Shouldn't you tell them that in 1997 the Texas Homestead Act was usurped in 1998 in one subtle sentence?
"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION"
And why did our elected officials allow our Homestead to be exploited in such a ruthless, underhanded and unconscionable strategy?
Remember with technocrats and attorneys it is what they are not telling you that they are avoiding you dicovering until you sign it on the dotted line.
Home Equity Loan
A home equity loan arises when the homeowner uses an existing homestead as collateral for a loan based on the value of the property. Prior to 1998, a homeowner did not have the ability to use the homestead as collateral for a home equity loan. The recent amendment, permitting home equity loans, places no restrictions on the borrower’s use of the money—it is not required that the loan proceeds be used on the homestead. Leopold at § 27.10.3. Whatever the use of the proceeds, the homestead is not protected against a valid home equity loan. Tex. Const. art. XVI, § 50(a)(6); Prop. Code § 41.001(b)(6). However, in an effort to protect the homeowner, the Texas Constitution sets forth an extensive list of requirements which a creditor must satisfy before obtaining a valid lien against the homestead. See Tex. Const. art. XVI, § 50(a)(6).
sets forth an extensive list of requirements which a creditor must satisfy
IMHO it is baffling BS so my question is what are you not telling a homeowner when explaining a Texas Home Equity Closing Affidavit and Agreement to a customer so that they will understand what they are signing?
The Texas Homestead Exemption
The state of Texas is unique in its application of homestead protection. Although this protection is very substantial, it presents serious limits on the ability of a homeowner to mortgage his/her homestead.
The urban residential homestead consists of a lot or lots of 10 acres or less that is located within a city or town. There is no limit on the value of the land and its improvements entitled to homestead protection. Rather, what is defined as homestead is based solely on the size or acreage of the land involved.
The Texas homestead exemption began as protection for the wives and children of the early settlers in the event the man of the house was lured into a not-so-honest game of chance or decided he needed a few dollars more to continue a night out on the town. More seriously though, the wives and children of a deceased breadwinner were secure in their home(stead) and could not be removed because of some improper or manufactured claim of debt.
As a state constitutional protection, it has withstood the test of time and remained virtually unchanged as we have moved from the 19th century through most of the 20th century.
The practical protections of the homestead laws prevent any creditor (except for the mortgage holder, a taxing authority, or the holder of a note created for a home improvement loan) from forcing the sale of the homestead to satisfy nonpayment of a debt. It is difficult to "abandon" the homestead protection to borrow against its equity. An owner who wants to maintain property ownership and be able to borrow against its equity would have to move out of the property and demonstrate it is now being used as rental/income- producing real estate and that he or she has established a new homestead elsewhere.
It is interesting to note that home equity loans were not available in Texas until the constitution was amended, effective January 1998. Home equity loans in Texas involve numerous restrictions and requirements that may not exist for such loans made in other states. The amount of a home equity loan plus the balance of the first mortgage may not exceed 80% of the value of the property, thus leaving a 20% equity cushion at the time of the second lien.
