St. Mary's Law Journal


Jerry Patterson


Texas citizens should vote on home equity reform to be able to decide for themselves whether they desire the benefits of home equity borrowing. Texas is the only state in the nation that prohibits homeowners from using their home equity as they see fit such as to educate their children, to start or expand small businesses, or to enjoy their retirement years. Critics to home equity reform in Texas do not fully understand the scope of the amendments or the benefits that come with reform. The myth that equity loans would trigger an increase in foreclosure rates cannot be documented and no evidence exists of this result in other states. Nonetheless, public opinion about the home equity loan proposal increasingly favors reform. Article XVI, Section 50 of the Texas Constitution prevents homeowners from using their homes as collateral for any loan except a loan to pay property taxes, a first mortgage, or a home improvement loan. Section 51 prohibits small business owners from using their home equity to support their businesses. The proposed Texas constitutional changes would not actually change any of the current law but would expand citizens’ options. Homeowners would be afforded financial advantages and consumer protections which otherwise are not available under the current law. Furthermore, Texans access to home equity is a fundamental property right which is being denied. Changes that improve the laws, yet retain the existing homestead protections against foreclosure under most circumstances, deserve further discussion in the form of a vote from Texans.


St. Mary's University School of Law