interest on the bonds that mature or become
due during the fiscal year, less any amount in any interest and
sinking account at the end of the preceding fiscal year that is
pledged to payment of the bonds or interest.

(Added Nov. 7, 1989; Subsec. (b) amended Nov. 2, 1999.)


      Sec. 72. TEMPORARY REPLACEMENT OF PUBLIC OFFICER ON MILITARY
ACTIVE DUTY. (a) An elected or appointed officer of the state or of




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      any political subdivision who enters active duty in the armed
forces of the United States as a result of being called to duty,
drafted, or activated does not vacate the office held, but the
appropriate authority may appoint a replacement to serve as temporary
acting officer as provided by this section if the elected or appointed
officer will be on active duty for longer than 30 days.
      (b) For an officer other than a member of the legislature, the
authority who has the power to appoint a person to fill a vacancy in
that office may appoint a temporary acting officer. If a vacancy would
normally be filled by special election, the governor may appoint the
temporary acting officer for a state or district office, and the
governing body of a political subdivision may appoint the temporary
acting officer for an office of that political subdivision.
      (c) For an officer who is a member of the legislature, the
member of the legislature shall select a person to serve as the
temporary acting representative or senator, subject to approval of the
selection by a majority vote of the appropriate house of the
legislature. The temporary acting representative or senator must be:
           (1) a member of the same political party as the member
being temporarily replaced; and
           (2) qualified for office under Section 6, Article III, of
this constitution for a senator, or Section 7, Article III, of this
constitution for a representative.
      (d) The officer who is temporarily replaced under this section
may recommend to the appropriate appointing authority the name of a
person to temporarily fill the office.
      (e) The appropriate authority shall appoint the temporary
acting officer to begin service on the date specified in writing by
the officer being temporarily replaced as the date the officer will
enter active military service.
      (f) A temporary acting officer has all the powers, privileges,
and duties of the office and is entitled to the same compensation,
payable in the same manner and from the same source, as the officer
who is temporarily replaced.
      (g) A temporary acting officer appointed under this section
shall perform the duties of office for the shorter period of:
           (1) the term of the active military service of the officer
who is temporarily replaced; or




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               (2)    the term of office of the officer who is temporarily
replaced.
      (h) In this section, "armed forces of the United States" means
the United States Army, the United States Navy, the United States Air
Force, the United States Marine Corps, the United States Coast Guard,
any reserve or auxiliary component of any of those services, or the
National Guard.

(Added Sept. 13, 2003.)


      Sec. 73. VETERANS HOSPITALS. The state may contribute money,
property, and other resources for the establishment, maintenance, and
operation of veterans hospitals in this state.

(Added Nov. 3, 2009.)




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TX Rules of Civil Procedure, Rule 735.1                                                                      Page 1




Vernon's Texas Rules Annotated Currentness
 Texas Rules of Civil Procedure
    Part VII. Rules Relating to Special Proceedings
         Section 1. Procedures Related to Foreclosures of Certain Liens
           Rule 735. Foreclosures Requiring a Court Order (Refs & Annos)
                735.1. Liens Affected


Rule 736 provides the procedure for obtaining a court order, when required, to allow foreclosure of a lien con-
taining a power of sale in the security instrument, dedicatory instrument, or declaration creating the lien, includ-
ing a lien securing any of the following:



  (a) a home equity loan, reverse mortgage, or home equity line of credit under article XVI, sections 50(a)(6),
  50(k), and 50(t) of the Texas Constitution;


  (b) a tax lien transfer or property tax loan under sections 32.06 and 32. 065 of the Tax Code; or


  (c) a property owners' association assessment under section 209.0092 of the Property Code.


CREDIT(S)

Adopted by order of Oct. 17, 2011, eff. Jan. 1, 2012. Amended by order of Dec. 12, 2011, and Dec. 30, 2011,
eff. Jan. 1, 2012.


COMMENT--RULE 735


    See comment following Rule 735.3.

RESEARCH REFERENCES

Encyclopedias

TX Jur. 3d Homesteads § 142, Foreclosure of Lien for Home Equity Loan or Reverse Mortgage.


Forms

Texas Jurisprudence Pleading & Practice Forms 2d Ed § 174:10, Application and Notice.




                          © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
TX Rules of Civil Procedure, Rule 735.1                                                                  Page 2




1 West's Texas Forms § 11:4.10, Foreclosure of Certain Liens Requiring Court Orders.


Treatises and Practice Aids

Elliott, 11 Tex. Prac. Series § 12:34, Purpose of Rule 736 Expedited Home Equity Lien Foreclosure.


Cochran, 27 Tex. Prac. Series § 7.14, Foreclosure Procedures.


NOTES OF DECISIONS

  Construction and application 1

  1. Construction and application

Servicer for a junior home equity loan was not required, under state constitutional provision governing the cre-
ation and foreclosure of a lien securing a home equity loan, to obtain a court order in order to receive excess
proceeds from the foreclosure of a senior, purchase money deed of trust. Patton v. Porterfield (App. 5 Dist.
2013) 411 S.W.3d 147, rehearing overruled , reconsideration en banc denied, review denied, rehearing of peti-
tion for review denied. Homestead       109


Vernon's Ann. Texas Rules Civ. Proc., Rule 735.1, TX R RCP Rule 735.1


Current with amendments received through 3/15/2015

(C) 2015 Thomson Reuters

END OF DOCUMENT




                          © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
TX Rules of Civil Procedure, Rule 735.3                                                                    Page 1




Vernon's Texas Rules Annotated Currentness
 Texas Rules of Civil Procedure
    Part VII. Rules Relating to Special Proceedings
         Section 1. Procedures Related to Foreclosures of Certain Liens
           Rule 735. Foreclosures Requiring a Court Order (Refs & Annos)
                735.3. Judicial Foreclosure Unaffected


A Rule 736 order is not a substitute for a judgment for judicial foreclosure, but any loan agreement, contract, or
lien that may be foreclosed using Rule 736 procedures may also be foreclosed by judgment in an action for judi-
cial foreclosure.



CREDIT(S)

Adopted by order of Oct. 17, 2011, eff. Jan. 1, 2012. Amended by order of Dec. 12, 2011, and Dec. 30, 2011,
eff. Jan. 1, 2012.


COMMENT--2011


    Rules 735 and 736 have been rewritten and expanded to cover property owners' associations' assess-
    ment liens, in accordance with amendments to chapter 209 of the Property Code. Rule 735.1 makes the
    expedited procedures of Rule 736 available only when the lienholder has a power of sale but a court or-
    der is nevertheless required by law to foreclose the lien. Rule 735.2 makes clear that Rule 736 is pro-
    cedural only and does not affect other contractual or legal rights or duties. Any lien which can be fore-
    closed under Rule 736 may also be foreclosed in an action for judicial foreclosure, as Rule 735.3 states,
    but no lienholder is required to obtain both a Rule 736 order and a judgment for judicial foreclosure.
    The requirement of conspicuousness in Rule 736.1(d)(5) has reference to section 1.201(b)(10) of the
    Business and Commerce Code.


RESEARCH REFERENCES

Forms

1 West's Texas Forms § 11:4.10, Foreclosure of Certain Liens Requiring Court Orders.


Treatises and Practice Aids

Elliott, 11 Tex. Prac. Series § 12:34, Purpose of Rule 736 Expedited Home Equity Lien Foreclosure.




                          © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
TX Rules of Civil Procedure, Rule 735.3                                             Page 2




Cochran, 27 Tex. Prac. Series § 7.14, Foreclosure Procedures.


Vernon's Ann. Texas Rules Civ. Proc., Rule 735.3, TX R RCP Rule 735.3


Current with amendments received through 3/15/2015

(C) 2015 Thomson Reuters

END OF DOCUMENT




                         © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
