Most Home Equity Loans Contain Errors

Texas has traditionally had very strong state laws to protect homeowners. In fact, the state didn't even allow Home Equity Loans or HELOC (Home Equity Line of Credit) Loans until 1997. Since then, tens of thousands of Texans have borrowed against the equity in their homes to finance home improvements, consolidate debt, pay for college, or whatever else they wanted to do with the proceeds. 

Surprising, most of these loans do not comply with the strict consumer protections written into the Texas Constitution. In fact, our research shows that 87%* of all home equity loans we've examined contain one or more violations. The law requires that banks "cure" or fix all violations. If they don't, you may be entitled to cash compensation and/or your lender may be required to return all your payments and void your lien!

Even if you took out the loan years ago, you still have time to examine your loan documents to see if you too are the victim of fraud, predatory lending, or illegal loan practices that are common with these loans.

If you aren't sure if your loan contains errors, take our Free Home Equity Test, call (713) 590-3066 for a no cost or obligation consultation, or click here to schedule a consultation at your convenience.

 

Home Equity Lending Forever Changed on January 1, 2018

On November 7, 2017 Texans passed Texas Proposition 2, also known as SJR 60 or the Home Equity Loan Amendment (2017). It made changes to Section 50(a) of Article 16 of the Texas Constitution, and became effective January 1, 2018. 

Key changes to the law include:

  1. Lowering the limitation of fees that can be charged to the borrower from 3% to 2% and removing certain fees from this calculation.
  2. Expanding the list of lenders authorized to make Texas home equity loans.
  3. Allowing Texas home equity loans to be refinanced as rate-and-term refinances.
  4. Repealing the prohibition on originating a Texas home equity loan secured by a homestead property with an agricultural tax exemption.
  5. Eliminating the 50% threshold for advances on a home equity line of credit (“HELOC”).

Home equity loans that originate after January 1st of 2018 will be impacted, as well as loans made prior to the change that are refinanced after January 1st. For more information on the impact of the change, read How Home Equity Borrowing in Texas has Forever Changed.

*Since 2010 we've examined over 1,900 loans and about 87% of them have bank errors.

 


 

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 The audit is designed to identify whether or not mistakes have been made by your lender. That could be charging more than they're allowed to originate the loan, it could be lending more to you than they're allowed to given the value of your home, it could be failing to provide you with documents.

-Chip Lane, Managing Partner