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2017 Legislative Update I – Proposed Constitutional Amendments

Published on Tuesday, June 27, 2017 in Client and Friends Memo, Texas Legislation

The Regular Session of the 85th Texas Legislature (85(R) – 2017), which ended May 29, 2017, proposed only seven constitutional amendments. For these amendments to take effect, they must be approved by a majority of Texas voters at an election to be held November 7, 2017. Only four of these proposed constitutional amendments and the three proposed enabling legislative bills are the subject of this legislative update.

SENATE JOINT RESOLUTION NO. 60 (SJR 60)


SJR 60 proposes to amend
Section 50, Article XVI, Texas Constitution, by amending Subsections (a), (f), (g), and (t) and adding Subsection (f-1) that change provisions governing Texas Home Equity lending. If approved by the voters, SJR 60 will take effect January 1, 2018, and apply only to a home equity loan made on or after that date and to an existing home equity loan refinanced under SJR 60 on or after that date.

 

Major Changes

These proposed amendments will create major changes in Texas Home Equity lending by: (1) eliminating the ban on home equity loans on homesteads with agricultural exemptions; (2) reducing the 3% fee cap to a 2% fee cap with certain fees excluded from this 2% fee cap; (3) permitting, under certain conditions, a home equity loan to be refinanced as a non-home equity loan; (4) repealing the 50% ceiling on additional advances under a Home Equity Line of Credit (HELOC); (5) updating who is authorized to make home equity loans; and (6) amending the 12-day notice disclosure to reflect these changes, as more fully discussed below.

(1) SJR 60 proposes to repeal Subsection 50(a)(6)(I), the provision prohibiting home equity loans on property with an agricultural exemption other than dairy farms. This would eliminate a major risk factor for lenders making loans in rural areas as well as provide more options for borrowers.

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