HOME EQUITY LOAN LEGAL TEAM | HOUSTON TX

There are strict provisions in the Texas Constitution that protect homeowners from home equity loan lenders.

a man stands happily with arms crossed in front of his home

A home equity loan is a special kind of mortgage transaction in which you use the ownership equity you have in your home to get a cash loan from the bank or to simply refinance your existing mortgage.

The Texas Constitution states that:

  • The extension of credit be voluntary, written, and consented to by all owners and their spouses.

  • The value of total indebtedness—any current mortgage plus the home equity mortgage — cannot exceed 80% of the home’s total value.

  • The loan cannot close until at least 12 days after the borrower applies for it, and the borrower has a 3-day right of rescission.

  • Only authorized lenders may extend home equity loans and must follow certain procedures.

  • Lenders must make disclosures and include, in a separate written instrument, the text of the constitutional amendment.

  • Lenders cannot require certain fees at closing totaling more than 2% of the principal.

  • Recourse beyond the homestead is strictly forbidden.

  • The loan cannot be closed at the borrower’s home.

  • Lenders cannot extend more than one home equity loan to a consumer at any one time.

a woman looks pensively away from her phone
an attorney is looking through a stack of refinance legal documents

After legal notice of a constitutional violation, the bank has 60 days to cure. 

For instance, if you were charged fees in excess of the 2% limit, the bank must refund you the difference.  

If the bank fails to cure a violation within 60 days, the borrower may bring a lawsuit to cancel the home equity loan altogether without having to repay it.  Don’t delay.

Schedule a free consultation and examination of your closing documents.