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  88R399 JES-D
 
  By: Toth H.J.R. No. 20
 
 
 
A JOINT RESOLUTION
  proposing a constitutional amendment authorizing the legislature
  to provide for exceptions to the requirement that a home equity loan
  be closed only at the office of the lender, an attorney at law, or a
  title company.
         BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 50(a) and (g), Article XVI, Texas
  Constitution, are amended 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 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);
                     (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, except as otherwise provided by
  statute;
                     (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; 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;
                           (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) 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.
         (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
  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);
         "(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, UNLESS YOU QUALIFY FOR AN
  EXCEPTION PROVIDED BY 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 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 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.
         SECTION 2.  This proposed constitutional amendment shall be
  submitted to the voters at an election to be held November 7, 2023.
  The ballot shall be printed to permit voting for or against the
  proposition: "The constitutional amendment authorizing the
  legislature to provide for exceptions to the requirement that a
  home equity loan be closed only at the office of the lender, an
  attorney at law, or a title company."