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Comments Due on Proposed Rules for Texas Home Equity Lending Law Changes
Thursday, December 14, 2017 7:00 AM

Texas voters approved changes to the home equity lending law on Nov. 7, 2017. The Texas Credit Union Commission and the Finance Commission have jointly published proposed interpretation amendments to implement SJR 60, which amends Article XVI, Section 50 of the Texas Constitution and applies to home equity loans entered on or after Jan. 1, 2018.

The proposed amendments were published in the Texas Register, and the comment period runs from Nov. 24, 2017 to Dec. 25, 2017. Comments may be submitted in writing to Laurie Hobbs, Assistant General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas 78705-4207 or by email to laurie.hobbs@occc.texas.gov

The Finance Commission and Credit Union Commission expect the amendments to be presented for final adoption at the February and March meetings and to be effective in late March 2018.

The constitutional amendments relate primarily to six issues:

  • Section 50(a)(6) replaces the current three percent fee limitation with a 2 percent limitation and specifies that four types of fees are not included in the limitation: an appraisal fee, a property survey fee, a mortgagee title insurance premium, and a title report fee;
  • Section 50(a)(6)(I) removes the current prohibition on a home equity loan for agricultural property;
  • Section 50(a)(6)(P) adds certain subsidiaries of depository institutions to the list of lenders authorized to make home equity loans and replaces a reference to a "mortgage broker" with "mortgage banker or mortgage company";
  • Section 50(f) allows a home equity loan to be refinanced as a non-home equity loan if four conditions are met: a one-year timing limitation, a limitation on advance of additional funds, an 80 percent loan-to-value limitation, and a required disclosure to the property owner;
  • Section 50(g) makes conforming changes to the required 12-day consumer disclosure; and
  • Section 50(t)(6) removes the 50 percent limitation on additional debits or advances for a home equity line of credit.

The agencies have posted finalized versions of the disclosures required under SJR 60, on the Finance Commission’s website. The amended disclosures are available at: http://www.fc.texas.gov/homeinfo/homeinfo.html.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.