Commentary: How Texas would benefit from Proposition 2

Texans will receive many benefits thanks to passage of Proposition 2 in the Nov. 7 election. This constitutional amendment will reform home equity restrictions in Texas. These benefits include making smaller-dollar loans more available to homeowners, providing greater flexibility for home equity lines of credit, opening up agricultural exemption properties as collateral for home equity, and eliminating the rigid concept of “once a home equity, always a home equity.”

What this law does:

• Lowers the current 3-percent fee cap on lenders to 2 percent. At the same time, it removes from the fee calculation several third-party fees outside the lenders’ control including: the appraisal, survey, and title costs. This change will increase access to smaller-dollar home equity loans by borrowers.

FOLLOW US ON TWITTER: Viewpoints delivers the latest perspectives on current events.

• Enables flexibility for Home Equity Lines of Credit (HELOCs). Today, if a homeowner chooses a traditional home equity loan they can borrow up to 80 percent of the Loan to Value (LTV), but they must take all the cash at the origination of the loan. If a borrower were to choose a more conservative HELOC, only accessing the cash they need over time through multiple draws, the maximum loan they can get is below 50 percent LTV. This amendment will provide protection of equity and savings in interest expense by allowing HELOCs also to comprise up to 80 percent of LTV.

• Makes agriculturally exempt homes eligible for home equity loans. Current law prohibits a home equity loan on property that is designated for agricultural use unless the property is used primarily for milk production. The amendment will remove this restriction and allow homesteads with an agricultural exemption to be eligible for home equity loans.

• Enables refinancing of home equity loans as mortgages. The current refinance obstacle will be removed and a home equity loan that has been in place for at least one year could be refinanced as a regular mortgage. The refinance will no longer be subject to the higher costs associated with currently refinancing a home equity loan.

These improvements to Texas homeowner are so beneficial that Proposition 2 had the support of trade groups representing mortgage lenders in all types of financial institutions, real estate agents and title companies. These provisions are scheduled to take effect Jan. 1.

Foster is the director of regulatory affairs at Polunsky Beitel Green, a residential mortgage law firm in San Antonio.

Reader Comments ...

Next Up in Opinion

Author tackles one of the greatest baseball teams you’ve never heard of
Author tackles one of the greatest baseball teams you’ve never heard of

When Anne Keene, the Austin author of “The Cloudbuster Nine: The Untold Story of Ted Williams and the Baseball Team that Helped Win World War II,” was growing up, she knew that her father both loved and hated the game of baseball. She knew he adored it, loved the old players, told stories about them to the point that it became something...
Herman: Time for the look-at-me candidate to look ahead
Herman: Time for the look-at-me candidate to look ahead

In the end, as loser Andrew White sees it, “look at me” beat “listen to me” as Democrats, the relatively few who showed up to vote, picked former Dallas County Sheriff Lupe Valdez as their November candidate against GOP Gov. Greg Abbott. “It’s been an odd race,” White told me two hours before the polls closed...
Opinion: The Mississippi man tried 6 times for the same crime

One morning nearly 22 years ago, four employees of a furniture store in a small Mississippi town were shot to death. For months afterward, local law enforcement seemed stumped by the crime. Eventually, the top prosecutor — Doug Evans — charged a former store employee, Curtis Flowers, a black man who had no criminal record. The case since...
Commentary: Why Congress must step up to the plate for Dreamers
Commentary: Why Congress must step up to the plate for Dreamers

It is now or never. The Deferred Action for Childhood Arrivals program is the last line of defense. For recipients of DACA, other immigration routes to permanent residency or even the holy grail — U.S. citizenship — are next to impossible. Legally, even if after deportation they manage to apply for U.S. legal status, their “unlawful...
Herman: Male or female? You make the call.

Let’s play “Guess the Gender.” The rules are simple. I’ll tell you some facts. You’ll attempt to guess the gender of the person in question. This one should be easy. I’m guessing you’re going to guess male. Fact one: An Austin city employee, instead of doing the required research, inserted a bunch of made-up...
More Stories