A Texas homeowner wants to convert their home equity loan to a traditional refinance to remove the constitutional restrictions. Under the Texas Constitution, what provision allows this conversion?
Correct Answer
C) Section 50(f)(2), which allows a home equity loan to be refinanced as a non-home-equity loan if the refinance pays off the existing home equity debt and does not advance additional funds
Under Texas Constitution Article XVI §50(f)(2), a home equity loan may be refinanced into a non-home-equity loan (traditional refinance) provided that the new loan pays off the existing home equity debt and the borrower does not receive additional cash or credit beyond what is needed to refinance the existing debt, pay closing costs, and establish an escrow account.
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