LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session March 12, 1995 TO: Honorable Ken Armbrister, Chair IN RE: Senate Bill No. 301 Committee on State Affairs By:Patterson, Jerry Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 301 (Relating to a voluntary, consensual encumbrance on homestead property for the purpose of an equity loan.) this office has determined the following: The bill would allow homeowner's to receive an equity loan or reversible mortgage loan from financial institutions against their homestead property. The principal amount of the loan plus all other encumbrances could not exceed 90% of the fair market value of the property used as collateral; only the homestead property securing an equity loan could be used as collateral. Acceleration of an equity loan is prohibited due to a decrease in market value, unless the decrease is caused by damage or destruction to the property, environmental hazards, condemnation or use of the secured property that constitutes a waste or nuisance. Lenders would be required to provide homeowners with a notice, as specified in the bill, once they request application for an equity loan. No significant fiscal implication to the State or units of local government is anticipated. Source: Comptroller of Public Accounts, Savings and Loan Department, Department of Banking, Office of the Consumer Credit Commissioner LBB Staff: JK, BR, DF