This
memorandum is effective January 1, 1998, and is being made available to our
clients and friends for the purpose of explaining the text of the Constitutional
amendment that allows home equity lending in Texas. We have chosen a question
and answer format in an attempt to simplify a complex subject. This memo is
also available on the firm's Internet Website at www.davislawpc.com. We appreciate your feedback and your continued support.
Did the Constitutional Amendment change any previous law other than allowing
home equity lending?
Yes.
Article 16, Section 50 was restructured from a grammatical standpoint and some
words and phrases were deleted. These do not appear to have any legal effect.
However, the provision allowing homestead liens for home improvement has been
changed. These changes are as follows:
The
prior provision referenced "work and material used in construction of improvements
thereon." The Constitutional Amendment added for clarification, "or
work and material used to repair or renovate existing improvements thereon."
If the work and material are used for repair or renovation, there are four additional
requirements:
-
The first requirement is that the contract for the work and material be
in writing with the consent of both spouses (if applicable), given in the
same manner as is required in making a sale and conveyance of the homestead.
This means that both spouses must join in the document and it must be in
recordable form (including acknowledgments). Additionally, Section 53.254
of the Property Code requires that the contract be recorded.
-
The second requirement is that the contract for work and material not be
executed by the owner or owner's spouse before the 12th day after the owner
makes written application for any extension of credit for the work and material.
This would appear to apply to both third party financing and financing provided
directly by the contractor. In essence, the parties must wait at least twelve
days from completion and signing of the loan application before the contract
for work and material is executed. From the language of the provision, it
appears you would not include the day the loan application is signed and
delivered but the contract for work and materials could be signed on the
twelfth day. It is not clear whether a "day" is a calendar day
or a twenty-four hour period from the signing and delivery of the loan application.
There is an exception to the 12 day waiting period for emergency repairs.
This means immediate repairs to conditions that materially affect the health
and safety of the owner or person in the homestead and the owner acknowledges
in writing the emergency nature of such repairs.
-
The third requirement is that the contract for work and material expressly
provide that the owner may rescind the contract without penalty or charge
within 3 days after the execution of the contract by all parties, unless
the work is for emergency repairs and the owner acknowledges in writing,
the emergency nature of such repairs.
-
The fourth and final requirement is that the contract for work and material
may be executed by the owner and the owner's spouse (if applicable) only
at the office of a third party lender, an attorney's office or at the title
company. The apparent reason for this new requirement is to prevent the
contract for improvements from being signed (presumably under pressure)
at the contractor's office or the owner's residence.
Do these four requirements apply only to contracts for work and material for
repair and renovation, or do they also apply to new improvements, such as construction
of a new residence on the homestead?
It is unclear from the language of the provision whether the new requirements
apply only to repair and renovation or all improvements. By the end of 1999,
title underwriters consistently concluded that these four requirements apply
only to repair and renovation and not to new improvements. In Spradlin v. Jim
Walter Homes, Inc., the Dallas Court of Appeals (Fifth District) agreed.
What exactly is a contract for work and material? Is it the mechanic's lien
contract, the contractor's proposal, which is signed by the owner and spouse,
or is it the construction contract describing the work to be done and the consideration
to be paid?
There is no definition in the Constitution nor in the Constitutional Amendment
as to the meaning of "contract for work and material". It would most
certainly include the mechanic's lien contract. It may also include the contractor's
proposal and the construction contract. Typically, the contractor has the owner
sign the proposal or construction contract for improvements before the owner
applies for third party financing. The new mechanic's lien statute which amends
Section 53.001 et seq. of the Property Code, creates a new definition called
"residential construction contract". This term is defined as a "contract
between an owner and a contractor in which the contractor agrees to construct
or repair the owner's residence, including improvements appurtenant to the residence".
It could be possible for a court to determine that the "contract for material
and work" was inclusive of the new term the "residential construction
contract".
Is the 3 day rescission right similar to the federal truth-in-lending 3 day
notice to cancel?
No. The 3 day right in the Constitutional Amendment concerning construction
of improvements does not relate to the loan but to the contract for work and
material. The federal regulation specifies when the 3 day period begins to run,
which days are not included and, how the right is to be exercised. This provision
indicates only that the contract must provide a 3 day period after execution
to cancel the contract. It does not indicate whether rescission by either the
owner or spouse would be adequate to terminate the contract. In many cases the
lender will have to give the federal 3 day right to cancel, which may or may
not coincide with the new 3 day right to cancel the contract. Under the Constitutional
Amendment, the lender will want to withhold funding until after the 3 day contract
rescission period has expired. Another unanswered question is whether the lender
would be required to return to the owner any costs and expense relating to the
loan, or whether that would be the obligation of the contractor.
Will it be practical, in order to waive the 12 day period and the 3 day rescission
period to get the owner to acknowledge the emergency nature of the repairs?
No. For the waiver to be valid, not only must the owners sign an acknowledgment
of the emergency nature of the repairs, the repairs actually must be to remedy
a condition which affects the health or safety of the owner or occupant. This
is a fact determination. If the lender makes this determination and a court
disagrees, the lender will not have a valid lien on the homestead. The owner's
acknowledgment will not estop the owner from arguing that the lien is invalid
because the repairs were not for a bona fide emergency purpose. Note that under
Texas law, statutory provisions are construed very strictly in favor of the
homestead claimant and that nearly all court cases involving waiver of the federal
truth-in-lending 3 day notice to cancel have found that the lender was incorrect
in determining that a financial emergency existed. The provision does not address
at all whether a waiver is possible where a portion of the work and materials
is for bona fide emergency repairs and the remainder is not. The prudent policy
will be to not accept waivers of the 12 day or 3 day periods.
What are the consequences in not complying with these new requirements on construction
of improvements on homesteads?
The mechanic's lien would be invalid and the lender's deed of trust renewing
and rearranging the mechanic's lien would be invalid. If the lender knows or
should have known that the requirements have not been met and thus its lien
is invalid, and the owner / borrower requests a release of the invalid lien,
the lender must release the lien or risk committing a deceptive trade practice.
How is the home equity portion of the Constitutional Amendment structured?
It is structured to set out 26 requirements or conditions to home equity lending,
to wit:
- The
loan is secured by a voluntary lien created by written agreement with the
consent of each owner and owner's spouse.
-
The principal amount of the loan, when added to the aggregate principal
balances of all other indebtedness secured by valid liens of record against
the homestead, does not exceed 80% of the fair market value on the day the
loan is made.
-
The loan is without recourse against each owner and spouse of each owner,
unless the extension of credit was obtained by fraud of the owner or the
spouse of the owner.
-
The lien instrument must provide that the lien may be foreclosed upon only
by a court order.
-
The fees payable by the owner or owner's spouse (exclusive of interest)
necessary to originate, evaluate, maintain, record, insure, or service the
loan may not exceed 3% of the original principal amount of the loan. It
appears that by including all aspects of the loan process, the Texas Legislature
intended to include all fees from loan application through loan pay-off
and release. It is not clear how a lender is to monitor these costs to keep
a running total, but it appears to be the responsibility of the lender to
do so. This would include the cost of the mortgage title policy, appraisal,
document preparation fees, mortgage insurance (keeping in mind the 80% limit)
and servicing fees.
-
The loan cannot be an open end account, such as a revolving line of credit
or a credit card account.
-
The borrower must be able to prepay the loan without penalty or any other
charge.
-
The loan cannot be secured by any additional real or personal property.
-
The loan may not be secured by homestead property which is designated for
agricultural use for ad valorem tax purposes unless such homestead property
is used primarily for the production of milk. In other words, there is no
equity lending on homesteads where an agricultural tax exemption is in place
at the time the loan is made, unless the agricultural use is primarily dairy
farming. Note that this provision is broader than just excluding rural homesteads,
as defined under Section 41.002 of the Property Code. It would also include
urban homesteads which are subject to the agricultural tax exemption. The
determination as to whether the homestead is used primarily as a dairy farm
would be a fact issue for the lender, and perhaps later, for the trier of
fact. (Query as to why people who decide to place an agricultural exemption
on their property apparently need to be "protected" from the "evils"
of homestead lending, while the people in town and dairy farmers do not
need this constitutional safeguard, and whether this constitutional restriction
itself would be considered impermissibly discriminatory.)
-
The loan documents must not allow the loan to be accelerated because of
a decrease in the market value of the homestead or because the borrower
defaults on another debt other than a prior valid encumbrance on the homestead.
Thus, a home equity second lien deed of trust could make it a default if
the owner fails to timely make payments on the first lien.
-
Only one home equity loan may be secured by the homestead at any given time.
-
The loan must be payable in substantial equal successive monthly payments
beginning not later than 2 months from closing; each payment must at least
cover interest due on the scheduled installment.
-
The loan cannot close before (a) the 12th day after the later to occur of
(i) the date the owner submits the loan application or (ii) the date the
lender provides the owner a copy of the Home Equity Disclosure and (b) the
first anniversary of the date of closing of a prior home equity loan. Thus,
and owner cannot refinance an existing equity loan for at least a one year
period.
-
The loan can only be closed at the office of the lender, at an attorney's
office or at a title company office. The apparent reason for this requirement
is to prevent the loan from being closed at the owner's residence. Although
the term "closed" is not given, it would appear to mean the execution
and acknowledgement of the documents so as to create legal and binding obligations
on the parties. Funding probably would not be necessary to have a "closed
loan".
-
The loan can be a fixed rate or adjustable rate mortgage, so long as the
interest rate is authorized by statute. Many first lien home equity loans
would come under the federal preemption of state usury statutes, and thus
there would be no interest ceiling. Secondary liens with simple interest
rates would come under the Texas usury statute, Section 303.009 of the Texas
Finance Code, generally allowing an annual interest rate not exceeding 18%
to 24%.
-
A home equity loan can only be made by one of the following entities:
-
Banks, savings and loan associations, savings bank and credit union
doing business under the laws of the State of Texas or the United States;
-
A Federally chartered instrumentality, or a person approved as a mortgagee
by the United States Government to make federally insured loans;
-
A person licensed to make regulated loans, as provided by statutes of
the State of Texas;
-
The seller of homestead property who provided all or part of the financing
for the purchase; and
-
A person who is related to the owner within the second degree of affinity
or consanguinity (father, mother, sibling, grandparents, children, or
grandchildren)
-
Licensed Mortgage Broker [added in 2003]
-
The loan documents cannot require that the proceeds of the loan be used
to pay another debt except other debt secured by the homestead or debt to
another lender.
-
The loan documents cannot require that the owner assign wages to secure
the loan.
-
All blanks must be completed before the loan documents are signed by the
owner.
-
The loan documents cannot require the owner to sign a confession of judgment
or power of attorney in favor of lender or a third party to confess judgement
or to appear for owner in a judicial proceeding.
-
At the time of closing, lender must provide to the borrower a copy of all
documents actually signed by the owner.
-
The security instruments (deed of trust) must contain a statement that the
loan secured is a home equity loan.
-
The lender must cancel and return the note and provide a recordable release
of lien or endorsement of note and assignment of lien (in the case of a
refinance) within a reasonable period of time of loan payoff.
-
The owner and any spouse must be given 3 days after the loan is closed,
to rescind the transaction without penalty or charge.
-
At closing, the lender and owner must sign a written acknowledgment as to
fair market value of the homestead property as of the closing date.
-
If the holder of the loan failed to comply with all obligations of holder
under the loan documents within a reasonable time after the holder has been
notified by the borrower of the failure to comply, the penalty shall be
forfeiture of all principal and interest.
It appears that some requirements of the home equity provision are consistent
with the procedures applicable to how mortgages loans are originated and closed,
and some provisions create new requirements. Which provisions are different
from current origination procedures?
The following include the major differences in home equity lending:
- Most
lenders make loans up to 95% of loan to value. Home equity loans are limited
to an 80% loan to value.
-
Home equity loans will be without recourse. This means that in the event
of default, acceleration and foreclosure, the lender is limited to proceeds
from the foreclosure and cannot pursue a deficiency lawsuit against the
owners. The Constitutional Amendment does not indicate whether the lender
could require third party guarantors or co-signors, who by definition, would
have personal liability for any deficiency. The Constitutional Amendment
does not expressly prohibit liability of third parties.
-
The origination, closing, and other fees cannot aggregate an amount in excess
of 3% of the loan amount. This provision is very broadly worded to include
origination, evaluation (appraisal, credit,), recording, mortgage insurance,
title insurance, and loan servicing. It appears that it would be the responsibility
of the lender to keep a running total. of these fees so as not to exceed
the 3% cap. There is no prohibition against a "no cost" refinance
where the lender pays all standard costs and fees in exchange for a higher
interest rate on the loan.
-
Home equity loans are not permitted on homesteads subject to the ag exemptions
(except if used primarily for production of milk). Lenders will want a procedure
to verify early in the loan processing that the property is not subject
to the ag exemption.
-
A property may only have one home equity lien at a time. A lender will want
to verify early on that no other home equity loan exists or that the new
loan will refinance the existing home equity lien. The lender will also
want to verify that any existing home equity liens have been in place for
at least a year from the projected closing date of the new loan.
-
The home equity loan cannot be closed prior to (i) twelve days from the
date of loan application or (ii) the date the lender provides the Home Equity
Disclosure to the owner. The Home Equity Disclosure will be given at the
time of loan application.
-
Lender may not specify how the loan proceeds are to be used except the Lender
may require pay-off to the lender for other debt on the property.
-
At the time of closing, the lender and owner are to sign an acknowledgment
as to fair market value. Although no definition of this term is given, the
Constitutional Amendment does provide that a lender may conclusively rely
on the written acknowledgment as to fair value if (i) the value estimate
is from an appraisal or evaluation prepared in accordance with a state or
federal requirement applicable to an extension of credit for home equity
lending and (ii) the lender does not have actual knowledge at the time of
advance of funds that the fair market value stated in the written acknowledgment
was incorrect.
-
Lenders will be required to give owners a three day right of rescission.
However, under federal truth-in-lending law, consumers are already entitled
to a three day right to cancel. These periods may or may not run concurrently.
What is the Home Equity Disclosure Statement and when must it be given?
The Home Equity Disclosure is a written statement which tracks the exact wording
of Subsection (A)6 (G) of the Constitutional Amendment. The statement basically
discloses to the consumer the requirements a lender must meet in order to make
a home equity loan. The Disclosure must be given at the time the completed loan
application is received by the lender.
What changes or additions to the standard loan document package will be necessary
for a home equity loan?
Most of the additional written disclosures will be contained in a special home
equity addendum to the deed of trust. This addendum will state that the loan
is being made under Section 50 (A) (6) of Article XVI of the Texas Constitution
and recite the conditions required thereunder. The loan document package will
also include the Fair Market Value Acknowledgment; and the closing instructions
will be drafted specifically for home improvement loans. The Deed of Trust foreclosure
provisions will be modified to accommodate the expedited court foreclosure approval
procedure, which was promulgated by the Texas Supreme Court.
Will a foreclosure on a home equity lien be as time-consuming and expensive
as a judicial foreclosure?
Presumably not. Subsection (A)6 (D) requires that the lien may be foreclosed
upon only by court order. An expedited court procedure should allow a lender
to appear at the ancillary district court docket and get a hearing scheduled
in a very short period of time. The lender should be provided relief if it can
show that the loan is in default and proper notice has been sent to the borrowers.
Does the Constitutional Amendment provide for reverse mortgages?
Yes. Reverse mortgages are defined and described in detail under subsection
6(k). These loans are without recourse and can be made only to an owner or spouse
62 years and older. There are numerous requirements which must be met. Reverse
mortgages will be described in a separate memo at a later date.
Conclusion
At
first reading, it appears there are many restrictions which inhibit home equity
lending. However, other than the nonrecourse nature and the prior judicial approval
of foreclosure proceeding, the restrictions and conditions do not severely limit
the ability to originate this type of loan. There are some economic constraints.
Most owners will considered the cost / benefits evaluation to be negative if
the cost of a consolidated purchase money / home equity loan is very high. If,
for example, it costs a homeowner $3,000.00 in fees and expenses to obtain a
combined $80,000.00 purchase money refinance / $20,000.00 home equity loan,
most consumers may consider the price too high. On the other hand, the lender
who can make a $20,000.00 second lien equity loan with low fees and expenses
will find a lot of business.
HOME
EQUITY LOAN
NOTICE
CONCERNING EXTENSIONS OF CREDIT
DEFINED BY SECTION 50 (a) (6), ARTICLE XVI,
TEXAS CONSTITUTION:
"SECTION
50 (a) (6), ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS CERTAIN LOANS TO BE
SECURED AGAINST THE EQUITY IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY
LOANS. IF YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE
LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES
THAT:
"(A)
THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF EACH OWNER OF YOUR
HOME AND EACH OWNER’S SPOUSE;
"(B)
THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE MUST NOT EXCEED AN
AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES OF ALL OTHER LIENS AGAINST
YOUR HOME, IS MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME;
"(C)
THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR
SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL
FRAUD;
"(D)
THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY WITH A COURT ORDER;
"(E)
FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 3 PERCENT OF THE LOAN AMOUNT;
"(F)
THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE DEBITED FROM TIME TO OR
UNDER WHICH CREDIT MAY BE EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY
LINE OF CREDIT;
"(G)
YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;
"(H)
NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;
"(I)
THE LOAN MAY NOT BE SECURED BY AGRICULTURAL HOMESTEAD PROPERTY, UNLESS THE
AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION OF MILK;
"(J)
YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED SOLELY BECAUSE
THE FAIR MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER
LOAN THAT IS NOT SECURED BY YOUR HOME;
"(K)
ONLY ONE LOAN DESCRIBED BY SECTION 50 (a) (6), ARTICLE XVI, OF THE TEXAS CONSTITUTION
MAY BE SECURED WITH YOUR HOME AT ANY GIVEN TIME;
"(L)
THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT EQUAL OR EXCEED THE
AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT PERIOD;
"(M)
THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A WRITTEN APPLICATION
TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE THIS NOTICE, WHICHEVER DATE
IS LATER; AND IF YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE
PAST YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE
YEAR HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN;
"(N)
THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER, TITLE COMPANY, OR AN
ATTORNEY AT LAW;
"(O)
THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF INTEREST AUTHORIZED BY
STATUTE;
"(P)
ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED BY SECTION 50 (a)
(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
"(Q)
LOANS DESCRIBED BY SECTION 50 (a) (6), ARTICLE XVI, OF THE TEXAS CONSTITUTION
MUST:
"(1)
NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT EXCEPT A DEBT THAT
IS SECURED BY YOUR HOME OR OWED TO ANOTHER LENDER;
"(2)
NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;
"(3)
NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS LEFT TO BE FILLED
IN;
"(4)
NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR POWER OF ATTORNEY
TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN A LEGAL PROCEEDING ON
YOUR BEHALF;
"(5)
PROVIDE THAT YOU RECEIVE A COPY OF ALL DOCUMENTS YOU SIGN AT CLOSING;
"(6)
PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A DISCLOSURE THAT THIS LOAN
IS A LOAN DEFINED BY SECTION 50 (A) (6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
"(7)
PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER WILL SIGN AND GIVE
YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE LIEN, WHICHEVER IS APPROPRIATE;
"(8)
PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THE LOAN WITHOUT
PENALTY OR CHARGE;
"(9)
PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR MARKET VALUE OF YOUR
HOME ON THE DATE THE LOAN CLOSES; AND
"(10)
PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND INTEREST IF THE LENDER
FAILS TO COMPLY WITH THE LENDER’S OBLIGATIONS UNLESS THE LENDER CURES
THE FAILURE TO COMPLY AS PROVIDED BY SECTION 50 (a) (6) (Q) (x), ARTICLE
XVI, OF THE TEXAS CONSTITUTION; AND
"(R)
IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:
"(1)
YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW MONEY UNDER THE LINE
OF CREDIT;
"(2)
EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN AMOUNT OF AT LEAST $4,000;
"(3)
YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, SOLICITATION CHECK, OR SIMILAR
DEVICE TO OBTAIN ADVANCES UNDER THE LINE OF CREDIT;
"(4)
ANY FEES THE LENDER CHARGES MAY BE CHARGED AND COLLECTED ONLY AT THE TIME
THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER MAY NOT CHARGE A FEE IN
CONNECTION WITH ANY ADVANCE;
"(5)
THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN ADDED TO ALL OTHER
DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80 PERCENT OF THE FAIR MARKET
VALUE OF YOUR HOME ON THE DATE THE LINE OF CREDIT IS ESTABLISHED;
"(6)
IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY TIME EXCEEDS 50
PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS DETERMINED ON THE DATE
THE LINE OF CREDIT IS ESTABLISHED, YOU MAY NOT CONTINUE TO REQUEST ADVANCES
UNDER THE LINE OF CREDIT UNTIL THE BALANCE IS LESS THAN 50 PERCENT OF THE
FAIR MARKET VALUE; AND
"(7)
THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE LINE OF CREDIT. THIS
NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS CONSTITUTION. YOUR
RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, OF THE TEXAS CONSTITUTION,
AND NOT BY THIS NOTICE."