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SECTION 1. Section 50,
Article XVI, Texas Constitution, is amended by amending Subsections (a),
(f), (g), and (t) and adding Subsection (f-1) to read as follows:
(a) The homestead of a
family, or of a single adult person, shall be, and is hereby protected from
forced sale, for the payment of all debts except for:
(1) the purchase money
thereof, or a part of such purchase money;
(2) the taxes due thereon;
(3) an owelty of partition
imposed against the entirety of the property by a court order or by a
written agreement of the parties to the partition, including a debt of one
spouse in favor of the other spouse resulting from a division or an award
of a family homestead in a divorce proceeding;
(4) the refinance of 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;
(5) work and material used
in constructing new improvements thereon, if contracted for in writing, or
work and material used to repair or renovate existing improvements thereon
if:
(A) the work and material
are contracted for in writing, with the consent of both spouses, in the
case of a family homestead, given in the same manner as is required in
making a sale and conveyance of the homestead;
(B) the contract for the
work and material is not executed by the owner or the owner's spouse before
the fifth day after the owner makes written application for any extension
of credit for the work and material, unless the work and material are
necessary to complete immediate repairs to conditions on the homestead
property that materially affect the health or safety of the owner or person
residing in the homestead and the owner of the homestead acknowledges such
in writing;
(C) the contract for the
work and material expressly provides that the owner may rescind the
contract without penalty or charge within three days after the execution of
the contract by all parties, unless the work and material are necessary to
complete immediate repairs to conditions on the homestead property that
materially affect the health or safety of the owner or person residing in
the homestead and the owner of the homestead acknowledges such in writing;
and
(D) the contract for the
work and material is executed by the owner and the owner's spouse only at
the office of a third-party lender making an extension of credit for the
work and material, an attorney at law, or a title company;
(6) an extension of credit
that:
(A) is secured by a
voluntary lien on the homestead created under a written agreement with the
consent of each owner and each owner's spouse;
(B) is of a principal amount
that when added to the aggregate total of the outstanding principal
balances of all other indebtedness secured by valid encumbrances of record
against the homestead does not exceed 80 percent of the fair market value
of the homestead on the date the extension of credit is made;
(C) is without recourse for
personal liability against each owner and the spouse of each owner, unless
the owner or spouse obtained the extension of credit by actual fraud;
(D) is secured by a lien
that may be foreclosed upon only by a court order;
(E) does not require the
owner or the owner's spouse to pay, in addition to any interest or any
bona fide discount points used to buy down the interest rate, any
fees to any person that are necessary to originate, evaluate, maintain,
record, insure, or service the extension of credit that exceed, in the
aggregate, two [three] percent of the original principal
amount of the extension of credit, excluding fees for:
(i) an appraisal
performed by a third party appraiser;
(ii) a property survey
performed by a state registered or licensed surveyor;
(iii) a state base
premium for a mortgagee policy of title insurance with endorsements
established in accordance with state law; or
(iv) a title examination
report if its cost is less than the state base premium for a mortgagee
policy of title insurance without endorsements established in accordance
with state law;
(F) is not a form of
open-end account that may be debited from time to time or under which
credit may be extended from time to time unless the open-end account is a
home equity line of credit;
(G) is payable in advance
without penalty or other charge;
(H) is not secured by any
additional real or personal property other than the homestead;
(I) (repealed) [is
not secured by homestead property that on the date of closing is designated
for agricultural use as provided by statutes governing property tax, unless
such homestead property is used primarily for the production of milk;]
(J) may not be accelerated
because of a decrease in the market value of the homestead or because of
the owner's default under other indebtedness not secured by a prior valid
encumbrance against the homestead;
(K) is the only debt secured
by the homestead at the time the extension of credit is made unless the
other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or
Subsection (a)(8) of this section;
(L) is scheduled to be
repaid:
(i) in substantially equal
successive periodic installments, not more often than every 14 days and not
less often than monthly, beginning no later than two months from the date
the extension of credit is made, each of which equals or exceeds the amount
of accrued interest as of the date of the scheduled installment; or
(ii) if the extension of
credit is a home equity line of credit, in periodic payments described
under Subsection (t)(8) of this section;
(M) is closed not before:
(i) the 12th day after the
later of the date that the owner of the homestead submits a loan
application to the lender for the extension of credit or the date that the
lender provides the owner a copy of the notice prescribed by Subsection (g)
of this section;
(ii) one business day after
the date that the owner of the homestead receives a copy of the loan
application if not previously provided and a final itemized disclosure of
the actual fees, points, interest, costs, and charges that will be charged
at closing. If a bona fide emergency or another good cause exists and the
lender obtains the written consent of the owner, the lender may provide the
documentation to the owner or the lender may modify previously provided
documentation on the date of closing; and
(iii) the first anniversary
of the closing date of any other extension of credit described by
Subsection (a)(6) of this section secured by the same homestead property,
except a refinance described by Paragraph (Q)(x)(f) of this subdivision,
unless the owner on oath requests an earlier closing due to a state of
emergency that:
(a) has been declared by the
president of the United States or the governor as provided by law; and
(b) applies to the area
where the homestead is located;
(N) is closed only at the
office of the lender, an attorney at law, or a title company;
(O) permits a lender to
contract for and receive any fixed or variable rate of interest authorized
under statute;
(P) is made by one of the
following that has not been found by a federal regulatory agency to have
engaged in the practice of refusing to make loans because the applicants
for the loans reside or the property proposed to secure the loans is
located in a certain area:
(i) a bank, savings and loan
association, savings bank, or credit union doing business under the laws of
this state or the United States, including a subsidiary of a bank,
savings and loan association, savings bank, or credit union described by
this subparagraph;
(ii) a federally chartered
lending instrumentality or a person approved as a mortgagee by the United
States government to make federally insured loans;
(iii) a person licensed to
make regulated loans, as provided by statute of this state;
(iv) a person who sold the
homestead property to the current owner and who provided all or part of the
financing for the purchase;
(v) a person who is related
to the homestead property owner within the second degree of affinity or
consanguinity; or
(vi) a person regulated by
this state as a mortgage banker or mortgage company [broker];
and
(Q) is made on the condition
that:
(i) the owner of the
homestead is not required to apply the proceeds of the extension of credit
to repay another debt except debt secured by the homestead or debt to
another lender;
(ii) the owner of the
homestead not assign wages as security for the extension of credit;
(iii) the owner of the
homestead not sign any instrument in which blanks relating to substantive
terms of agreement are left to be filled in;
(iv) the owner of the
homestead not sign a confession of judgment or power of attorney to the
lender or to a third person to confess judgment or to appear for the owner
in a judicial proceeding;
(v) at the time the
extension of credit is made, the owner of the homestead shall receive a
copy of the final loan application and all executed documents signed by the
owner at closing related to the extension of credit;
(vi) the security
instruments securing the extension of credit contain a disclosure that the
extension of credit is the type of credit defined by Subsection (a)(6)
of this section [Section 50(a)(6), Article XVI, Texas Constitution];
(vii) within a reasonable
time after termination and full payment of the extension of credit, the
lender cancel and return the promissory note to the owner of the homestead
and give the owner, in recordable form, a release of the lien securing the
extension of credit or a copy of an endorsement and assignment of the lien
to a lender that is refinancing the extension of credit;
(viii) the owner of the
homestead and any spouse of the owner may, within three days after the
extension of credit is made, rescind the extension of credit without
penalty or charge;
(ix) the owner of the
homestead and the lender sign a written acknowledgment as to the fair
market value of the homestead property on the date the extension of credit
is made;
(x) except as provided by
Subparagraph (xi) of this paragraph, the lender or any holder of the note
for the extension of credit shall forfeit all principal and interest of the
extension of credit if the lender or holder fails to comply with the
lender's or holder's obligations under the extension of credit and fails to
correct the failure to comply not later than the 60th day after the date
the lender or holder is notified by the borrower of the lender's failure to
comply by:
(a) paying to the owner an
amount equal to any overcharge paid by the owner under or related to the
extension of credit if the owner has paid an amount that exceeds an amount
stated in the applicable Paragraph (E), (G), or (O) of this subdivision;
(b) sending the owner a
written acknowledgement that the lien is valid only in the amount that the
extension of credit does not exceed the percentage described by Paragraph
(B) of this subdivision, if applicable, or is not secured by property
described under Paragraph (H) [or (I)] of this subdivision, if
applicable;
(c) sending the owner a
written notice modifying any other amount, percentage, term, or other
provision prohibited by this section to a permitted amount, percentage,
term, or other provision and adjusting the account of the borrower to
ensure that the borrower is not required to pay more than an amount
permitted by this section and is not subject to any other term or provision
prohibited by this section;
(d) delivering the required
documents to the borrower if the lender fails to comply with Subparagraph
(v) of this paragraph or obtaining the appropriate signatures if the lender
fails to comply with Subparagraph (ix) of this paragraph;
(e) sending the owner a
written acknowledgement, if the failure to comply is prohibited by
Paragraph (K) of this subdivision, that the accrual of interest and all of
the owner's obligations under the extension of credit are abated while any
prior lien prohibited under Paragraph (K) remains secured by the homestead;
or
(f) if the failure to comply
cannot be cured under Subparagraphs (x)(a)-(e) of this paragraph, curing
the failure to comply by a refund or credit to the owner of $1,000 and
offering the owner the right to refinance the extension of credit with the
lender or holder for the remaining term of the loan at no cost to the owner
on the same terms, including interest, as the original extension of credit
with any modifications necessary to comply with this section or on terms on
which the owner and the lender or holder otherwise agree that comply with
this section; and
(xi) the lender or any
holder of the note for the extension of credit shall forfeit all principal
and interest of the extension of credit if the extension of credit is made
by a person other than a person described under Paragraph (P) of this
subdivision or if the lien was not created under a written agreement with
the consent of each owner and each owner's spouse, unless each owner and
each owner's spouse who did not initially consent subsequently consents;
(7) a reverse mortgage; or
(8) the conversion and
refinance of a personal property lien secured by a manufactured home to a
lien on real property, including the refinance of the purchase price of the
manufactured home, the cost of installing the manufactured home on the real
property, and the refinance of the purchase price of the real property.
(f) A refinance of debt
secured by the homestead, any portion of which is an extension of credit
described by Subsection (a)(6) of this section, may not be secured by a
valid lien against the homestead unless either:
(1) the refinance of
the debt is an extension of credit described by Subsection (a)(6) or (a)(7)
of this section; or
(2) all of the following
conditions are met:
(A) the refinance is not
closed before the first anniversary of the date the extension of credit was
closed;
(B) the refinanced
extension of credit does not include the advance of any additional funds
other than:
(i) funds advanced to
refinance a debt described by Subsections (a)(1) through (a)(7) of this
section; or
(ii) actual costs and
reserves required by the lender to refinance the debt;
(C) the refinance of the
extension of credit is of a principal amount that when added to the
aggregate total of the outstanding principal balances of all other
indebtedness secured by valid encumbrances of record against the homestead
does not exceed 80 percent of the fair market value of the homestead on the
date the refinance of the extension of credit is made; and
(D) the lender provides
the owner the following written notice on a separate document not later than
the third business day after the date the owner submits the loan
application to the lender and at least 12 days before the date the
refinance of the extension of credit is closed:
"YOUR EXISTING LOAN
THAT YOU DESIRE TO REFINANCE IS A HOME EQUITY LOAN. YOU MAY HAVE THE
OPTION TO REFINANCE YOUR HOME EQUITY LOAN AS EITHER A HOME EQUITY LOAN OR
AS A NON-HOME EQUITY LOAN, IF OFFERED BY YOUR LENDER.
"HOME EQUITY LOANS
HAVE IMPORTANT CONSUMER PROTECTIONS. A LENDER MAY ONLY FORECLOSE A HOME
EQUITY LOAN BASED ON A COURT ORDER. A HOME EQUITY LOAN MUST BE WITHOUT
RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE.
"IF YOU HAVE APPLIED
TO REFINANCE YOUR EXISTING HOME EQUITY LOAN AS A NON-HOME EQUITY LOAN, YOU
WILL LOSE CERTAIN CONSUMER PROTECTIONS. A NON-HOME EQUITY REFINANCED LOAN:
"(1) WILL PERMIT THE
LENDER TO FORECLOSE WITHOUT A COURT ORDER;
"(2) WILL BE WITH
RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE; AND
"(3) MAY ALSO
CONTAIN OTHER TERMS OR CONDITIONS THAT MAY NOT BE PERMITTED IN A
TRADITIONAL HOME EQUITY LOAN.
"BEFORE YOU REFINANCE
YOUR EXISTING HOME EQUITY LOAN TO MAKE IT A NON-HOME EQUITY LOAN, YOU
SHOULD MAKE SURE YOU UNDERSTAND THAT YOU ARE WAIVING IMPORTANT PROTECTIONS
THAT HOME EQUITY LOANS PROVIDE UNDER THE LAW AND SHOULD CONSIDER CONSULTING
WITH AN ATTORNEY OF YOUR CHOOSING REGARDING THESE PROTECTIONS.
"YOU MAY WISH TO ASK
YOUR LENDER TO REFINANCE YOUR LOAN AS A HOME EQUITY LOAN. HOWEVER, A HOME
EQUITY LOAN MAY HAVE A HIGHER INTEREST RATE AND CLOSING COSTS THAN A
NON-HOME EQUITY LOAN."
(f-1) A lien securing a
refinance of debt under Subsection (f)(2) of this section is deemed to be a
lien described by Subsection (a)(4) of this section. An affidavit executed
by the owner or the owner's spouse acknowledging that the requirements of
Subsection (f)(2) of this section have been met conclusively establishes
that the requirements of Subsection (a)(4) of this section have been met.
(g) An extension of credit
described by Subsection (a)(6) of this section may be secured by a valid
lien against homestead property if the extension of credit is not closed
before the 12th day after the lender provides the owner with the following
written notice on a separate instrument:
"NOTICE CONCERNING
EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)(6), ARTICLE XVI, TEXAS
CONSTITUTION:
"SECTION 50(a)(6),
ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS CERTAIN LOANS TO BE SECURED
AGAINST THE EQUITY IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY
LOANS. IF YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF
THE LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION
PROVIDES THAT:
"(A) THE LOAN MUST BE
VOLUNTARILY CREATED WITH THE CONSENT OF EACH OWNER OF YOUR HOME AND EACH
OWNER'S SPOUSE;
"(B) THE PRINCIPAL LOAN
AMOUNT AT THE TIME THE LOAN IS MADE MUST NOT EXCEED AN AMOUNT THAT, WHEN
ADDED TO THE PRINCIPAL BALANCES OF ALL OTHER LIENS AGAINST YOUR HOME, IS
MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME;
"(C) THE LOAN MUST BE
WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS
YOU OR YOUR SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
"(D) THE LIEN SECURING
THE LOAN MAY BE FORECLOSED UPON ONLY WITH A COURT ORDER;
"(E) FEES AND CHARGES TO
MAKE THE LOAN MAY NOT EXCEED 2 [3] PERCENT OF THE LOAN AMOUNT,
EXCEPT FOR A FEE OR CHARGE FOR AN APPRAISAL PERFORMED BY A THIRD PARTY
APPRAISER, A PROPERTY SURVEY PERFORMED BY A STATE REGISTERED OR LICENSED
SURVEYOR, A STATE BASE PREMIUM FOR A MORTGAGEE POLICY OF TITLE INSURANCE
WITH ENDORSEMENTS, OR A TITLE EXAMINATION REPORT;
"(F) THE LOAN MAY NOT BE
AN OPEN-END ACCOUNT THAT MAY BE DEBITED FROM TIME TO TIME OR UNDER WHICH
CREDIT MAY BE EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF
CREDIT;
"(G) YOU MAY PREPAY THE
LOAN WITHOUT PENALTY OR CHARGE;
"(H) NO ADDITIONAL
COLLATERAL MAY BE SECURITY FOR THE LOAN;
"(I) (repealed) [THE
LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS DESIGNATED FOR
AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE AGRICULTURAL
HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION OF MILK];
"(J) YOU ARE NOT
REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED SOLELY BECAUSE THE FAIR
MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN
THAT IS NOT SECURED BY YOUR HOME;
"(K) ONLY ONE LOAN DESCRIBED
BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED
WITH YOUR HOME AT ANY GIVEN TIME;
"(L) THE LOAN MUST BE
SCHEDULED TO BE REPAID IN PAYMENTS THAT EQUAL OR EXCEED THE AMOUNT OF
ACCRUED INTEREST FOR EACH PAYMENT PERIOD;
"(M) THE LOAN MAY NOT
CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A LOAN APPLICATION TO THE LENDER OR
BEFORE 12 DAYS AFTER YOU RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER; AND
MAY NOT WITHOUT YOUR CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE
ON WHICH YOU RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY
PROVIDED AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS,
INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF YOUR
HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW
LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED
FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS ON OATH YOU REQUEST AN
EARLIER CLOSING DUE TO A DECLARED STATE OF EMERGENCY;
"(N) THE LOAN MAY CLOSE
ONLY AT THE OFFICE OF THE LENDER, TITLE COMPANY, OR AN ATTORNEY AT LAW;
"(O) THE LENDER MAY
CHARGE ANY FIXED OR VARIABLE RATE OF INTEREST AUTHORIZED BY STATUTE;
"(P) ONLY A LAWFULLY
AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE
XVI, OF THE TEXAS CONSTITUTION;
"(Q) LOANS DESCRIBED BY
SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MUST:
"(1) NOT REQUIRE YOU TO
APPLY THE PROCEEDS TO ANOTHER DEBT EXCEPT A DEBT THAT IS SECURED BY YOUR
HOME OR OWED TO ANOTHER LENDER;
"(2) NOT REQUIRE THAT
YOU ASSIGN WAGES AS SECURITY;
"(3) NOT REQUIRE THAT
YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS FOR SUBSTANTIVE TERMS OF
AGREEMENT LEFT TO BE FILLED IN;
"(4) NOT REQUIRE THAT
YOU SIGN A CONFESSION OF JUDGMENT OR POWER OF ATTORNEY TO ANOTHER PERSON TO
CONFESS JUDGMENT OR APPEAR IN A LEGAL PROCEEDING ON YOUR BEHALF;
"(5) PROVIDE THAT YOU
RECEIVE A COPY OF YOUR FINAL LOAN APPLICATION AND ALL EXECUTED DOCUMENTS
YOU SIGN AT CLOSING;
"(6) PROVIDE THAT THE
SECURITY INSTRUMENTS CONTAIN A DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED
BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
"(7) PROVIDE THAT WHEN
THE LOAN IS PAID IN FULL, THE LENDER WILL SIGN AND GIVE YOU A RELEASE OF
LIEN OR AN ASSIGNMENT OF THE LIEN, WHICHEVER IS APPROPRIATE;
"(8) PROVIDE THAT YOU
MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THE LOAN WITHOUT PENALTY OR
CHARGE;
"(9) PROVIDE THAT YOU
AND THE LENDER ACKNOWLEDGE THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE
THE LOAN CLOSES; AND
"(10) PROVIDE THAT THE
LENDER WILL FORFEIT ALL PRINCIPAL AND INTEREST IF THE LENDER FAILS TO
COMPLY WITH THE LENDER'S OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO
COMPLY AS PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS
CONSTITUTION; AND
"(R) IF THE LOAN IS A
HOME EQUITY LINE OF CREDIT:
"(1) YOU MAY REQUEST
ADVANCES, REPAY MONEY, AND REBORROW MONEY UNDER THE LINE OF CREDIT;
"(2) EACH ADVANCE UNDER
THE LINE OF CREDIT MUST BE IN AN AMOUNT OF AT LEAST $4,000;
"(3) YOU MAY NOT USE A
CREDIT CARD, DEBIT CARD, OR SIMILAR DEVICE, OR PREPRINTED CHECK THAT YOU DID
NOT SOLICIT, TO OBTAIN ADVANCES UNDER THE LINE OF CREDIT;
"(4) ANY FEES THE LENDER
CHARGES MAY BE CHARGED AND COLLECTED ONLY AT THE TIME THE LINE OF CREDIT IS
ESTABLISHED AND THE LENDER MAY NOT CHARGE A FEE IN CONNECTION WITH ANY
ADVANCE;
"(5) THE MAXIMUM
PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN ADDED TO ALL OTHER DEBTS
SECURED BY YOUR HOME, MAY NOT EXCEED 80 PERCENT OF THE FAIR MARKET VALUE OF
YOUR HOME ON THE DATE THE LINE OF CREDIT IS ESTABLISHED;
"(6) IF THE PRINCIPAL
BALANCE UNDER THE LINE OF CREDIT AT ANY TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF
YOUR HOME, AS DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU
MAY NOT CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE
BALANCE IS LESS THAN 50 PERCENT
OF THE FAIR MARKET VALUE; AND
"(7) THE LENDER MAY NOT
UNILATERALLY AMEND THE TERMS OF THE LINE OF CREDIT.
"THIS NOTICE IS ONLY A
SUMMARY OF YOUR RIGHTS UNDER THE TEXAS CONSTITUTION. YOUR RIGHTS ARE
GOVERNED BY SECTION 50, ARTICLE XVI, OF THE TEXAS CONSTITUTION, AND NOT BY
THIS NOTICE."
If the discussions with the
borrower are conducted primarily in a language other than English, the
lender shall, before closing, provide an additional copy of the notice
translated into the written language in which the discussions were conducted.
(t) A home equity line of
credit is a form of an open-end account that may be debited from time to
time, under which credit may be extended from time to time and under which:
(1) the owner requests
advances, repays money, and reborrows money;
(2) any single debit or
advance is not less than $4,000;
(3) the owner does not use a
credit card, debit card, or similar device, or preprinted check unsolicited
by the borrower, to obtain an advance;
(4) any fees described by
Subsection (a)(6)(E) of this section are charged and collected only at the
time the extension of credit is established and no fee is charged or
collected in connection with any debit or advance;
(5) the maximum principal
amount that may be extended under the account, when added to the aggregate
total of the outstanding principal balances of all indebtedness secured by
the homestead on the date the extension of credit is established, does not
exceed an amount described under Subsection (a)(6)(B) of this section;
(6) (repealed) [no
additional debits or advances are made if the total principal amount
outstanding exceeds an amount equal to 50 percent of the fair market value
of the homestead as determined on the date the account is established;]
(7) the lender or holder may
not unilaterally amend the extension of credit; and
(8) repayment is to be made
in regular periodic installments, not more often than every 14 days and not
less often than monthly, beginning not later than two months from the date
the extension of credit is established, and:
(A) during the period during
which the owner may request advances, each installment equals or exceeds
the amount of accrued interest; and
(B) after the period during
which the owner may request advances, installments are substantially equal.
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SECTION 1. Section 50,
Article XVI, Texas Constitution, is amended by amending Subsections (a),
(f), (g), and (t) and adding Subsection (f-1) to read as follows:
(a) The homestead of a
family, or of a single adult person, shall be, and is hereby protected from
forced sale, for the payment of all debts except for:
(1) the purchase money
thereof, or a part of such purchase money;
(2) the taxes due thereon;
(3) an owelty of partition
imposed against the entirety of the property by a court order or by a written
agreement of the parties to the partition, including a debt of one spouse
in favor of the other spouse resulting from a division or an award of a
family homestead in a divorce proceeding;
(4) the refinance of 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;
(5) work and material used
in constructing new improvements thereon, if contracted for in writing, or
work and material used to repair or renovate existing improvements thereon
if:
(A) the work and material
are contracted for in writing, with the consent of both spouses, in the
case of a family homestead, given in the same manner as is required in
making a sale and conveyance of the homestead;
(B) the contract for the
work and material is not executed by the owner or the owner's spouse before
the fifth day after the owner makes written application for any extension
of credit for the work and material, unless the work and material are
necessary to complete immediate repairs to conditions on the homestead
property that materially affect the health or safety of the owner or person
residing in the homestead and the owner of the homestead acknowledges such
in writing;
(C) the contract for the
work and material expressly provides that the owner may rescind the
contract without penalty or charge within three days after the execution of
the contract by all parties, unless the work and material are necessary to
complete immediate repairs to conditions on the homestead property that
materially affect the health or safety of the owner or person residing in
the homestead and the owner of the homestead acknowledges such in writing;
and
(D) the contract for the
work and material is executed by the owner and the owner's spouse only at
the office of a third-party lender making an extension of credit for the
work and material, an attorney at law, or a title company;
(6) an extension of credit
that:
(A) is secured by a
voluntary lien on the homestead created under a written agreement with the
consent of each owner and each owner's spouse;
(B) is of a principal amount
that when added to the aggregate total of the outstanding principal
balances of all other indebtedness secured by valid encumbrances of record
against the homestead does not exceed 80 percent of the fair market value
of the homestead on the date the extension of credit is made;
(C) is without recourse for
personal liability against each owner and the spouse of each owner, unless
the owner or spouse obtained the extension of credit by actual fraud;
(D) is secured by a lien
that may be foreclosed upon only by a court order;
(E) does not require the
owner or the owner's spouse to pay, in addition to any interest or any
bona fide discount points used to buy down the interest rate, any
fees to any person that are necessary to originate, evaluate, maintain,
record, insure, or service the extension of credit that exceed, in the
aggregate, two [three] percent of the original principal
amount of the extension of credit, excluding fees for:
(i) an appraisal
performed by a third party appraiser;
(ii) a property survey
performed by a state registered or licensed surveyor;
(iii) a state base
premium for a mortgagee policy of title insurance with endorsements
established in accordance with state law; or
(iv) a title examination
report if its cost is less than the state base premium for a mortgagee
policy of title insurance without endorsements established in accordance
with state law;
(F) is not a form of
open-end account that may be debited from time to time or under which
credit may be extended from time to time unless the open-end account is a
home equity line of credit;
(G) is payable in advance
without penalty or other charge;
(H) is not secured by any
additional real or personal property other than the homestead;
(I) (repealed) [is
not secured by homestead property that on the date of closing is designated
for agricultural use as provided by statutes governing property tax, unless
such homestead property is used primarily for the production of milk];
(J) may not be accelerated
because of a decrease in the market value of the homestead or because of
the owner's default under other indebtedness not secured by a prior valid
encumbrance against the homestead;
(K) is the only debt secured
by the homestead at the time the extension of credit is made unless the
other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or
Subsection (a)(8) of this section;
(L) is scheduled to be
repaid:
(i) in substantially equal
successive periodic installments, not more often than every 14 days and not
less often than monthly, beginning no later than two months from the date
the extension of credit is made, each of which equals or exceeds the amount
of accrued interest as of the date of the scheduled installment; or
(ii) if the extension of
credit is a home equity line of credit, in periodic payments described
under Subsection (t)(8) of this section;
(M) is closed not before:
(i) the 12th day after the
later of the date that the owner of the homestead submits a loan
application to the lender for the extension of credit or the date that the
lender provides the owner a copy of the notice prescribed by Subsection (g)
of this section;
(ii) one business day after
the date that the owner of the homestead receives a copy of the loan
application if not previously provided and a final itemized disclosure of
the actual fees, points, interest, costs, and charges that will be charged
at closing. If a bona fide emergency or another good cause exists and the
lender obtains the written consent of the owner, the lender may provide the
documentation to the owner or the lender may modify previously provided
documentation on the date of closing; and
(iii) the first anniversary
of the closing date of any other extension of credit described by
Subsection (a)(6) of this section secured by the same homestead property,
except a refinance described by Paragraph (Q)(x)(f) of this subdivision,
unless the owner on oath requests an earlier closing due to a state of
emergency that:
(a) has been declared by the
president of the United States or the governor as provided by law; and
(b) applies to the area
where the homestead is located;
(N) is closed only at the office
of the lender, an attorney at law, or a title company;
(O) permits a lender to
contract for and receive any fixed or variable rate of interest authorized
under statute;
(P) is made by one of the
following that has not been found by a federal regulatory agency to have
engaged in the practice of refusing to make loans because the applicants
for the loans reside or the property proposed to secure the loans is
located in a certain area:
(i) a bank, savings and loan
association, savings bank, or credit union doing business under the laws of
this state or the United States, including a subsidiary of a bank,
savings and loan association, savings bank, or credit union described by
this subparagraph;
(ii) a federally chartered
lending instrumentality or a person approved as a mortgagee by the United
States government to make federally insured loans;
(iii) a person licensed to
make regulated loans, as provided by statute of this state;
(iv) a person who sold the
homestead property to the current owner and who provided all or part of the
financing for the purchase;
(v) a person who is related
to the homestead property owner within the second degree of affinity or
consanguinity; or
(vi) a person regulated by
this state as a mortgage banker or mortgage company [broker];
and
(Q) is made on the condition
that:
(i) the owner of the
homestead is not required to apply the proceeds of the extension of credit
to repay another debt except debt secured by the homestead or debt to
another lender;
(ii) the owner of the
homestead not assign wages as security for the extension of credit;
(iii) the owner of the
homestead not sign any instrument in which blanks relating to substantive
terms of agreement are left to be filled in;
(iv) the owner of the
homestead not sign a confession of judgment or power of attorney to the
lender or to a third person to confess judgment or to appear for the owner
in a judicial proceeding;
(v) at the time the
extension of credit is made, the owner of the homestead shall receive a
copy of the final loan application and all executed documents signed by the
owner at closing related to the extension of credit;
(vi) the security
instruments securing the extension of credit contain a disclosure that the
extension of credit is the type of credit defined by Subsection (a)(6)
of this section [Section 50(a)(6), Article XVI, Texas Constitution];
(vii) within a reasonable
time after termination and full payment of the extension of credit, the
lender cancel and return the promissory note to the owner of the homestead
and give the owner, in recordable form, a release of the lien securing the
extension of credit or a copy of an endorsement and assignment of the lien
to a lender that is refinancing the extension of credit;
(viii) the owner of the homestead
and any spouse of the owner may, within three days after the extension of
credit is made, rescind the extension of credit without penalty or charge;
(ix) the owner of the
homestead and the lender sign a written acknowledgment as to the fair
market value of the homestead property on the date the extension of credit
is made;
(x) except as provided by
Subparagraph (xi) of this paragraph, the lender or any holder of the note
for the extension of credit shall forfeit all principal and interest of the
extension of credit if the lender or holder fails to comply with the
lender's or holder's obligations under the extension of credit and fails to
correct the failure to comply not later than the 60th day after the date
the lender or holder is notified by the borrower of the lender's failure to
comply by:
(a) paying to the owner an
amount equal to any overcharge paid by the owner under or related to the
extension of credit if the owner has paid an amount that exceeds an amount
stated in the applicable Paragraph (E), (G), or (O) of this subdivision;
(b) sending the owner a
written acknowledgement that the lien is valid only in the amount that the
extension of credit does not exceed the percentage described by Paragraph
(B) of this subdivision, if applicable, or is not secured by property
described under Paragraph (H) [or (I)] of this subdivision, if
applicable;
(c) sending the owner a
written notice modifying any other amount, percentage, term, or other
provision prohibited by this section to a permitted amount, percentage,
term, or other provision and adjusting the account of the borrower to
ensure that the borrower is not required to pay more than an amount
permitted by this section and is not subject to any other term or provision
prohibited by this section;
(d) delivering the required
documents to the borrower if the lender fails to comply with Subparagraph
(v) of this paragraph or obtaining the appropriate signatures if the lender
fails to comply with Subparagraph (ix) of this paragraph;
(e) sending the owner a
written acknowledgement, if the failure to comply is prohibited by
Paragraph (K) of this subdivision, that the accrual of interest and all of
the owner's obligations under the extension of credit are abated while any
prior lien prohibited under Paragraph (K) remains secured by the homestead;
or
(f) if the failure to comply
cannot be cured under Subparagraphs (x)(a)-(e) of this paragraph, curing
the failure to comply by a refund or credit to the owner of $1,000 and
offering the owner the right to refinance the extension of credit with the
lender or holder for the remaining term of the loan at no cost to the owner
on the same terms, including interest, as the original extension of credit
with any modifications necessary to comply with this section or on terms on
which the owner and the lender or holder otherwise agree that comply with
this section; and
(xi) the lender or any
holder of the note for the extension of credit shall forfeit all principal
and interest of the extension of credit if the extension of credit is made
by a person other than a person described under Paragraph (P) of this
subdivision or if the lien was not created under a written agreement with
the consent of each owner and each owner's spouse, unless each owner and
each owner's spouse who did not initially consent subsequently consents;
(7) a reverse mortgage; or
(8) the conversion and
refinance of a personal property lien secured by a manufactured home to a
lien on real property, including the refinance of the purchase price of the
manufactured home, the cost of installing the manufactured home on the real
property, and the refinance of the purchase price of the real property.
(f) A refinance of debt
secured by the homestead, any portion of which is an extension of credit
described by Subsection (a)(6) of this section, may not be secured by a
valid lien against the homestead unless either:
(1) the refinance of
the debt is an extension of credit described by Subsection (a)(6) or (a)(7)
of this section; or
(2) all of the following
conditions are met:
(A) the refinance is not
closed before the first anniversary of the date the extension of credit was
closed;
(B) the refinanced
extension of credit does not include the advance of any additional funds
other than:
(i) funds advanced to refinance
a debt described by Subsections (a)(1) through (a)(7) of this section; or
(ii) actual costs and
reserves required by the lender to refinance the debt;
(C) the refinance of the
extension of credit is of a principal amount that when added to the aggregate
total of the outstanding principal balances of all other indebtedness
secured by valid encumbrances of record against the homestead does not
exceed 80 percent of the fair market value of the homestead on the date the
refinance of the extension of credit is made; and
(D) the lender provides
the owner the following written notice on a separate document not later
than the third business day after the date the owner submits the loan
application to the lender and at least 12 days before the date the refinance
of the extension of credit is closed:
"YOUR EXISTING LOAN
THAT YOU DESIRE TO REFINANCE IS A HOME EQUITY LOAN. YOU MAY HAVE THE
OPTION TO REFINANCE YOUR HOME EQUITY LOAN AS EITHER A HOME EQUITY LOAN OR
AS A NON-HOME EQUITY LOAN, IF OFFERED BY YOUR LENDER.
"HOME EQUITY LOANS
HAVE IMPORTANT CONSUMER PROTECTIONS. A LENDER MAY ONLY FORECLOSE A HOME
EQUITY LOAN BASED ON A COURT ORDER. A HOME EQUITY LOAN MUST BE WITHOUT
RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE.
"IF YOU HAVE APPLIED
TO REFINANCE YOUR EXISTING HOME EQUITY LOAN AS A NON-HOME EQUITY LOAN, YOU
WILL LOSE CERTAIN CONSUMER PROTECTIONS. A NON-HOME EQUITY REFINANCED LOAN:
"(1) WILL PERMIT THE
LENDER TO FORECLOSE WITHOUT A COURT ORDER;
"(2) WILL BE WITH
RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE; AND
"(3) MAY ALSO
CONTAIN OTHER TERMS OR CONDITIONS THAT MAY NOT BE PERMITTED IN A
TRADITIONAL HOME EQUITY LOAN.
"BEFORE YOU REFINANCE
YOUR EXISTING HOME EQUITY LOAN TO MAKE IT A NON-HOME EQUITY LOAN, YOU
SHOULD MAKE SURE YOU UNDERSTAND THAT YOU ARE WAIVING IMPORTANT PROTECTIONS
THAT HOME EQUITY LOANS PROVIDE UNDER THE LAW AND SHOULD CONSIDER CONSULTING
WITH AN ATTORNEY OF YOUR CHOOSING REGARDING THESE PROTECTIONS.
"YOU MAY WISH TO ASK
YOUR LENDER TO REFINANCE YOUR LOAN AS A HOME EQUITY LOAN. HOWEVER, A HOME
EQUITY LOAN MAY HAVE A HIGHER INTEREST RATE AND CLOSING COSTS THAN A
NON-HOME EQUITY LOAN."
(f-1) A lien securing a
refinance of debt under Subsection (f)(2) of this section is deemed to be a
lien described by Subsection (a)(4) of this section. An affidavit executed
by the owner or the owner's spouse acknowledging that the requirements of
Subsection (f)(2) of this section have been met conclusively establishes
that the requirements of Subsection (a)(4) of this section have been met.
(g) An extension of credit
described by Subsection (a)(6) of this section may be secured by a valid
lien against homestead property if the extension of credit is not closed
before the 12th day after the lender provides the owner with the following
written notice on a separate instrument:
"NOTICE CONCERNING
EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)(6), ARTICLE XVI, TEXAS
CONSTITUTION:
"SECTION 50(a)(6),
ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS CERTAIN LOANS TO BE SECURED
AGAINST THE EQUITY IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY
LOANS. IF YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF
THE LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION
PROVIDES THAT:
"(A) THE LOAN MUST BE VOLUNTARILY
CREATED WITH THE CONSENT OF EACH OWNER OF YOUR HOME AND EACH OWNER'S
SPOUSE;
"(B) THE PRINCIPAL LOAN
AMOUNT AT THE TIME THE LOAN IS MADE MUST NOT EXCEED AN AMOUNT THAT, WHEN
ADDED TO THE PRINCIPAL BALANCES OF ALL OTHER LIENS AGAINST YOUR HOME, IS
MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME;
"(C) THE LOAN MUST BE
WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS
YOU OR YOUR SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
"(D) THE LIEN SECURING
THE LOAN MAY BE FORECLOSED UPON ONLY WITH A COURT ORDER;
"(E) FEES AND CHARGES TO
MAKE THE LOAN MAY NOT EXCEED 2 [3] PERCENT OF THE LOAN AMOUNT,
EXCEPT FOR A FEE OR CHARGE FOR AN APPRAISAL PERFORMED BY A THIRD PARTY
APPRAISER, A PROPERTY SURVEY PERFORMED BY A STATE REGISTERED OR LICENSED
SURVEYOR, A STATE BASE PREMIUM FOR A MORTGAGEE POLICY OF TITLE INSURANCE
WITH ENDORSEMENTS, OR A TITLE EXAMINATION REPORT;
"(F) THE LOAN MAY NOT BE
AN OPEN-END ACCOUNT THAT MAY BE DEBITED FROM TIME TO TIME OR UNDER WHICH
CREDIT MAY BE EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF
CREDIT;
"(G) YOU MAY PREPAY THE
LOAN WITHOUT PENALTY OR CHARGE;
"(H) NO ADDITIONAL
COLLATERAL MAY BE SECURITY FOR THE LOAN;
"(I) (repealed) [THE
LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS DESIGNATED FOR
AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE AGRICULTURAL
HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION OF MILK];
"(J) YOU ARE NOT
REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED SOLELY BECAUSE THE FAIR
MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN
THAT IS NOT SECURED BY YOUR HOME;
"(K) ONLY ONE LOAN
DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY
BE SECURED WITH YOUR HOME AT ANY GIVEN TIME;
"(L) THE LOAN MUST BE
SCHEDULED TO BE REPAID IN PAYMENTS THAT EQUAL OR EXCEED THE AMOUNT OF
ACCRUED INTEREST FOR EACH PAYMENT PERIOD;
"(M) THE LOAN MAY NOT
CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A LOAN APPLICATION TO THE LENDER OR
BEFORE 12 DAYS AFTER YOU RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER; AND
MAY NOT WITHOUT YOUR CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE
ON WHICH YOU RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY
PROVIDED AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, INTEREST,
COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF YOUR HOME WAS
SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN SECURED
BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED FROM THE
CLOSING DATE OF THE OTHER LOAN, UNLESS ON OATH YOU REQUEST AN EARLIER
CLOSING DUE TO A DECLARED STATE OF EMERGENCY;
"(N) THE LOAN MAY CLOSE
ONLY AT THE OFFICE OF THE LENDER, TITLE COMPANY, OR AN ATTORNEY AT LAW;
"(O) THE LENDER MAY
CHARGE ANY FIXED OR VARIABLE RATE OF INTEREST AUTHORIZED BY STATUTE;
"(P) ONLY A LAWFULLY
AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE
XVI, OF THE TEXAS CONSTITUTION;
"(Q) LOANS DESCRIBED BY
SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MUST:
"(1) NOT REQUIRE YOU TO
APPLY THE PROCEEDS TO ANOTHER DEBT EXCEPT A DEBT THAT IS SECURED BY YOUR
HOME OR OWED TO ANOTHER LENDER;
"(2) NOT REQUIRE THAT
YOU ASSIGN WAGES AS SECURITY;
"(3) NOT REQUIRE THAT
YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS FOR SUBSTANTIVE TERMS OF
AGREEMENT LEFT TO BE FILLED IN;
"(4) NOT REQUIRE THAT
YOU SIGN A CONFESSION OF JUDGMENT OR POWER OF ATTORNEY TO ANOTHER PERSON TO
CONFESS JUDGMENT OR APPEAR IN A LEGAL PROCEEDING ON YOUR BEHALF;
"(5) PROVIDE THAT YOU
RECEIVE A COPY OF YOUR FINAL LOAN APPLICATION AND ALL EXECUTED DOCUMENTS
YOU SIGN AT CLOSING;
"(6) PROVIDE THAT THE
SECURITY INSTRUMENTS CONTAIN A DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED
BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
"(7) PROVIDE THAT WHEN
THE LOAN IS PAID IN FULL, THE LENDER WILL SIGN AND GIVE YOU A RELEASE OF
LIEN OR AN ASSIGNMENT OF THE LIEN, WHICHEVER IS APPROPRIATE;
"(8) PROVIDE THAT YOU
MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THE LOAN WITHOUT PENALTY OR
CHARGE;
"(9) PROVIDE THAT YOU
AND THE LENDER ACKNOWLEDGE THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE
THE LOAN CLOSES; AND
"(10) PROVIDE THAT THE
LENDER WILL FORFEIT ALL PRINCIPAL AND INTEREST IF THE LENDER FAILS TO
COMPLY WITH THE LENDER'S OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO
COMPLY AS PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS
CONSTITUTION; AND
"(R) IF THE LOAN IS A
HOME EQUITY LINE OF CREDIT:
"(1) YOU MAY REQUEST
ADVANCES, REPAY MONEY, AND REBORROW MONEY UNDER THE LINE OF CREDIT;
"(2) EACH ADVANCE UNDER
THE LINE OF CREDIT MUST BE IN AN AMOUNT OF AT LEAST $4,000;
"(3) YOU MAY NOT USE A
CREDIT CARD, DEBIT CARD, OR SIMILAR DEVICE, OR PREPRINTED CHECK THAT YOU
DID NOT SOLICIT, TO OBTAIN ADVANCES UNDER THE LINE OF CREDIT;
"(4) ANY FEES THE LENDER
CHARGES MAY BE CHARGED AND COLLECTED ONLY AT THE TIME THE LINE OF CREDIT IS
ESTABLISHED AND THE LENDER MAY NOT CHARGE A FEE IN CONNECTION WITH ANY
ADVANCE;
"(5) THE MAXIMUM
PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN ADDED TO ALL OTHER DEBTS
SECURED BY YOUR HOME, MAY NOT EXCEED 80 PERCENT OF THE FAIR MARKET VALUE OF
YOUR HOME ON THE DATE THE LINE OF CREDIT IS ESTABLISHED;
"(6) IF THE PRINCIPAL
BALANCE UNDER THE LINE OF CREDIT AT ANY TIME EXCEEDS 80
[50] PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS
DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY NOT
CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE BALANCE IS
LESS THAN 80 [50] PERCENT OF THE FAIR MARKET
VALUE; AND
"(7) THE LENDER MAY NOT
UNILATERALLY AMEND THE TERMS OF THE LINE OF CREDIT.
"THIS NOTICE IS ONLY A SUMMARY
OF YOUR RIGHTS UNDER THE TEXAS CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY
SECTION 50, ARTICLE XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS
NOTICE."
If the discussions with the
borrower are conducted primarily in a language other than English, the
lender shall, before closing, provide an additional copy of the notice
translated into the written language in which the discussions were
conducted.
(t) A home equity line of
credit is a form of an open-end account that may be debited from time to
time, under which credit may be extended from time to time and under which:
(1) the owner requests
advances, repays money, and reborrows money;
(2) any single debit or
advance is not less than $4,000;
(3) the owner does not use a
credit card, debit card, or similar device, or preprinted check unsolicited
by the borrower, to obtain an advance;
(4) any fees described by
Subsection (a)(6)(E) of this section are charged and collected only at the
time the extension of credit is established and no fee is charged or
collected in connection with any debit or advance;
(5) the maximum principal
amount that may be extended under the account, when added to the aggregate
total of the outstanding principal balances of all indebtedness secured by
the homestead on the date the extension of credit is established, does not
exceed an amount described under Subsection (a)(6)(B) of this section;
(6) (repealed) [no
additional debits or advances are made if the total principal amount
outstanding exceeds an amount equal to 50 percent of the fair market value
of the homestead as determined on the date the account is established];
(7) the lender or holder may
not unilaterally amend the extension of credit; and
(8) repayment is to be made
in regular periodic installments, not more often than every 14 days and not
less often than monthly, beginning not later than two months from the date
the extension of credit is established, and:
(A) during the period during
which the owner may request advances, each installment equals or exceeds the
amount of accrued interest; and
(B) after the period during
which the owner may request advances, installments are substantially equal.
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