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Home Equity, Reverse Mortgage, and Home Improvement Lending:
    • Texas Constitution: Article 16, Section 50
    • Home Improvement Lending: Section 50(a)(5), (c)-(e),and (u)
    • Home Equity Lending: Section 50(a)(6), (c)-(j), (q), (r), (t)^*, and (u)
    • Reverse Mortgage: Section 50(a)(7), (c), (d), (f), (k)-(q), (u), and (v)

*Lines of Credit: On September 13, 2003, the voters of Texas approved an amendment of the Constitution that added Section (50)(t) allowing lines of credit.

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Home Equity and Reverse Mortgage

Joint Resolution:

• Commissions Sign Joint Resolution Seeking Clarification from Texas Legislature on Home Equity Provisions

Interpretations:

• 7 TAC Chapter 151 – Procedure for Requesting an Interpretation
• 7 TAC Chapter 153 – Adopted Interpretations of Home Equity and Reverse Mortgage Law  

Modification:

• Home Equity Modification Advisory Bulletin - Issued April 2009

Actions Proposed by the Joint Financial Regulatory Agencies:
 — None

Actions on Interpretations Adopted by the Joint Financial Regulatory Agencies:

Adoption of Interpretations and Rules:

• October 24, 2008 adoption of 7 TAC §§151.1, 151.3, 151.7, and 151.8; 33 TexReg 9073 (November 7, 2008); (Originally proposed at 33 TexReg 5199 (July 4, 2008))
• October 24, 2008 adoption of 7 TAC §§153.11-153.14, 153.51, and 153.95; 33 TexReg 9074 (November 7, 2008); (Originally proposed at 33 TexReg 5200 (July 4, 2008))  
• June 20, 2008 adoption of amendments to 7 TAC §153.22 and §153.84; 33 TexReg 5295 (July 4, 2008); (Proposed amendments published at 33 TexReg 2101 (March 14, 2008))
• October 20, 2006 adoption of amendment to 7 TAC §153.13; 31 TexReg 9022 (November 3, 2006); (Proposed amendments published at 31 TexReg 7076 (September. 1, 2006))
• June 9, 2006 adoption of new 7 TAC §§153.13, 153.18, and 153.20; 31 TexReg 5080 (June 23, 2006); (Proposed amendments published at 31 TexReg 1393 (March 3, 2006))
• June 9, 2006 adoption of repeal of 7 TAC §§153.13, 153.18, and 153.20; 31 TexReg 5080 (June 23, 2006); (Proposed amendments published at 31 TexReg 1393 (March 3, 2006))

Home Improvement

Interpretations:

• 7 TAC Chapter 151 - Procedure for Requesting an Interpretation
• 7 TAC Chapter 152 - Interpretations of Home Improvement Law  

Actions Proposed by the Joint Financial Regulatory Agencies — Currently Out for Comment
 — None

Actions on Interpretations Adopted by the Joint Financial Regulatory Agencies:

Adoption of Interpretations and Rules:

• June 17, 2005 adoption of 7 TAC §§152.1, 152.3, 152.5 152.7, 152.15; 30 TexReg 3863 (July1, 2005); (Originally proposed at 30 TexReg 955 (February 25, 2005))
• February 11, 2005 adoption of 7 TAC §§152.9, 152.11, 152.13; 30 TexReg 1065 (February 25, 2005); (Originally proposed at 29 TexReg 10195 (November 5, 2004))
• December 18, 2003 adoption of new 7 TAC §§151.1-151.8; 29 Tex. Reg 83 (January 2, 2006); (Originally proposed at 28 TexReg 9644 (November 7, 2003))

Loan Worksheet #10 — Home Equity Lending -- Prepared by Texas Department of Banking - Last Revised 11/2006

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Procedures Related to Home Equity Loan Foreclosure

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The Texas Constitution, Article XVI, Section 50, has protected homesteads from forced sale for over 150 years. Historically, constitutional provisions did not permit liens on the homestead for equity homestead loans. (Note: The Texas Legislature meets only in odd-numbered years.).

80th Legislature (2007)
Effective December 4, 2007, the citizens of Texas approved a constitutional amendment to Article XVI, Section 50 (see HJR 72). The amendment makes various changes relating to the eligibility for a home equity loan and the procedural requirements related to obtaining a home equity loan. Specifically, the amendment provides that:

78th Legislature (2003)
On September 13, 2003, the voters of Texas approved two constitutional amendments proposed by the 78th Legislature in Senate Joint Resolution 42 (SJR 42) and HJR 23. The amendments authorized home equity lines of credit, allowed lenders under certain conditions to cure violations of the home equity lending law, and enabled borrowers to refinance home equity loans with reverse mortgages.

A constitutional amendment was approved by the voters on September 13, 2003 that permitted the legislature to delegate to a state agency the authority to interpret home equity lending constitutional provisions at the request of an interested party or on the agency’s own motion (SJR 42). SB 1067 delegated this authority to the Finance Commission and Credit Union Commission (§11.308 and §15.413 of the Texas Finance Code). Soon thereafter, an interagency workgroup was formed to begin work on interpretative rules that were based primarily upon substantive provisions of a Regulatory Commentary that the agencies drafted in 1998.

76th Legislature (1999)
In 1999, and effective that date, Texas voters approved two corrective constitutional amendments proposed by the 76th Legislature to address these uncertainties. SJR 12 redefined a Reverse Mortgage consistent with federal law. SJR 22, increased the maximum size of an urban homestead to 10 acres.

75th Legislature (1997)
On November 4, 1997, the voters of Texas approved a constitutional amendment proposed by the 75th Legislature in House Joint Resolution 31 (HJR 31). HJR 31 significantly modified the constitutional provisions regarding liens on a homestead for home improvement purposes and created two additional categories of authorized liens, effective January 1, 1998:

However, uncertainties in the constitution resulted in many lenders electing to not make home equity loans or to make them only in certain circumstances.

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The Texas Constitution, Article XVI, Section 50, has protected homesteads from forced sale for over 150 years. Constitutional provisions did not permit liens on the homestead for reverse mortgages until January 1, 1998.

78th Legislature (2003)
A constitutional amendment was approved by the voters on September 13, 2003 that permitted the legislature to delegate to a state agency the authority to interpret home improvement lending constitutional provisions at the request of an interested party or on the agency’s own motion (SJR 42). SB 1067 delegated this authority to the Finance Commission and Credit Union Commission (§11.308 and §15.413 of the Texas Finance Code).

76th Legislature (1999)
On November 2, 1999, Texas voters approved the constitutional amendments proposed in SJR 12 and SJR 22. The minimum age to obtain a reverse mortgage was set at 62, which is consistent with federal law. Additionally, the maximum size of an urban homestead was increased to 10 acres.

75th Legislature (1997)
On November 4, 1997, the voters of Texas approved a constitutional amendment proposed by the Legislature in HJR 31. This amendment significantly modified the constitutional provisions regarding liens on a homestead creating, effective January 1, 1998, a lien for a reverse mortgage. However, repayment contingencies resulted in lenders electing to not make reverse mortgages. Additionally, the minimum age to obtain a reverse mortgage (set at 55 years) was inconsistent with federal law.

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78th Legislature (2003)
A constitutional amendment was approved by the voters on September 13, 2003 that permitted the legislature to delegate to a state agency the authority to interpret home improvement lending constitutional provisions at the request of an interested party or on the agency’s own motion (SJR 42). SB 1067 delegated this authority to the Finance Commission and Credit Union Commission (§11.308 and §15.413 of the Texas Finance Code).

77th Legislature (2001)
On November 6, 2001, the voters of Texas approved a constitutional amendment proposed by the Legislature in HJR 5. This amendment reduced the waiting period between submission of a loan application and execution of a contract for work and materials from 12 days to 5 days.

75th Legislature (1997)
On November 4, 1997, the voters of Texas approved a constitutional amendment proposed by the Legislature in House Joint Resolution 31 (HJR 31). This amendment significantly modified the constitutional provisions regarding liens on a homestead for home improvement purposes. This amendment added a requirement that the contract for work and materials be in writing, established a 12 day waiting period between the submission of a loan application and the execution of the contract for work and materials, gave the owner 3 days to rescind the contract for work and materials, and designated the offices of a third-party lender, an attorney, or a title company as the only approved locations for executing the contract for work and materials.

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• 2006 Home Equity Lending Report
• 2005 Home Equity Lending Report
• 2004 Home Equity Lending Report
• 2003 Home Equity Lending Report
• 2002 Home Equity Lending Report
• 2001 Home Equity Lending Report
• 1999 Home Equity Lending in Texas

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Home Equity Lending Contract Disclosure: English version of the consumer notice as provided by Texas Constitution, Article XVI, Section 50(a)(6).

Aviso Sobre El Crédito Que Se Concede: Spanish version of the Home Equity Lending Contract Disclosure. A lender whose discussions with the borrower are conducted primarily in Spanish for a closed-end home equity loan may rely on this translation of the consumer notice developed under the requirements of Texas Finance Code §341.502, as authorized by 7 Texas Administrative Code §153.51.

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Home Equity Loans in Texas FAQ
Préstamos Sobre el Valor Liquido de Residencias

Safe and Sound at Home: Tips for Protecting Your Equity
Para Informarle Tocante el Crédito

Reverse Mortgages in Texas FAQ

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ACORN v. Finance Commission

Case Information from the Third Court of Appeals
– Appellant Texas Bankers' Association's Motion for Clarification regarding Continuation of the Court's Stay – January 26, 2010
– Opinion issued Affirming in part; Reversing and Rendering in part – January 8, 2010
– Concurring and Dissenting Opinion issued – January 8, 2010
– Letter Issued by the Court – November 20, 2009
– Appellants' Letter Citing Additional Authorities – August 11, 2009
– Appellees' Letter Citing Additional Authorities – July 29, 2009
– Appellees’ Response to Commissions’ Motion for Abatement – January 15, 2008
– Commissions’ Motion for Abatement – January 4, 2008
– Amicus Brief, Independent Bankers Association – April 20, 2007
– Oral arguments set for January 31, 2007
– Appellee’s Reply Brief – January 29, 2007
– Reply Brief of Appellant, Texas Bankers Association – January 19, 2007
– Joint Motion for Additional Time for Oral Argument – January 19, 2007
– Response Brief of Appellant Texas Bankers Association – January 19, 2007
– Reply Brief of Appellants, the Finance Commission of Texas and the Credit Union Commission of Texas – January 9, 2007
      • Appendix
– Appellees’ Brief – December 8, 2006
– Stay Extended Pending Disposition of Appeal – August 31, 2006
– Brief of Appellant, the Finance Commission of Texas and the Credit Union of Texas – August 30, 2006
– Brief of Appellant, Texas Bankers Association – August 30, 2006
– Plaintiff’s Notice of Appeal – May 23, 2006
– Appellants’ Amended Notice of Appeal – May 2, 2006
– Final Summary Judgment and Temporary Stay Order – April 29, 2006