A Texas homeowner with an outstanding home equity loan experiences a natural disaster that severely damages his homestead. The property value drops below the outstanding loan balance. Under Texas law, can the lender demand immediate repayment of the home equity loan because the 80% LTV cap is now exceeded?
Correct Answer
B) No, because the 80% LTV requirement is measured at origination and the lender cannot demand repayment based on subsequent property value changes
The 80% LTV cap under Texas Constitution Article XVI, Section 50(a)(6)(B) is measured at the time the home equity loan is originated. Subsequent changes in property value do not create a new obligation for the borrower. The lender cannot demand repayment or acceleration solely because the property value has declined.
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Under Texas real estate financing law, what is the term for the lender's interest in a deed of trust?
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A Texas homeowner has an existing home equity loan and wants to modify its terms rather than refinance. She asks the lender to extend the maturity date and reduce the interest rate. Under Texas Constitution Article XVI, Section 50(a)(6), can the lender modify the existing home equity loan?