Texas Constitution Fee Limit Requirements

The Texas Constitution prohibits fees from exceeding 2% of the principal balance on non-purchase money loans. This regulation applies to loans subject to Texas Constitution Article 16 § 50(a)(6).

Mavent/ECS Compliance Rules

The Encompass Compliance Service determines whether a loan is subject to Texas Constitution rules by checking: - Borrower's Homestead field - Continuous Money Loan field on the State-Specific Disclosure Information screen

Fee Exclusions from 2% Limit Test

The following fees are excluded from the 2% fee limit test when paid by the borrower: - Appraisal Fee (Mavent Fee 3) - Survey Fee (Mavent Fee 71) - Lender's Title Policy (Mavent Fee 59) - Title Examination (Mavent Fee 53)

Note: Title Endorsement Fee remains included in the 2% fee test.

Resolving Mavent Compliance Failures

Temporary Solution

For rate/term refinances failing the 2% fee test: 1. Navigate to the State-Specific Disclosure Information screen 2. Check the "Purchase Money" box to clear the Mavent failure 3. Important: This is a temporary measure only

Proper Determination Process

The underwriting team must make the final determination on purchase money status by:

1. Reviewing Chain of Title - Check preliminary title report
2. Comparing Documentation - Cross-reference with fraud report
3. Examining Loan History - Verify if property was ever refinanced for cash out in the past

Key Considerations

• Rate/term refinances paying off private first liens may qualify as purchase money
• If a property was previously refinanced for cash out, it may not qualify as purchase money
• Underwriters have final authority on purchase money determination

Best Practice

Always defer purchase money classification decisions to the underwriting team to ensure compliance and avoid regulatory issues.