Texas 2015 - 84th Regular

Texas House Bill HJR131 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	84R11205 SLB-F
2	2	By: Raymond H.J.R. No. 131
3	3
4	4
5	5	A JOINT RESOLUTION
6	6	proposing a constitutional amendment concerning fees that are
7	7	subject to the maximum allowable limit to obtain a home equity loan.
8	8	BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Sections 50(a) and (g), Article XVI, Texas
10	10	Constitution, are amended to read as follows:
11	11	(a) The homestead of a family, or of a single adult person,
12	12	shall be, and is hereby protected from forced sale, for the payment
13	13	of all debts except for:
14	14	(1) the purchase money thereof, or a part of such
15	15	purchase money;
16	16	(2) the taxes due thereon;
17	17	(3) an owelty of partition imposed against the
18	18	entirety of the property by a court order or by a written agreement
19	19	of the parties to the partition, including a debt of one spouse in
20	20	favor of the other spouse resulting from a division or an award of a
21	21	family homestead in a divorce proceeding;
22	22	(4) the refinance of a lien against a homestead,
23	23	including a federal tax lien resulting from the tax debt of both
24	24	spouses, if the homestead is a family homestead, or from the tax
25	25	debt of the owner;
26	26	(5) work and material used in constructing new
27	27	improvements thereon, if contracted for in writing, or work and
28	28	material used to repair or renovate existing improvements thereon
29	29	if:
30	30	(A) the work and material are contracted for in
31	31	writing, with the consent of both spouses, in the case of a family
32	32	homestead, given in the same manner as is required in making a sale
33	33	and conveyance of the homestead;
34	34	(B) the contract for the work and material is not
35	35	executed by the owner or the owner's spouse before the fifth day
36	36	after the owner makes written application for any extension of
37	37	credit for the work and material, unless the work and material are
38	38	necessary to complete immediate repairs to conditions on the
39	39	homestead property that materially affect the health or safety of
40	40	the owner or person residing in the homestead and the owner of the
41	41	homestead acknowledges such in writing;
42	42	(C) the contract for the work and material
43	43	expressly provides that the owner may rescind the contract without
44	44	penalty or charge within three days after the execution of the
45	45	contract by all parties, unless the work and material are necessary
46	46	to complete immediate repairs to conditions on the homestead
47	47	property that materially affect the health or safety of the owner or
48	48	person residing in the homestead and the owner of the homestead
49	49	acknowledges such in writing; and
50	50	(D) the contract for the work and material is
51	51	executed by the owner and the owner's spouse only at the office of a
52	52	third-party lender making an extension of credit for the work and
53	53	material, an attorney at law, or a title company;
54	54	(6) an extension of credit that:
55	55	(A) is secured by a voluntary lien on the
56	56	homestead created under a written agreement with the consent of
57	57	each owner and each owner's spouse;
58	58	(B) is of a principal amount that when added to
59	59	the aggregate total of the outstanding principal balances of all
60	60	other indebtedness secured by valid encumbrances of record against
61	61	the homestead does not exceed 80 percent of the fair market value of
62	62	the homestead on the date the extension of credit is made;
63	63	(C) is without recourse for personal liability
64	64	against each owner and the spouse of each owner, unless the owner or
65	65	spouse obtained the extension of credit by actual fraud;
66	66	(D) is secured by a lien that may be foreclosed
67	67	upon only by a court order;
68	68	(E) does not require the owner or the owner's
69	69	spouse to pay, in addition to any interest, fees to the lender or
70	70	originator [any person] that are necessary to originate, evaluate,
71	71	maintain, record, insure, or service the extension of credit that
72	72	exceed, in the aggregate, three percent of the original principal
73	73	amount of the extension of credit;
74	74	(F) is not a form of open-end account that may be
75	75	debited from time to time or under which credit may be extended from
76	76	time to time unless the open-end account is a home equity line of
77	77	credit;
78	78	(G) is payable in advance without penalty or
79	79	other charge;
80	80	(H) is not secured by any additional real or
81	81	personal property other than the homestead;
82	82	(I) is not secured by homestead property that on
83	83	the date of closing is designated for agricultural use as provided
84	84	by statutes governing property tax, unless such homestead property
85	85	is used primarily for the production of milk;
86	86	(J) may not be accelerated because of a decrease
87	87	in the market value of the homestead or because of the owner's
88	88	default under other indebtedness not secured by a prior valid
89	89	encumbrance against the homestead;
90	90	(K) is the only debt secured by the homestead at
91	91	the time the extension of credit is made unless the other debt was
92	92	made for a purpose described by Subsections (a)(1)-(a)(5) or
93	93	Subsection (a)(8) of this section;
94	94	(L) is scheduled to be repaid:
95	95	(i) in substantially equal successive
96	96	periodic installments, not more often than every 14 days and not
97	97	less often than monthly, beginning no later than two months from the
98	98	date the extension of credit is made, each of which equals or
99	99	exceeds the amount of accrued interest as of the date of the
100	100	scheduled installment; or
101	101	(ii) if the extension of credit is a home
102	102	equity line of credit, in periodic payments described under
103	103	Subsection (t)(8) of this section;
104	104	(M) is closed not before:
105	105	(i) the 12th day after the later of the date
106	106	that the owner of the homestead submits a loan application to the
107	107	lender for the extension of credit or the date that the lender
108	108	provides the owner a copy of the notice prescribed by Subsection (g)
109	109	of this section;
110	110	(ii) one business day after the date that
111	111	the owner of the homestead receives a copy of the loan application
112	112	if not previously provided and a final itemized disclosure of the
113	113	actual fees, points, interest, costs, and charges that will be
114	114	charged at closing. If a bona fide emergency or another good cause
115	115	exists and the lender obtains the written consent of the owner, the
116	116	lender may provide the documentation to the owner or the lender may
117	117	modify previously provided documentation on the date of closing;
118	118	and
119	119	(iii) the first anniversary of the closing
120	120	date of any other extension of credit described by Subsection
121	121	(a)(6) of this section secured by the same homestead property,
122	122	except a refinance described by Paragraph (Q)(x)(f) of this
123	123	subdivision, unless the owner on oath requests an earlier closing
124	124	due to a state of emergency that:
125	125	(a) has been declared by the president
126	126	of the United States or the governor as provided by law; and
127	127	(b) applies to the area where the
128	128	homestead is located;
129	129	(N) is closed only at the office of the lender, an
130	130	attorney at law, or a title company;
131	131	(O) permits a lender to contract for and receive
132	132	any fixed or variable rate of interest authorized under statute;
133	133	(P) is made by one of the following that has not
134	134	been found by a federal regulatory agency to have engaged in the
135	135	practice of refusing to make loans because the applicants for the
136	136	loans reside or the property proposed to secure the loans is located
137	137	in a certain area:
138	138	(i) a bank, savings and loan association,
139	139	savings bank, or credit union doing business under the laws of this
140	140	state or the United States;
141	141	(ii) a federally chartered lending
142	142	instrumentality or a person approved as a mortgagee by the United
143	143	States government to make federally insured loans;
144	144	(iii) a person licensed to make regulated
145	145	loans, as provided by statute of this state;
146	146	(iv) a person who sold the homestead
147	147	property to the current owner and who provided all or part of the
148	148	financing for the purchase;
149	149	(v) a person who is related to the homestead
150	150	property owner within the second degree of affinity or
151	151	consanguinity; or
152	152	(vi) a person regulated by this state as a
153	153	mortgage broker; and
154	154	(Q) is made on the condition that:
155	155	(i) the owner of the homestead is not
156	156	required to apply the proceeds of the extension of credit to repay
157	157	another debt except debt secured by the homestead or debt to another
158	158	lender;
159	159	(ii) the owner of the homestead not assign
160	160	wages as security for the extension of credit;
161	161	(iii) the owner of the homestead not sign
162	162	any instrument in which blanks relating to substantive terms of
163	163	agreement are left to be filled in;
164	164	(iv) the owner of the homestead not sign a
165	165	confession of judgment or power of attorney to the lender or to a
166	166	third person to confess judgment or to appear for the owner in a
167	167	judicial proceeding;
168	168	(v) at the time the extension of credit is
169	169	made, the owner of the homestead shall receive a copy of the final
170	170	loan application and all executed documents signed by the owner at
171	171	closing related to the extension of credit;
172	172	(vi) the security instruments securing the
173	173	extension of credit contain a disclosure that the extension of
174	174	credit is the type of credit defined by Section 50(a)(6), Article
175	175	XVI, Texas Constitution;
176	176	(vii) within a reasonable time after
177	177	termination and full payment of the extension of credit, the lender
178	178	cancel and return the promissory note to the owner of the homestead
179	179	and give the owner, in recordable form, a release of the lien
180	180	securing the extension of credit or a copy of an endorsement and
181	181	assignment of the lien to a lender that is refinancing the extension
182	182	of credit;
183	183	(viii) the owner of the homestead and any
184	184	spouse of the owner may, within three days after the extension of
185	185	credit is made, rescind the extension of credit without penalty or
186	186	charge;
187	187	(ix) the owner of the homestead and the
188	188	lender sign a written acknowledgment as to the fair market value of
189	189	the homestead property on the date the extension of credit is made;
190	190	(x) except as provided by Subparagraph (xi)
191	191	of this paragraph, the lender or any holder of the note for the
192	192	extension of credit shall forfeit all principal and interest of the
193	193	extension of credit if the lender or holder fails to comply with the
194	194	lender's or holder's obligations under the extension of credit and
195	195	fails to correct the failure to comply not later than the 60th day
196	196	after the date the lender or holder is notified by the borrower of
197	197	the lender's failure to comply by:
198	198	(a) paying to the owner an amount
199	199	equal to any overcharge paid by the owner under or related to the
200	200	extension of credit if the owner has paid an amount that exceeds an
201	201	amount stated in the applicable Paragraph (E), (G), or (O) of this
202	202	subdivision;
203	203	(b) sending the owner a written
204	204	acknowledgement that the lien is valid only in the amount that the
205	205	extension of credit does not exceed the percentage described by
206	206	Paragraph (B) of this subdivision, if applicable, or is not secured
207	207	by property described under Paragraph (H) or (I) of this
208	208	subdivision, if applicable;
209	209	(c) sending the owner a written notice
210	210	modifying any other amount, percentage, term, or other provision
211	211	prohibited by this section to a permitted amount, percentage, term,
212	212	or other provision and adjusting the account of the borrower to
213	213	ensure that the borrower is not required to pay more than an amount
214	214	permitted by this section and is not subject to any other term or
215	215	provision prohibited by this section;
216	216	(d) delivering the required documents
217	217	to the borrower if the lender fails to comply with Subparagraph (v)
218	218	of this paragraph or obtaining the appropriate signatures if the
219	219	lender fails to comply with Subparagraph (ix) of this paragraph;
220	220	(e) sending the owner a written
221	221	acknowledgement, if the failure to comply is prohibited by
222	222	Paragraph (K) of this subdivision, that the accrual of interest and
223	223	all of the owner's obligations under the extension of credit are
224	224	abated while any prior lien prohibited under Paragraph (K) remains
225	225	secured by the homestead; or
226	226	(f) if the failure to comply cannot be
227	227	cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the
228	228	failure to comply by a refund or credit to the owner of $1,000 and
229	229	offering the owner the right to refinance the extension of credit
230	230	with the lender or holder for the remaining term of the loan at no
231	231	cost to the owner on the same terms, including interest, as the
232	232	original extension of credit with any modifications necessary to
233	233	comply with this section or on terms on which the owner and the
234	234	lender or holder otherwise agree that comply with this section; and
235	235	(xi) the lender or any holder of the note
236	236	for the extension of credit shall forfeit all principal and
237	237	interest of the extension of credit if the extension of credit is
238	238	made by a person other than a person described under Paragraph (P)
239	239	of this subdivision or if the lien was not created under a written
240	240	agreement with the consent of each owner and each owner's spouse,
241	241	unless each owner and each owner's spouse who did not initially
242	242	consent subsequently consents;
243	243	(7) a reverse mortgage; or
244	244	(8) the conversion and refinance of a personal
245	245	property lien secured by a manufactured home to a lien on real
246	246	property, including the refinance of the purchase price of the
247	247	manufactured home, the cost of installing the manufactured home on
248	248	the real property, and the refinance of the purchase price of the
249	249	real property.
250	250	(g) An extension of credit described by Subsection (a)(6) of
251	251	this section may be secured by a valid lien against homestead
252	252	property if the extension of credit is not closed before the 12th
253	253	day after the lender provides the owner with the following written
254	254	notice on a separate instrument:
255	255	"NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION
256	256	50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION:
257	257	"SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION
258	258	ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME.
259	259	SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY
260	260	THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY
261	261	FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT:
262	262	"(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT
263	263	OF EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE;
264	264	"(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE
265	265	MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES
266	266	OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE
267	267	FAIR MARKET VALUE OF YOUR HOME;
268	268	"(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL
269	269	LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE
270	270	OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
271	271	"(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY
272	272	WITH A COURT ORDER;
273	273	"(E) FEES AND CHARGES PAID TO THE LENDER OR ORIGINATOR TO
274	274	MAKE THE LOAN MAY NOT EXCEED 3 PERCENT OF THE LOAN AMOUNT;
275	275	"(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE
276	276	DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM
277	277	TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT;
278	278	"(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;
279	279	"(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;
280	280	"(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT
281	281	IS DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS
282	282	THE AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE
283	283	PRODUCTION OF MILK;
284	284	"(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN
285	285	AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES
286	286	OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR
287	287	HOME;
288	288	"(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE
289	289	XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY
290	290	GIVEN TIME;
291	291	"(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS
292	292	THAT EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT
293	293	PERIOD;
294	294	"(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A
295	295	LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE
296	296	THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR
297	297	CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU
298	298	RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED
299	299	AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS,
300	300	INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF
301	301	YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST
302	302	YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE
303	303	ONE YEAR HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS
304	304	ON OATH YOU REQUEST AN EARLIER CLOSING DUE TO A DECLARED STATE OF
305	305	EMERGENCY;
306	306	"(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER,
307	307	TITLE COMPANY, OR AN ATTORNEY AT LAW;
308	308	"(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF
309	309	INTEREST AUTHORIZED BY STATUTE;
310	310	"(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS
311	311	DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS
312	312	CONSTITUTION;
313	313	"(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF
314	314	THE TEXAS CONSTITUTION MUST:
315	315	"(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT
316	316	EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER
317	317	LENDER;
318	318	"(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;
319	319	"(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE
320	320	BLANKS FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN;
321	321	"(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR
322	322	POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN
323	323	A LEGAL PROCEEDING ON YOUR BEHALF;
324	324	"(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN
325	325	APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING;
326	326	"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A
327	327	DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6),
328	328	ARTICLE XVI, OF THE TEXAS CONSTITUTION;
329	329	"(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER
330	330	WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE
331	331	LIEN, WHICHEVER IS APPROPRIATE;
332	332	"(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING,
333	333	RESCIND THE LOAN WITHOUT PENALTY OR CHARGE;
334	334	"(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR
335	335	MARKET VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND
336	336	"(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND
337	337	INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S
338	338	OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS
339	339	PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS
340	340	CONSTITUTION; AND
341	341	"(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:
342	342	"(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW
343	343	MONEY UNDER THE LINE OF CREDIT;
344	344	"(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN
345	345	AMOUNT OF AT LEAST $4,000;
346	346	"(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR
347	347	DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO OBTAIN
348	348	ADVANCES UNDER THE LINE OF CREDIT;
349	349	"(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND
350	350	COLLECTED ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE
351	351	LENDER MAY NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE;
352	352	"(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN
353	353	ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80
354	354	PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF
355	355	CREDIT IS ESTABLISHED;
356	356	"(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT
357	357	ANY TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME,
358	358	AS DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY
359	359	NOT CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE
360	360	BALANCE IS LESS THAN 50 PERCENT OF THE FAIR MARKET VALUE; AND
361	361	"(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE
362	362	LINE OF CREDIT.
363	363	"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS
364	364	CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI,
365	365	OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE."
366	366	If the discussions with the borrower are conducted primarily
367	367	in a language other than English, the lender shall, before closing,
368	368	provide an additional copy of the notice translated into the
369	369	written language in which the discussions were conducted.
370	370	SECTION 2. This proposed constitutional amendment shall be
371	371	submitted to the voters at an election to be held November 3, 2015.
372	372	The ballot shall be printed to provide for voting for or against the
373	373	proposition: "The constitutional amendment concerning fees that
374	374	are subject to the maximum allowable limit to obtain a home equity
375	375	loan."