(a) Any entity wishing to apply to be a participating lending institution may obtain application information and forms from the administrator. The applicant shall submit the completed application and application fee to the administrator who shall review it and recommend approval or disapproval of the application to the board. The board shall consider the recommendation of the administrator and shall notify the applying lending institution of its decision. Approval of the application of a lending institution to participate shall not be withheld unreasonably.      
        (b) No application shall be approved unless the applicant:        
          (1) is duly organized, validly existing, and in good standing under the laws governing its creation and existence and is duly authorized and qualified to originate and service residential housing loans in the State of Texas and transact all business contemplated by Chapter 177 of this title and the Natural Resources Code,Chapter 162;          
            (2) is, at the time of the origination of any conventional mortgage loan, an FNMA or FHLMC approved seller and servicer of conventional mortgages, or an institution, the deposits of which are insured by FDIC or FSLIC, and will continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;            
              (3) is, at the time of origination of any mortgage loan which has FHA insurance, an FHA-approved mortgagee and an FNMA or FHLMC approved seller and servicer of FHA insured mortgages, and will continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;              
                (4) is, at the time of origination of any mortgage loan which has a VA guaranty, an eligible lender for mortgages guaranteed by the VA and an FNMA or FHLMC approved seller and servicer of VA guaranteed mortgages, andwill continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;                
                  (5) is in compliance with the nondiscrimination provisions of the Civil Rights Act of 1964 (78 Statutes 252) and the regulations pursuant to such Act;                  
                    (6) has a delinquency and foreclosure experience for the last three years which does not materially exceed the experience for similar institutions as determined by the administrator; and                    
                      (7) shall satisfy any other qualification requirements which the board may adopt by resolution from time to time.                      
                        (c) The board shall review the list of approved participating lending institutions maintained by the administrator no later than March 1 of each year and may request the administrator to make further recommendations concerning previously approved participating lending institutions. The board may, as part of its annualreview or at any other time, revoke its approval of a participating lending institution but shall not do so unreasonably.                        
                          (d) Upon approval of a lending institution to participate in the program, the institution and the board shall execute a contract containing terms formulated by the administrator and approved by the board. The contract's terms shall reflect the prudent lending practices prevalent in the lending industry.                         
     Source Note:        The provisions of this §177.7 adopted to be effective May 4, 1984, 9 TexReg 2263.