By:  Solomons                                                     H.B. No. 1841



A BILL TO BE ENTITLED

AN ACT

relating to home equity loans and the interpretation of certain 
constitutional provisions by certain state agencies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 302, Finance Code, is amended by adding 
Subchapter C to read as follows:

SUBCHAPTER C.  PROVISIONS RELATING TO HOME EQUITY LOANS
	Sec. 302.201.  HOME EQUITY LINES OF CREDIT.  (a)  An open-end 
account described by Section 50(a)(6)(F), Article XVI, Texas 
Constitution, may be debited only to make payments to:
		(1)  an institution of higher education;                               
		(2)  a private elementary or secondary educational 
institution;      
		(3)  A licensed health care provider in this state 
including:        
			(A)  a hospital licensed under Chapter 241, Health &
 Safety Code;
			(B)  a nursing home or other facility licensed 
under Chapter 242, Health & Safety Code;
			(C)  a continuing care facility operating under a 
certificate of authority issued under Chapter 246, Health & Safety 
Code;
			(D)  an assisted living facility licensed under 
Chapter 247, Health & Safety Code;
			(E)  a special care facility licensed under 
Chapter 248, Health & Safety Code; or
			(F)  an end stage renal disease facility licensed 
under Chapter 251, Health & Safety Code; or
		(4)  a licensed health care provider in another state.                 
	(b)  Any debit from an open-end account home equity loan 
shall be issued by the lender or holder of the loan to an 
institution described in Subsection (a) as directed by the 
borrower.  A debit may not be issued to the borrower.
	Sec. 302.202.  REQUIRED DISCLOSURE FOR CERTAIN REFINANCES OF 
HOME EQUITY LOANS.  (a)  Any refinance of a debt secured by a 
homestead under the provisions of Section 50(f)(2), Article XVI, 
Texas Constitution, shall contain the following written notice on a 
separate instrument:
	"NOTICE OF WAIVER OF CONSTITUTIONAL RIGHTS:                             
	"1.  I AM AWARE OF THE FACT THAT MY PRESENT HOME EQUITY LOAN 
MAY NOT BE FORECLOSED UPON WITHOUT A COURT ORDER.  THIS MEANS THAT I 
CANNOT LOSE MY HOME WITHOUT A COURT ORDER WITH MY CURRENT LOAN.
	"2.  I AM AWARE OF THE FACT THAT, IF I REFINANCE MY HOME 
EQUITY LOAN UNDER THE TERMS AND CONDITIONS REQUIRING THIS NOTICE, 
THIS NEW LOAN MAY BE FORECLOSED UPON WITHOUT A COURT ORDER.  THIS 
MEANS THAT I MAY LOSE MY HOME WITHOUT A COURT ORDER.
	"3.  I AM AWARE OF THE FACT THAT MY PRESENT HOME EQUITY  LOAN 
IS WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST ME.  THIS MEANS 
THAT I WOULD NOT BE REQUIRED TO PAY THE LENDER ADDITIONAL AMOUNTS OF 
MONEY SHOULD MY HOME BE FORECLOSED UPON.
	"4.  I AM AWARE OF THE FACT THAT, IF I REFINANCE MY HOME 
EQUITY LOAN UNDER THE TERMS AND CONDITIONS REQUIRING THIS NOTICE, I 
AM PERSONALLY LIABLE FOR THIS DEBT.  THIS MEANS I MAY BE REQUIRED TO 
PAY THE LENDER MONEY OVER AND ABOVE THE VALUE OF MY HOUSE IF THE 
LENDER FORECLOSES UPON THIS LOAN.
	"5.  I AM AWARE OF THE FACT THAT THE LENDER CANNOT REQUIRE ME 
TO ACCEPT A REFINANCING OF MY EXISTING HOME EQUITY LOAN THAT CAUSES 
ME TO LOSE MY CONSTITUTIONAL RIGHTS OUTLINED ABOVE.  THIS MEANS THAT 
THE LENDER MUST OFFER ME A REFINANCING OF MY EXISTING HOME EQUITY 
LOAN THAT DOES NOT REQUIRE ME TO WAIVE MY CONSTITUTIONAL RIGHTS.
	"6.  I AM AWARE OF THE FACT THAT I MUST SIGN THIS NOTICE AT 
THE TIME OF APPLICATION AND AT CLOSING IN ORDER TO REFINANCE MY HOME 
EQUITY LOAN UNDER THE TERMS AND CONDITIONS REQUIRING THIS NOTICE.
	"7.  I AM AWARE OF THE FACT THAT I AM WAIVING THESE VALUABLE 
CONSTITUTIONAL RIGHTS THAT ARE PART OF MY CURRENT LOAN."
	(b)  A borrower seeking to refinance an existing home equity 
loan under Section 50(f)(2), Article XVI, Texas Constitution, must 
execute the notice in Subsection (a) of this section:
		(1)  at the time the borrower submits an application 
for the refinance of debt; and
		(2)  at the time of closing.                                           
	(c)  The notice in subsection (a) fulfills the lender's 
obligations under Section 50(f)(2)(D), Article XVI, Texas 
Constitution.
	Sec. 302.203.  INTERPRETIVE AUTHORITY.  (a)  The Finance 
Commission of Texas and the Texas Real Estate Commission may, 
either on request of an interested person or upon their own motion, 
issue interpretations of Subsections (a)(6-7), (e)-(p), and (t) of 
Section 50, Article XVI, Texas Constitution.
	(b)  An interpretation under this section is subject to 
Chapter 2001, Government Code.
	(c)  An interpretation issued by the Finance Commission of 
Texas and the Texas Real Estate Commission is applicable to all 
lenders authorized to make extensions of credit under Subsection 
50(a)(6) and 50(f), Article XVI, Texas Constitution.  A document or 
other statement that is issued by only the Finance Commission of 
Texas or the Texas Real Estate Commission is not an interpretation 
under this section.
	(d)  The Credit Union Commission shall assist the Finance 
Commission of Texas and the Texas Real Estate Commission in 
developing interpretations that affect lenders regulated by the 
Credit Union Commission.
	SECTION 2.  This Act takes effect on the date the 
constitutional amendment expanding the permissible uses, types, 
and refinancing options of home equity loans takes effect.  If that 
constitutional amendment is not approved by the voters, this Act 
has no effect.