Texas homeowners get a break with home equity loans
Nationwide, predatory lending is a real problem, not only in first mortgages but also home equity loans. When homeowners obtain home equity loans with bad terms, it can put their homesteads in jeopardy. Consumers see national TV ads stating they can get loans of up to 125% of their home’s equity. These loans strip equity from the property and can make it difficult for homeowners to ever resell. Thankfully, in Texas things are different. In 1997, during the 75th session of the Texas Legislature, the Texas Association of REALTORS® fought hard to pass legislation with more consumer protections than any other home equity lending law in the country. These homeowner protections include:

• 80% loan-to-value, preserving at least 20% of your equity at all times
• 3% cap on lender’s fees, protecting you from loan “flipping”
• Judicial foreclosure, ensuring homeowners have a venue to appeal a foreclosure

The protections in Texas’ home-equity lending law are constitutional, meaning any changes require a two-thirds vote of the legislature and statewide approval by Texas voters. During each legislative session, Texas REALTORS® oppose efforts by some in the lending community who want to repeal these important consumer protections.

Source: Texas Association of REALTORS®