SRC-JXG S.J.R. 37 76(R)   BILL ANALYSIS


Senate Research Center   S.J.R. 37
76R7021 DWS-DBy: Harris
State Affairs
4/6/1999
As Filed


DIGEST

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. S.J.R. 37 would enable a voter through an election to
make housing and business loans more readily available to rural areas in
Texas. 

PURPOSE

As proposed, S.J.R. 37 requires the submission to the voters of a
constitutional amendment to authorize Texas voters to decide on whether the
Farm Credit Bank will be able to make home equity loans in Texas, by
excluding 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.  

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 50(a), Article XVI, Texas Constitution, to
require the homestead of a family or of a single adult person to be
protected from forced sale for the payment of all debts, except for an
extension of credit that does not require the owner or the owner's spouse
to pay, in addition to any interest or cooperative membership fees, fees to
any person. Makes conforming changes. 

SECTION 2. Amends Section 50(g), Article XVI, Texas Constitution, to set
forth standard language regarding a notice concerning extensions of credit
defined by Section 50(a)(6), Article XVI, Texas Constitution. 

SECTION 3. Requires this proposed constitutional amendment to be submitted
to the voters at an election to be held on November 2, 1999. Sets forth
required language for the ballot.