Bill Text: TX HJR128 | 2015-2016 | 84th Legislature | Introduced

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Bill Title: Proposing a constitutional amendment relating to the limitation of fees that may be charged for a home equity loan.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2015-03-24 - Referred to Insurance [HJR128 Detail]

Download: Texas-2015-HJR128-Introduced.html

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By: Raymond H.J.R. No. 128

A JOINT RESOLUTION
proposing a constitutional amendment relating to the limitation of
fees that may be charged for a home equity loan.
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 50(a)(6)(E) and (g), Article XVI, Texas
Constitution, are amended to read as follows:
(E) does not require the owner or the owner's spouse to pay, in
addition to any interest, fees to any person the lender or
originator that are necessary to originate, evaluate, maintain,
record, insure, or service the extension of credit that exceed, in
the aggregate, three percent of the original principal amount of
the extension of credit;
(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 PAID TO THE LENDER OR ORIGINATOR TO
MAKE THE LOAN MAY NOT EXCEED 3 PERCENT OF THE LOAN AMOUNT;
"(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) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT
IS DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS
THE AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE
PRODUCTION OF MILK;
"(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) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER,
TITLE COMPANY, OR AN ATTORNEY AT LAW;
"(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 50 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 50 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.
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 5, 2013.
The ballot shall be printed to provide for voting for or against the
proposition: "The constitutional amendment to facilitate the
making of smaller dollar home equity loans by amending the
limitation of fees that may be charged in making a home equity
loan."