This memorandum will provide an overview of home equity lending embodied in Article XVI, Section 50, of the Texas Constitution and will also discuss some of the issues lenders face. The full text of Section 50, current to date, is attached to this memorandum (for ease of reference, the home equity and HELOC provisions are highlighted in bold typeface). All references to “sections,” “subsections,” and “parts” in this memorandum refer to the various provisions of Section 50, unless otherwise stated. This 2016 update revises the March 9, 2015 memorandum as follows: It adds the following new cases: Wood v. HSBC Bank USA, N.A., ______ S.W.3d ________, 2016 WL 2993923 (Tex. 2016); Garofolo v. Ocwen Loan Servicing, L.L.C, 497 S.W.3d 474 (Tex. 2016), Feuerbacher v. Wells Fargo Bank, 2016 WL 3669744 (E.D. Tex.-Sherman Division 2016) and Abernathy v. Deutshe Bank Nat’t Trust Co., 2013 WL 4056225 (Tex. App.-Austin 2013). For ease of reference, the name of each case identified above is highlighted in bold typeface (see Section II. below). It includes the 2016 amendments to the home equity Interpretations by the Texas Finance and Credit Union Commissions (herein “Commissions”) revising §§153.5(3), (7), 153.8 (5), 153.13(3), 153.14(2) and 153.17(1), (2). The Commissions also deleted paragraphs (3) and (4) from §153.17 and added new §153.17(3) and (4). (See Section III.D. of this memorandum.). The main purposes of the amendments by the Commissions were to specify that persons can meet the preclosure requirement mandated by Section 50(a)(6)(M)(ii) through use of the new federal disclosures released by the Consumer Financial Protection Bureau and to clarify who is a lender authorized by Section 50(a)(6)(P)(iii), (vi) to make a home equity loan. The amendments also made technical corrections and clarifications. The amendments became effective on November 24, 2016. It makes editorial changes, typographical corrections to existing text and updates citations, where applicable, to the cases summarized in Section II below.

Complete Memorandum