December 28, 2006
Here's something the Lege could do to help homeowners
My job is to buy loans. It's exciting, it's fun and I get an expense account which rocks (it's kind of like being a lobbyist, except the people you're taking out actually need you as much as you need them). At least once a week I get a call from a client regarding the purchase of a loan in which the borrower would like to liquefy equity (AKA, a 'cashout') in their owner occupied property. Normally, these aren't that big a deal (despite the ridiculous home equity laws in Texas) and I deal with them all the time. The problem that crops up is if it's a multi-unit property, like a duplex. Did you know that if you buy a duplex in the state of Texas, live in one unit, homestead it and rent the other side it's almost impossible to borrow against the equity in it?
The reason is that no case law has been established to support the lender's ability to perfect title in the event of foreclosure. The law (50(a)6) doesn't specifically address it and Texas judges, when it comes to homesteads, are notoriously borrower friendly. Which makes people nervous about lending in Texas, period. Don't get me wrong, legal protections for homeowners are important. However, lenders have to be able to foreclose cleanly should the borrower not pay.
While this happens in the metro's more than the rural areas, it is an issue that affects a surprisingly large number of homeowners. Any legislators out there want to take a crack at fixing it?
Posted by mcblogger at December 28, 2006 01:35 PM
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