Texas Home Equity Loan Laws

This article was published in the May 2018 issue of The Banking Law Journal, produced by Matthew Bender & Company, Inc.. On November 7, Texans approved Proposition 2 by a more than 2-1 majority. The measure amends section 50(a) of Article 16 of the Texas Constitution, making changes to the home equity loan (HEL) market in the state.

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When it comes to choosing between a home equity loan and a home. tax law limited the tax deductibility of mortgage interest on home equity.

Also, with more of their own money on the line, borrowers would be less likely to simply walk away from their home, like so many did. and therefore lower loan-to-value ratios (higher borrower.

A Brief History of Home Equity Loans in Texas. In 1997, the Texas Constitution’s Section 50 gave home equity lenders the right to operate within the state on a limited basis. Section 50’s provisions are exceedingly strict, and lenders that fail to follow them can face serious penalties. In the most extreme case,

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In the state of Texas once you have completed a cash-out or home equity loan on your homestead or primary residence the maximum loan-to-value (LTV) allowed thereafter is 80%. This restrictive ruling is actually part of the Texas Constitution (see section 50 (a) (6) article XVI).

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. Commission has updated Chapter 153 of the Texas Administrative Code to reflect the changes to the Texas Home Equity Lending Laws that.

DFW Mortgage Lender: Texas-Specific Equity Loan Rules How Home Equity Loans Work in Texas | ExpertLaw – A home equity loan is a special form of a home mortgage, that allows a homeowner to borrow against home equity, the difference between the home’s fair market value and the total balance of all debts secured by the home.

Texas law determines what is or is not considered home equity based financing, so be sure to check the terms of your loan or line of credit before considering a potential refinance. And, it’s important to remember that if you refinance a HELOC or HELoan to a non-home equity loan, you will forfeit protections afforded to you through home equity based lending laws.

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