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The Texas Constitution is strict about protecting the homestead. In fact, until 1997, the Texas Constitution did not permit home-equity loans to be secured by borrowers’ homesteads. Even now, home-equity liens are allowed only under certain conditions, among which is the requirement that a home-equity loan be made on the condition that the lender or holder will forfeit principal and interest if the loan is constitutionally noncompliant and the lender fails to cure particular issues, using one of six listed corrective actions, within 60 days of receiving notice of the violation from the homeowner.  On May 20, 2016, the Texas Supreme Court announced two decisions (Garofolo and Wood) that will significantly affect home-equity lending in Texas.
Continue Reading Recent Texas Supreme Court Decisions Affect Home-Equity Lending in Texas