Texas once viewed homesteads as property to be protected from creditors; but, with the introduction of home equity lending in Texas in 1997 and with amendments in 1999, 2003, and 2007, those protections have been significantly chipped away.
Looking to borrow equity from your house? Here is what you must know first:
Prior to the November election last year, we put out a warning in our blog “Should Protections for Home Equity Borrowers be Stripped so Banks Profit?” that Proposition 2 was a wolf in sheep’s clothing. Consumer groups and newspapers across the state from the Houston Chronicle to The San Antonio Express-News all warned consumers to vote NO.
Update 2/15/18: Unfortunately this proposition passed. Read here about how Home Equity Borrowing in Texas has Forever Changed.
Texas was the last state to allow homeowners to borrow the equity in their home. When the law passed in 1997 allowing home equity loans, it included strong protections for consumers. As compared to other states, Texas has some of the strongest protections for home equity borrowers.
Now, Proposition 2 seeks to amend the Texas Constitution and strip many of those protections that Texans have enjoyed for the last 20 years - protections that helped Texas from suffering as much as other states during the recent housing crises.
