Finance Code 59.006

  • Post author:
  • Post category:Finance

code federal regulations title internal revenue pt

Finance Code 59.006: Understanding Its Implications

Finance Code 59.006: Understanding Its Implications

Finance Code 59.006 in Texas, specifically, pertains to Loan-to-Value (LTV) ratios and their regulation in manufactured home lending. This section of the Texas Finance Code imposes specific requirements regarding the maximum allowable LTV for certain types of manufactured home loans. Essentially, it aims to protect both borrowers and lenders by limiting the amount of risk involved in these transactions.

The code often dictates that the LTV of a loan secured by a manufactured home cannot exceed a certain percentage. This percentage can vary depending on factors like whether the home is new or used, whether it’s placed on real property (land it will permanently occupy) or a leasehold (rented lot), and the overall creditworthiness of the borrower. The goal is to prevent over-lending and reduce the likelihood of defaults, which can harm both individuals and the financial institutions involved.

Why is LTV important in manufactured home financing? Manufactured homes, unlike traditionally built homes, can depreciate in value faster. This depreciation makes lenders more cautious, as it increases the risk that the sale of the home in the event of foreclosure won’t cover the outstanding loan balance. By limiting the LTV, lenders ensure they have a larger equity cushion and a reduced chance of suffering significant losses.

Key Considerations under Finance Code 59.006:

  • Maximum Loan Amounts: The code effectively limits the maximum loan amount a borrower can receive based on the appraised value of the manufactured home. This prevents borrowers from taking on excessive debt relative to the home’s worth.
  • Down Payment Requirements: Higher down payments are often required to comply with the mandated LTV ratios. This puts more “skin in the game” for the borrower and reduces the lender’s risk.
  • Appraisal Process: Accurate and reliable appraisals are crucial. The code may indirectly influence appraisal standards to ensure a fair market value assessment of the manufactured home, providing a solid basis for determining the LTV.
  • Lender Due Diligence: Lenders are obligated to carefully evaluate a borrower’s ability to repay the loan. Finance Code 59.006 works in conjunction with other lending regulations to ensure responsible lending practices.

Impact on Borrowers: While seemingly restrictive, Finance Code 59.006 ultimately benefits borrowers. By limiting LTV ratios, the code helps prevent borrowers from becoming over-leveraged and potentially facing foreclosure. It also encourages borrowers to build equity in their homes, increasing their financial security over time. This can also mean a slightly higher down payment is required, so it’s important to plan financially.

In Conclusion: Finance Code 59.006 plays a crucial role in regulating manufactured home lending in Texas. By imposing LTV limits, it fosters responsible lending practices, protects both borrowers and lenders, and contributes to a more stable and sustainable housing market for manufactured homes. Understanding this code is essential for anyone involved in financing, purchasing, or selling manufactured homes within the state.

code federal regulations title internal revenue pt 600×931 code federal regulations title internal revenue pt from bookstore.gpo.gov
united states code title title section 196×293 united states code title title section from www.amazon.com