Proposed home equity law update in Texas

The restrictions caused by COVID-19 brought many challenges to credit unions and their members, particularly as they relate to closing loans. Rep. Steve Toth (R-The Woodlands) has filed a constitutional amendment that would allow some exceptions to the requirement that a home equity loan be closed only at the office of the lender, an attorney at law, or a title company.

Exceptions to the current requirement that the loan be closed in person at one of these three locations would be made for:

• Members of the military (and their spouses) located outside the state at the time of closing
• Civilian employees of the federal government serving with the armed forces who are abroad or on a vessel
• Persons incarcerated or under house arrest
• Persons with a disability that prevents travel or is quarantined to protect the borrower’s health or the health of others

The home equity laws are in the Texas Constitution, not the statutes, and therefore require voter approval. If passed by the legislature, the amendment would appear on the ballot of the general election in November. If approved by the voters at that time, the bill would go into effect at the beginning of 2022.

For more information, please contact txcua@txcua.coop.