(a) The credit limit under an open-end mortgage may be reduced by the borrower, whether the advances to be made thereunder are obligatory or optional, to an amount not less than the amount of principal indebtedness shown on the most recent statement of the borrower’s account received by the borrower from the creditor, plus the amount of any advances initiated by the borrower subsequent to that statement.

Terms Used In Tennessee Code 47-28-105

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Credit limit: means the maximum amount of principal indebtedness which may be outstanding at any one time under a revolving credit agreement. See Tennessee Code 47-28-101
  • Creditor: includes a state or national bank, a state or federal savings and loan association, a savings bank, a registrant under the Industrial Loan and Thrift Companies Act, compiled in title 45, chapter 5, a state or federal credit union, or any other individual, partnership, trust, corporation, or other legal entity permitted or authorized to enter into credit transactions secured by a mortgage. See Tennessee Code 47-28-101
  • Mortgage: includes a mortgage, deed of trust, or other conveyance of real property securing obligations, except instruments creating or perfecting a security interest in fixtures which do not include other real property. See Tennessee Code 47-28-101
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
  • Open-end credit agreement: means a revolving credit agreement that is secured by a mortgage and that is not entered into for commercial purposes. See Tennessee Code 47-28-101
  • signed: includes a mark, the name being written near the mark and witnessed, or any other symbol or methodology executed or adopted by a party with intention to authenticate a writing or record, regardless of being witnessed. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(b)

(1) In order to effectuate such a reduction in the credit limit, the borrower must:

(A) Serve a notice of limitation on the creditor substantially in accordance with the provisions of the mortgage and of this chapter; and
(B) On or before the effective date of the notice, file a copy thereof for recordation in the appropriate register’s office as an amendment to the mortgage.
(2) Upon the recording of a notice of limitation in the appropriate register’s office, the notice of limitation becomes irrevocable, and shall not be modified, amended, or rescinded.
(c) In order to be effective, any such notice of limitation must be in substantial compliance with the following requirements:

(1) It must name the creditor on whom the notice is served;
(2) It must state specifically the reduced credit limit;
(3) It must state the effective date of such limitation, which date cannot be sooner than one (1) regular business day after the date of the service of the notice;
(4) It must name all parties to the open-end credit agreement and the mortgage securing the same;
(5) It must identify with reasonable specificity the real property subject to the mortgage;
(6) It must give any account number assigned to the account of the open-end credit agreement; and
(7) It must be signed by all persons principally obligated to repay advances under the open-end credit agreement.
(d) From and after the service of such a notice of limitation, the borrower shall not request or demand any further advances under the open-end credit agreement that exceed the credit limit stated in the notice, and the creditor will be relieved and released from any obligation or commitment to make advances thereunder that exceed that reduced credit limit.
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