HBA-JLV H.J.R. 101 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.J.R. 101
By: Solomons
Financial Institutions
3/28/2001
Introduced



BACKGROUND AND PURPOSE 

Under the Texas Constitution, any future refinance or renewal of a home
equity loan is considered a home equity loan and is subject to all
constitutional provisions governing new home equity loans. As a result,
there are concerns that many mortgage companies and traditional first lien
lenders  have become reluctant to refinance an existing first lien loan and
home equity loan.  Under current provisions, a first lien loan could become
converted to a non-recourse loan and subject to potential forfeiture of
principal and interest if a problem arises.  This situation could restrict
the ability of the homeowner borrower to take advantage of lower interest
rates and to refinance both loans into a single new loan. As proposed,
House Joint Resolution 101 requires the submission to the voters of a
constitutional amendment simplifying requirements for certain refinances of
home equity loans without additional cash advances. 

RULEMAKING AUTHORITY

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

ANALYSIS

House Joint Resolution 101 amends the Texas Constitution to authorize a
refinance of debt secured by a valid lien against the homestead if the
refinance meets the following conditions: 

_property securing the refinanced debt is not subject to one or more valid
and enforceable prior contractual liens or security interests; 

_the refinance is not closed before one year after the date that the
extension of credit was closed; and  

_the extension of credit does not include the advance of any additional
funds except for actual costs and reserves required by the lender to
refinance such debt. 

The resolution provides that a lien securing a refinance under these
provisions will be considered to be a lien against a homestead, including a
federal tax lien resulting from the tax debt of both spouses, if the
homestead is a family homestead or from the tax debt of the owner. 

FOR ELECTION

This proposed constitutional amendment shall be submitted to the voters at
an election to be held November 6, 2001.