An equity loan must not be secured by any additional real or
personal property other than the homestead. The definition of "homestead"
is located at Section 51 of Article XVI, Texas Constitution, and Chapter
41 of the Texas Property Code.
(1) A lender and an owner or an owner's spouse may
enter into an agreement whereby a lender may acquire an interest in
items incidental to the homestead. An equity loan secured by the following
items is not considered to be secured by additional real or personal
property:
(A) escrow reserves for the payment of taxes and insurance;
(B) an undivided interest in a condominium unit, a
planned unit development, or the right to the use and enjoyment of
certain property owned by an association;
(C) insurance proceeds related to the homestead;
(D) condemnation proceeds;
(E) fixtures; or
(F) easements necessary or beneficial to the use of
the homestead, including access easements for ingress and egress.
(2) A guaranty or surety of an equity loan is not permitted.
A guaranty or surety is considered additional property for purposes
of Section 50(a)(6)(H). Prohibiting a guaranty or surety is consistent
with the prohibition against personal liability in Section 50(a)(6)(C).
An equity loan with a guaranty or surety would create indirect liability
against the owner. The constitutional home equity lending provisions
clearly provide that the homestead is the only allowable collateral
for an equity loan. The constitutional home equity provisions prohibit
the lender from contracting for recourse of any kind against the owner
or owner's spouse, except for provisions providing for recourse against
the owner or spouse when the extension of credit is obtained by actual
fraud.
(3) A contractual right of offset in an equity loan
agreement is prohibited.
(4) A contractual cross-collateralization clause in
an equity loan agreement is prohibited.
(5) Any equity loan on an urban homestead that is secured
by more than ten acres is secured by additional real property in violation
of Section 50(a)(6)(H).
|
Source Note: The provisions of this §153.8 adopted to be effective January 8, 2004, 29 TexReg 84; amended to be effective November 24, 2016, 41 TexReg 9106; amended to be effective November 26, 2020, 45 TexReg 8307 |