Magazine article American Banker

Days Seem Numbered for Texas' Old Ban on Home Equity Loans

Magazine article American Banker

Days Seem Numbered for Texas' Old Ban on Home Equity Loans

Article excerpt

Home equity lending could soon take a giant step toward becoming a reality in Texas, where such loans are presently not allowed. The state Legislature is expected to consider and probably will approve a change in the 156-year-old law that bans home equity loans.

"We think we have a very realistic chance this year," said Mark E. Huckabee, president of Western National Bank, Lubbock. Mr. Huckabee is chairman of the Texas Conference for Home Owners Rights, an organization formed three years ago by bankers to address issues in home equity lending.

Texas is the only state that does not allow borrowing against the equity in a home. The momentum for changing the Texas Constitution seems to originate from an interim committee's December report to the state Senate.

"The Legislature should adopt a joint resolution putting a constitutional amendment before the voters so that the people of Texas may decide whether they want home equity lending in our state," the report said.

Bills in Texas' House of Representatives and Senate will be discussed by subcommittees within the next few weeks. In order for the constitution to be overhauled, two-thirds of each chamber most vote in its favor. Then, voters can ratify the change on Election Day with a majority vote.

State Rep. Debra Danburg of Houston, sponsor of the House bill, said this legislative session -- Texas legislatures convene every two years -- may be "the best chance we have ever had" to ratify home equity lending. …

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