HBA-TYH H.J.R. 76 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.J.R. 76
By: Staples
Financial Institutions
4/16/1999
Introduced



BACKGROUND AND PURPOSE 

In 1997, Texas voters approved home equity lending, with a provision for a
three percent cap on fees and charges, and to bar any additional collateral
for making the loans. However, this prohibits the federal Farm Credit
System (system) from making home equity loans. Under federal law, the
system operates Production Credit Associations (PSA) and Federal Land Banks
(FLB) that make rural loans. Loan applicants leave between two and five
percent of the loan amounts in the system as a membership to get a loan.
During the time of the loan, the member receives interest on the loan. The
amount reverts to the member when the loan is paid off. The federal
requirements of this longstanding program prohibit the 13 PSAs and 14 FLBs
in Texas from making home equity loans for dairy farming and moderately
priced rural housing.  As proposed, H.J.R. 37 requires the submission to
the voters of a constitutional amendment to exclude cooperative membership
fees and cooperative membership certificates from the three percent closing
cap and the requirement of no additional collateral under the existing
Texas home equity law.  


RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 50(a), Article XVI, Texas Constitution, to
exclude cooperative membership fees and cooperative membership certificates
from the three percent closing cap and the requirement of no additional
collateral under the existing equity loan law. 

SECTION 2.  Amends Section 50(g), Article XVI, Texas Constitution, to make
conforming changes.  
SECTION 3.  Requires this proposed constitutional amendment to be submitted
to the voters at an election to be held November 2, 1999.  Sets forth the
required language for the ballot.