By Nelson                                             S.J.R. No. 14
         76R3831 DWS-F                           
                                 A JOINT RESOLUTION
 1-1     proposing a constitutional amendment relating to securing an equity
 1-2     loan with one or more lots containing all or part of an urban
 1-3     homestead plus other nonhomestead real property.
 1-4           BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 50(a), Article XVI, Texas Constitution,
 1-6     is amended to read as follows:
 1-7           (a)  The homestead of a family, or of a single adult person,
 1-8     shall be, and is hereby protected from forced sale, for the payment
 1-9     of all debts except for:
1-10                 (1)  the purchase money thereof, or a part of such
1-11     purchase money;
1-12                 (2)  the taxes due thereon;
1-13                 (3)  an owelty of partition imposed against the
1-14     entirety of the property by a court order or by a written agreement
1-15     of the parties to the partition, including a debt of one spouse in
1-16     favor of the other spouse resulting from a division or an award of
1-17     a family homestead in a divorce proceeding;
1-18                 (4)  the refinance of a lien against a homestead,
1-19     including a federal tax lien resulting from the tax debt of both
1-20     spouses, if the homestead is a family homestead, or from the tax
1-21     debt of the owner;
1-22                 (5)  work and material used in constructing new
1-23     improvements thereon, if contracted for in writing, or work and
1-24     material used to repair or renovate existing improvements thereon
 2-1     if:
 2-2                       (A)  the work and material are contracted for in
 2-3     writing, with the consent of both spouses, in the case of a family
 2-4     homestead, given in the same manner as is required in making a sale
 2-5     and conveyance of the homestead;
 2-6                       (B)  the contract for the work and material is
 2-7     not executed by the owner or the owner's spouse before the 12th day
 2-8     after the owner makes written application for any extension of
 2-9     credit for the work and material, unless the work and material are
2-10     necessary to complete immediate repairs to conditions on the
2-11     homestead property that materially affect the health or safety of
2-12     the owner or person residing in the homestead and the owner of the
2-13     homestead acknowledges such in writing;
2-14                       (C)  the contract for the work and material
2-15     expressly provides that the owner may rescind the contract without
2-16     penalty or charge within three days after the execution of the
2-17     contract by all parties, unless the work and material are necessary
2-18     to complete immediate repairs to conditions on the homestead
2-19     property that materially affect the health or safety of the owner
2-20     or person residing in the homestead and the owner of the homestead
2-21     acknowledges such in writing; and
2-22                       (D)  the contract for the work and material is
2-23     executed by the owner and the owner's spouse only at the office of
2-24     a third-party lender making an extension of credit for the work and
2-25     material, an attorney at law, or a title company;
2-26                 (6)  an extension of credit that:
2-27                       (A)  is secured by a voluntary lien on the
 3-1     homestead created under a written agreement with the consent of
 3-2     each owner and each owner's spouse;
 3-3                       (B)  is of a principal amount that when added to
 3-4     the aggregate total of the outstanding principal balances of all
 3-5     other indebtedness secured by valid encumbrances of record against
 3-6     the security [homestead] does not exceed 80 percent of the fair
 3-7     market value of the security [homestead] on the date the extension
 3-8     of credit is made;
 3-9                       (C)  is without recourse for personal liability
3-10     against each owner and the spouse of each owner, unless the owner
3-11     or spouse obtained the extension of credit by actual fraud;
3-12                       (D)  is secured by a lien that may be foreclosed
3-13     upon only by a court order;
3-14                       (E)  does not require the owner or the owner's
3-15     spouse to pay, in addition to any interest, fees to any person that
3-16     are necessary to originate, evaluate, maintain, record, insure, or
3-17     service the extension of credit that exceed, in the aggregate,
3-18     three percent of the original principal amount of the extension of
3-19     credit;
3-20                       (F)  is not a form of open-end account that may
3-21     be debited from time to time or under which credit may be extended
3-22     from time to time;
3-23                       (G)  is payable in advance without penalty or
3-24     other charge;
3-25                       (H)  is not secured by any additional real or
3-26     personal property other than:
3-27                             (i)  the homestead;
 4-1                             (ii)  any real property that is part of one
 4-2     or more lots in a city, town, or village, as described by Section
 4-3     51 of this article, and that includes all or part of the homestead;
 4-4     and
 4-5                             (iii)  any improvements on the property
 4-6     described by Subparagraphs (i) and (ii) of this paragraph;
 4-7                       (I)  is not secured by homestead property
 4-8     designated for agricultural use as provided by statutes governing
 4-9     property tax, unless such homestead property is used primarily for
4-10     the production of milk;
4-11                       (J)  may not be accelerated because of a decrease
4-12     in the market value of the homestead or because of the owner's
4-13     default under other indebtedness not secured by a prior valid
4-14     encumbrance against the homestead;
4-15                       (K)  is the only debt secured by the homestead at
4-16     the time the extension of credit is made unless the other debt was
4-17     made for a purpose described by Subsections (a)(1)-(a)(5) of this
4-18     section;
4-19                       (L)  is scheduled to be repaid in substantially
4-20     equal successive monthly installments beginning no later than two
4-21     months from the date the extension of credit is made, each of which
4-22     equals or exceeds the amount of accrued interest as of the date of
4-23     the scheduled installment;
4-24                       (M)  is closed not before:
4-25                             (i)  the 12th day after the later of the
4-26     date that the owner of the homestead submits an application to the
4-27     lender for the extension of credit or the date that the lender
 5-1     provides the owner a copy of the notice prescribed by Subsection
 5-2     (g) of this section; and
 5-3                             (ii)  the first anniversary of the closing
 5-4     date of any other extension of credit described by Subsection
 5-5     (a)(6) of this section secured by the same homestead property;
 5-6                       (N)  is closed only at the office of the lender,
 5-7     an attorney at law, or a title company;
 5-8                       (O)  permits a lender to contract for and receive
 5-9     any fixed or variable rate of interest authorized under statute;
5-10                       (P)  is made by one of the following that has not
5-11     been found by a federal regulatory agency to have engaged in the
5-12     practice of refusing to make loans because the applicants for the
5-13     loans reside or the property proposed to secure the loans is
5-14     located in a certain area:
5-15                             (i)  a bank, savings and loan association,
5-16     savings bank, or credit union doing business under the laws of this
5-17     state or the United States;
5-18                             (ii)  a federally chartered lending
5-19     instrumentality or a person approved as a mortgagee by the United
5-20     States government to make federally insured loans;
5-21                             (iii)  a person licensed to make regulated
5-22     loans, as provided by statute of this state;
5-23                             (iv)  a person who sold the homestead
5-24     property to the current owner and who provided all or part of the
5-25     financing for the purchase; or
5-26                             (v)  a person who is related to the
5-27     homestead property owner within the second degree of affinity or
 6-1     consanguinity; and
 6-2                       (Q)  is made on the condition that:
 6-3                             (i)  the owner of the homestead is not
 6-4     required to apply the proceeds of the extension of credit to repay
 6-5     another debt except debt secured by the homestead or debt to
 6-6     another lender;
 6-7                             (ii)  the owner of the homestead not assign
 6-8     wages as security for the extension of credit;
 6-9                             (iii)  the owner of the homestead not sign
6-10     any instrument in which blanks are left to be filled in;
6-11                             (iv)  the owner of the homestead not sign a
6-12     confession of judgment or power of attorney to the lender or to a
6-13     third person to confess judgment or to appear for the owner in a
6-14     judicial proceeding;
6-15                             (v)  the lender, at the time the extension
6-16     of credit is made, provide the owner of the homestead a copy of all
6-17     documents signed by the owner related to the extension of credit;
6-18                             (vi)  the security instruments securing the
6-19     extension of credit contain a disclosure that the extension of
6-20     credit is the type of credit defined by Section 50(a)(6), Article
6-21     XVI, Texas Constitution;
6-22                             (vii)  within a reasonable time after
6-23     termination and full payment of the extension of credit, the lender
6-24     cancel and return the promissory note to the owner of the homestead
6-25     and give the owner, in recordable form, a release of the lien
6-26     securing the extension of credit or a copy of an endorsement and
6-27     assignment of the lien to a lender that is refinancing the
 7-1     extension of credit;
 7-2                             (viii)  the owner of the homestead and any
 7-3     spouse of the owner may, within three days after the extension of
 7-4     credit is made, rescind the extension of credit without penalty or
 7-5     charge;
 7-6                             (ix)  the owner of the homestead and the
 7-7     lender sign a written acknowledgment as to the fair market value of
 7-8     the security [homestead property] on the date the extension of
 7-9     credit is made; and
7-10                             (x)  the lender or any holder of the note
7-11     for the extension of credit shall forfeit all principal and
7-12     interest of the extension of credit if the lender or holder fails
7-13     to comply with the lender's or holder's obligations under the
7-14     extension of credit within a reasonable time after the lender or
7-15     holder is notified by the borrower of the lender's failure to
7-16     comply; or
7-17                 (7)  a reverse mortgage.
7-18           SECTION 2.  Section 50(g), Article XVI, Texas Constitution,
7-19     is amended to read as follows:
7-20           (g)  An extension of credit described by Subsection (a)(6) of
7-21     this section may be secured by a valid lien against homestead
7-22     property if the extension of credit is not closed before the 12th
7-23     day after the lender provides the owner with the following written
7-24     notice on a separate instrument:
7-25           "NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION
7-26     50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION:
7-27           "SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION
 8-1     ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME.
 8-2     SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY
 8-3     THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER
 8-4     MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT:
 8-5                 "(A)  THE LOAN MUST BE VOLUNTARILY CREATED WITH THE
 8-6     CONSENT OF EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE;
 8-7                 "(B)  THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS
 8-8     MADE MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL
 8-9     BALANCES OF ALL OTHER LIENS AGAINST THE SECURITY FOR THE LOAN [YOUR
8-10     HOME], IS MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF THE
8-11     SECURITY  [YOUR HOME];
8-12                 "(C)  THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL
8-13     LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE
8-14     OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
8-15                 "(D)  THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON
8-16     ONLY WITH A COURT ORDER;
8-17                 "(E)  FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED
8-18     3 PERCENT OF THE LOAN AMOUNT;
8-19                 "(F)  THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY
8-20     BE DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED
8-21     FROM TIME TO TIME;
8-22                 "(G)  YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR
8-23     CHARGE;
8-24                 "(H)  NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE
8-25     LOAN;
8-26                 "(I)  THE LOAN MAY NOT BE SECURED BY AGRICULTURAL
8-27     HOMESTEAD PROPERTY, UNLESS THE AGRICULTURAL HOMESTEAD PROPERTY IS
 9-1     USED PRIMARILY FOR THE PRODUCTION OF MILK;
 9-2                 "(J)  YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER
 9-3     THAN AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME
 9-4     DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT
 9-5     SECURED BY YOUR HOME;
 9-6                 "(K)  ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6),
 9-7     ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR
 9-8     HOME AT ANY GIVEN TIME;
 9-9                 "(L)  THE LOAN MUST BE SCHEDULED TO BE REPAID IN
9-10     PAYMENTS THAT EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR
9-11     EACH PAYMENT PERIOD;
9-12                 "(M)  THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU
9-13     SUBMIT A WRITTEN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER
9-14     YOU RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER;  AND IF YOUR HOME
9-15     WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW
9-16     LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS
9-17     PASSED FROM THE CLOSING DATE OF THE OTHER LOAN;
9-18                 "(N)  THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE
9-19     LENDER, TITLE COMPANY, OR AN ATTORNEY AT LAW;
9-20                 "(O)  THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE
9-21     OF INTEREST AUTHORIZED BY STATUTE;
9-22                 "(P)  ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS
9-23     DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS
9-24     CONSTITUTION;  AND
9-25                 "(Q)  LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI,
9-26     OF THE TEXAS CONSTITUTION MUST:
9-27                       "(1)  NOT REQUIRE YOU TO APPLY THE PROCEEDS TO
 10-1    ANOTHER DEBT THAT IS NOT SECURED BY YOUR HOME OR TO ANOTHER DEBT TO
 10-2    THE SAME LENDER;
 10-3                      "(2)  NOT REQUIRE THAT YOU ASSIGN WAGES AS
 10-4    SECURITY;
 10-5                      "(3)  NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS
 10-6    WHICH HAVE BLANKS LEFT TO BE FILLED IN;
 10-7                      "(4)  NOT REQUIRE THAT YOU SIGN A CONFESSION OF
 10-8    JUDGMENT OR POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT
 10-9    OR APPEAR IN A LEGAL PROCEEDING ON YOUR BEHALF;
10-10                      "(5)  PROVIDE THAT YOU RECEIVE A COPY OF ALL
10-11    DOCUMENTS YOU SIGN AT CLOSING;
10-12                      "(6)  PROVIDE THAT THE SECURITY INSTRUMENTS
10-13    CONTAIN A DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION
10-14    50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
10-15                      "(7)  PROVIDE THAT WHEN THE LOAN IS PAID IN FULL,
10-16    THE LENDER WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN
10-17    ASSIGNMENT OF THE LIEN, WHICHEVER IS APPROPRIATE;
10-18                      "(8)  PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER
10-19    CLOSING, RESCIND THE LOAN WITHOUT PENALTY OR CHARGE;
10-20                      "(9)  PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE
10-21    THE FAIR MARKET VALUE OF THE SECURITY FOR THE LOAN [YOUR HOME] ON
10-22    THE DATE THE LOAN CLOSES; AND
10-23                      "(10)  PROVIDE THAT THE LENDER WILL FORFEIT ALL
10-24    PRINCIPAL AND INTEREST IF THE LENDER FAILS TO COMPLY WITH THE
10-25    LENDER'S OBLIGATIONS."
10-26          If the discussions with the borrower are conducted primarily
10-27    in a language other than English, the lender shall, before closing,
 11-1    provide an additional copy of the notice translated into the
 11-2    written language in which the discussions were conducted.
 11-3          SECTION 3.  Section 50(h), Article XVI, Texas Constitution,
 11-4    is amended to read as follows:
 11-5          (h)  A lender or assignee for value may conclusively rely on
 11-6    the written acknowledgment as to the fair market value of the
 11-7    security [homestead property] made in accordance with Subsection
 11-8    (a)(6)(Q)(ix) of this section if:
 11-9                (1)  the value acknowledged to is the value estimate in
11-10    an appraisal or evaluation prepared in accordance with a state or
11-11    federal requirement applicable to an extension of credit under
11-12    Subsection (a)(6); and
11-13                (2)  the lender or assignee does not have actual
11-14    knowledge at the time of the payment of value or advance of funds
11-15    by the lender or assignee that the fair market value stated in the
11-16    written acknowledgment was incorrect.
11-17          SECTION 4.  This proposed constitutional amendment shall be
11-18    submitted to the voters at an election to be held November 2, 1999.
11-19    The ballot shall be printed to permit voting for or against the
11-20    proposition:  "The constitutional amendment to allow an equity loan
11-21    to be secured by one or more lots containing all or part of an
11-22    urban homestead plus other nonhomestead real property."