Bill Text: TX HJR124 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Proposing a constitutional amendment to remove the requirement that a home equity loan be closed only at the office of the lender, an attorney at law, or a title company.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2023-03-13 - Referred to Pensions, Investments & Financial Services [HJR124 Detail]
Download: Texas-2023-HJR124-Introduced.html
88R10405 SHH-F | ||
By: Swanson | H.J.R. No. 124 |
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proposing a constitutional amendment to remove the requirement that | ||
a home equity loan be closed only at the office of the lender, an | ||
attorney at law, or a title company. | ||
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Sections 50(a) and (g), Article XVI, Texas | ||
Constitution, are amended to read as follows: | ||
(a) The homestead of a family, or of a single adult person, | ||
shall be, and is hereby protected from forced sale, for the payment | ||
of all debts except for: | ||
(1) the purchase money thereof, or a part of such | ||
purchase money; | ||
(2) the taxes due thereon; | ||
(3) an owelty of partition imposed against the | ||
entirety of the property by a court order or by a written agreement | ||
of the parties to the partition, including a debt of one spouse in | ||
favor of the other spouse resulting from a division or an award of a | ||
family homestead in a divorce proceeding; | ||
(4) the refinance of a lien against a homestead, | ||
including a federal tax lien resulting from the tax debt of both | ||
spouses, if the homestead is a family homestead, or from the tax | ||
debt of the owner; | ||
(5) work and material used in constructing new | ||
improvements thereon, if contracted for in writing, or work and | ||
material used to repair or renovate existing improvements thereon | ||
if: | ||
(A) the work and material are contracted for in | ||
writing, with the consent of both spouses, in the case of a family | ||
homestead, given in the same manner as is required in making a sale | ||
and conveyance of the homestead; | ||
(B) the contract for the work and material is not | ||
executed by the owner or the owner's spouse before the fifth day | ||
after the owner makes written application for any extension of | ||
credit for the work and material, unless the work and material are | ||
necessary to complete immediate repairs to conditions on the | ||
homestead property that materially affect the health or safety of | ||
the owner or person residing in the homestead and the owner of the | ||
homestead acknowledges such in writing; | ||
(C) the contract for the work and material | ||
expressly provides that the owner may rescind the contract without | ||
penalty or charge within three days after the execution of the | ||
contract by all parties, unless the work and material are necessary | ||
to complete immediate repairs to conditions on the homestead | ||
property that materially affect the health or safety of the owner or | ||
person residing in the homestead and the owner of the homestead | ||
acknowledges such in writing; and | ||
(D) the contract for the work and material is | ||
executed by the owner and the owner's spouse only at the office of a | ||
third-party lender making an extension of credit for the work and | ||
material, an attorney at law, or a title company; | ||
(6) an extension of credit that: | ||
(A) is secured by a voluntary lien on the | ||
homestead created under a written agreement with the consent of | ||
each owner and each owner's spouse; | ||
(B) is of a principal amount that when added to | ||
the aggregate total of the outstanding principal balances of all | ||
other indebtedness secured by valid encumbrances of record against | ||
the homestead does not exceed 80 percent of the fair market value of | ||
the homestead on the date the extension of credit is made; | ||
(C) is without recourse for personal liability | ||
against each owner and the spouse of each owner, unless the owner or | ||
spouse obtained the extension of credit by actual fraud; | ||
(D) is secured by a lien that may be foreclosed | ||
upon only by a court order; | ||
(E) does not require the owner or the owner's | ||
spouse to pay, in addition to any interest or any bona fide discount | ||
points used to buy down the interest rate, any fees to any person | ||
that are necessary to originate, evaluate, maintain, record, | ||
insure, or service the extension of credit that exceed, in the | ||
aggregate, two percent of the original principal amount of the | ||
extension of credit, excluding fees for: | ||
(i) an appraisal performed by a third party | ||
appraiser; | ||
(ii) a property survey performed by a state | ||
registered or licensed surveyor; | ||
(iii) a state base premium for a mortgagee | ||
policy of title insurance with endorsements established in | ||
accordance with state law; or | ||
(iv) a title examination report if its cost | ||
is less than the state base premium for a mortgagee policy of title | ||
insurance without endorsements established in accordance with | ||
state law; | ||
(F) is not a form of open-end account that may be | ||
debited from time to time or under which credit may be extended from | ||
time to time unless the open-end account is a home equity line of | ||
credit; | ||
(G) is payable in advance without penalty or | ||
other charge; | ||
(H) is not secured by any additional real or | ||
personal property other than the homestead; | ||
(I) (repealed); | ||
(J) may not be accelerated because of a decrease | ||
in the market value of the homestead or because of the owner's | ||
default under other indebtedness not secured by a prior valid | ||
encumbrance against the homestead; | ||
(K) is the only debt secured by the homestead at | ||
the time the extension of credit is made unless the other debt was | ||
made for a purpose described by Subsections (a)(1)-(a)(5) or | ||
Subsection (a)(8) of this section; | ||
(L) is scheduled to be repaid: | ||
(i) in substantially equal successive | ||
periodic installments, not more often than every 14 days and not | ||
less often than monthly, beginning no later than two months from the | ||
date the extension of credit is made, each of which equals or | ||
exceeds the amount of accrued interest as of the date of the | ||
scheduled installment; or | ||
(ii) if the extension of credit is a home | ||
equity line of credit, in periodic payments described under | ||
Subsection (t)(8) of this section; | ||
(M) is closed not before: | ||
(i) the 12th day after the later of the date | ||
that the owner of the homestead submits a loan application to the | ||
lender for the extension of credit or the date that the lender | ||
provides the owner a copy of the notice prescribed by Subsection (g) | ||
of this section; | ||
(ii) one business day after the date that | ||
the owner of the homestead receives a copy of the loan application | ||
if not previously provided and a final itemized disclosure of the | ||
actual fees, points, interest, costs, and charges that will be | ||
charged at closing. If a bona fide emergency or another good cause | ||
exists and the lender obtains the written consent of the owner, the | ||
lender may provide the documentation to the owner or the lender may | ||
modify previously provided documentation on the date of closing; | ||
and | ||
(iii) the first anniversary of the closing | ||
date of any other extension of credit described by Subsection | ||
(a)(6) of this section secured by the same homestead property, | ||
except a refinance described by Paragraph (Q)(x)(f) of this | ||
subdivision, unless the owner on oath requests an earlier closing | ||
due to a state of emergency that: | ||
(a) has been declared by the president | ||
of the United States or the governor as provided by law; and | ||
(b) applies to the area where the | ||
homestead is located; | ||
(N) (repealed) [ |
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(O) permits a lender to contract for and receive | ||
any fixed or variable rate of interest authorized under statute; | ||
(P) is made by one of the following that has not | ||
been found by a federal regulatory agency to have engaged in the | ||
practice of refusing to make loans because the applicants for the | ||
loans reside or the property proposed to secure the loans is located | ||
in a certain area: | ||
(i) a bank, savings and loan association, | ||
savings bank, or credit union doing business under the laws of this | ||
state or the United States, including a subsidiary of a bank, | ||
savings and loan association, savings bank, or credit union | ||
described by this subparagraph; | ||
(ii) a federally chartered lending | ||
instrumentality or a person approved as a mortgagee by the United | ||
States government to make federally insured loans; | ||
(iii) a person licensed to make regulated | ||
loans, as provided by statute of this state; | ||
(iv) a person who sold the homestead | ||
property to the current owner and who provided all or part of the | ||
financing for the purchase; | ||
(v) a person who is related to the homestead | ||
property owner within the second degree of affinity or | ||
consanguinity; or | ||
(vi) a person regulated by this state as a | ||
mortgage banker or mortgage company; and | ||
(Q) is made on the condition that: | ||
(i) the owner of the homestead is not | ||
required to apply the proceeds of the extension of credit to repay | ||
another debt except debt secured by the homestead or debt to another | ||
lender; | ||
(ii) the owner of the homestead not assign | ||
wages as security for the extension of credit; | ||
(iii) the owner of the homestead not sign | ||
any instrument in which blanks relating to substantive terms of | ||
agreement are left to be filled in; | ||
(iv) the owner of the homestead not sign a | ||
confession of judgment or power of attorney to the lender or to a | ||
third person to confess judgment or to appear for the owner in a | ||
judicial proceeding; | ||
(v) at the time the extension of credit is | ||
made, the owner of the homestead shall receive a copy of the final | ||
loan application and all executed documents signed by the owner at | ||
closing related to the extension of credit; | ||
(vi) the security instruments securing the | ||
extension of credit contain a disclosure that the extension of | ||
credit is the type of credit defined by Subsection (a)(6) of this | ||
section; | ||
(vii) within a reasonable time after | ||
termination and full payment of the extension of credit, the lender | ||
cancel and return the promissory note to the owner of the homestead | ||
and give the owner, in recordable form, a release of the lien | ||
securing the extension of credit or a copy of an endorsement and | ||
assignment of the lien to a lender that is refinancing the extension | ||
of credit; | ||
(viii) the owner of the homestead and any | ||
spouse of the owner may, within three days after the extension of | ||
credit is made, rescind the extension of credit without penalty or | ||
charge; | ||
(ix) the owner of the homestead and the | ||
lender sign a written acknowledgment as to the fair market value of | ||
the homestead property on the date the extension of credit is made; | ||
(x) except as provided by Subparagraph (xi) | ||
of this paragraph, the lender or any holder of the note for the | ||
extension of credit shall forfeit all principal and interest of the | ||
extension of credit if the lender or holder fails to comply with the | ||
lender's or holder's obligations under the extension of credit and | ||
fails to correct the failure to comply not later than the 60th day | ||
after the date the lender or holder is notified by the borrower of | ||
the lender's failure to comply by: | ||
(a) paying to the owner an amount | ||
equal to any overcharge paid by the owner under or related to the | ||
extension of credit if the owner has paid an amount that exceeds an | ||
amount stated in the applicable Paragraph (E), (G), or (O) of this | ||
subdivision; | ||
(b) sending the owner a written | ||
acknowledgement that the lien is valid only in the amount that the | ||
extension of credit does not exceed the percentage described by | ||
Paragraph (B) of this subdivision, if applicable, or is not secured | ||
by property described under Paragraph (H) of this subdivision, if | ||
applicable; | ||
(c) sending the owner a written notice | ||
modifying any other amount, percentage, term, or other provision | ||
prohibited by this section to a permitted amount, percentage, term, | ||
or other provision and adjusting the account of the borrower to | ||
ensure that the borrower is not required to pay more than an amount | ||
permitted by this section and is not subject to any other term or | ||
provision prohibited by this section; | ||
(d) delivering the required documents | ||
to the borrower if the lender fails to comply with Subparagraph (v) | ||
of this paragraph or obtaining the appropriate signatures if the | ||
lender fails to comply with Subparagraph (ix) of this paragraph; | ||
(e) sending the owner a written | ||
acknowledgement, if the failure to comply is prohibited by | ||
Paragraph (K) of this subdivision, that the accrual of interest and | ||
all of the owner's obligations under the extension of credit are | ||
abated while any prior lien prohibited under Paragraph (K) remains | ||
secured by the homestead; or | ||
(f) if the failure to comply cannot be | ||
cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the | ||
failure to comply by a refund or credit to the owner of $1,000 and | ||
offering the owner the right to refinance the extension of credit | ||
with the lender or holder for the remaining term of the loan at no | ||
cost to the owner on the same terms, including interest, as the | ||
original extension of credit with any modifications necessary to | ||
comply with this section or on terms on which the owner and the | ||
lender or holder otherwise agree that comply with this section; and | ||
(xi) the lender or any holder of the note | ||
for the extension of credit shall forfeit all principal and | ||
interest of the extension of credit if the extension of credit is | ||
made by a person other than a person described under Paragraph (P) | ||
of this subdivision or if the lien was not created under a written | ||
agreement with the consent of each owner and each owner's spouse, | ||
unless each owner and each owner's spouse who did not initially | ||
consent subsequently consents; | ||
(7) a reverse mortgage; or | ||
(8) the conversion and refinance of a personal | ||
property lien secured by a manufactured home to a lien on real | ||
property, including the refinance of the purchase price of the | ||
manufactured home, the cost of installing the manufactured home on | ||
the real property, and the refinance of the purchase price of the | ||
real property. | ||
(g) An extension of credit described by Subsection (a)(6) of | ||
this section may be secured by a valid lien against homestead | ||
property if the extension of credit is not closed before the 12th | ||
day after the lender provides the owner with the following written | ||
notice on a separate instrument: | ||
"NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION | ||
50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION: | ||
"SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION | ||
ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME. | ||
SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY | ||
THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY | ||
FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT: | ||
"(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF | ||
EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE; | ||
"(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE | ||
MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES | ||
OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE | ||
FAIR MARKET VALUE OF YOUR HOME; | ||
"(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY | ||
AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS | ||
EXTENSION OF CREDIT BY ACTUAL FRAUD; | ||
"(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY | ||
WITH A COURT ORDER; | ||
"(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 2 | ||
PERCENT OF THE LOAN AMOUNT, EXCEPT FOR A FEE OR CHARGE FOR AN | ||
APPRAISAL PERFORMED BY A THIRD PARTY APPRAISER, A PROPERTY SURVEY | ||
PERFORMED BY A STATE REGISTERED OR LICENSED SURVEYOR, A STATE BASE | ||
PREMIUM FOR A MORTGAGEE POLICY OF TITLE INSURANCE WITH | ||
ENDORSEMENTS, OR A TITLE EXAMINATION REPORT; | ||
"(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE | ||
DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM | ||
TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT; | ||
"(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE; | ||
"(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN; | ||
"(I) (repealed); | ||
"(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN | ||
AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES | ||
OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR | ||
HOME; | ||
"(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE | ||
XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY | ||
GIVEN TIME; | ||
"(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT | ||
EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT | ||
PERIOD; | ||
"(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A | ||
LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE | ||
THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR | ||
CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU | ||
RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED | ||
AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, | ||
INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF | ||
YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST | ||
YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE | ||
ONE YEAR HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS | ||
ON OATH YOU REQUEST AN EARLIER CLOSING DUE TO A DECLARED STATE OF | ||
EMERGENCY; | ||
"(N) (repealed) [ |
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"(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF | ||
INTEREST AUTHORIZED BY STATUTE; | ||
"(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS | ||
DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS | ||
CONSTITUTION; | ||
"(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE | ||
TEXAS CONSTITUTION MUST: | ||
"(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT | ||
EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER | ||
LENDER; | ||
"(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY; | ||
"(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE | ||
BLANKS FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN; | ||
"(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR | ||
POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN | ||
A LEGAL PROCEEDING ON YOUR BEHALF; | ||
"(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN | ||
APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING; | ||
"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A | ||
DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6), | ||
ARTICLE XVI, OF THE TEXAS CONSTITUTION; | ||
"(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER | ||
WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE | ||
LIEN, WHICHEVER IS APPROPRIATE; | ||
"(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, | ||
RESCIND THE LOAN WITHOUT PENALTY OR CHARGE; | ||
"(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR | ||
MARKET VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND | ||
"(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND | ||
INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S | ||
OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS | ||
PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS | ||
CONSTITUTION; AND | ||
"(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT: | ||
"(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW | ||
MONEY UNDER THE LINE OF CREDIT; | ||
"(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN | ||
AMOUNT OF AT LEAST $4,000; | ||
"(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR | ||
DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO OBTAIN | ||
ADVANCES UNDER THE LINE OF CREDIT; | ||
"(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND COLLECTED | ||
ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER | ||
MAY NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE; | ||
"(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN | ||
ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80 | ||
PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF | ||
CREDIT IS ESTABLISHED; | ||
"(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY | ||
TIME EXCEEDS 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS | ||
DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY | ||
NOT CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE | ||
BALANCE IS LESS THAN 80 PERCENT OF THE FAIR MARKET VALUE; AND | ||
"(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE | ||
LINE OF CREDIT. | ||
"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS | ||
CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, | ||
OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE." | ||
If the discussions with the borrower are conducted primarily | ||
in a language other than English, the lender shall, before closing, | ||
provide an additional copy of the notice translated into the | ||
written language in which the discussions were conducted. | ||
SECTION 2. This proposed constitutional amendment shall be | ||
submitted to the voters at an election to be held November 7, 2023. | ||
The ballot shall be printed to permit voting for or against the | ||
proposition: "The constitutional amendment to remove the | ||
requirement that a home equity loan be closed only at the office of | ||
the lender, an attorney at law, or a title company." |