HBA-TYH H.J.R. 76 76(R) BILL ANALYSIS Office of House Bill AnalysisH.J.R. 76 By: Staples Financial Institutions 4/16/1999 Introduced BACKGROUND AND PURPOSE In 1997, Texas voters approved home equity lending, with a provision for a three percent cap on fees and charges, and to bar any additional collateral for making the loans. However, this prohibits the federal Farm Credit System (system) from making home equity loans. Under federal law, the system operates Production Credit Associations (PSA) and Federal Land Banks (FLB) that make rural loans. Loan applicants leave between two and five percent of the loan amounts in the system as a membership to get a loan. During the time of the loan, the member receives interest on the loan. The amount reverts to the member when the loan is paid off. The federal requirements of this longstanding program prohibit the 13 PSAs and 14 FLBs in Texas from making home equity loans for dairy farming and moderately priced rural housing. As proposed, H.J.R. 37 requires the submission to the voters of a constitutional amendment to exclude cooperative membership fees and cooperative membership certificates from the three percent closing cap and the requirement of no additional collateral under the existing Texas home equity law. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 50(a), Article XVI, Texas Constitution, to exclude cooperative membership fees and cooperative membership certificates from the three percent closing cap and the requirement of no additional collateral under the existing equity loan law. SECTION 2. Amends Section 50(g), Article XVI, Texas Constitution, to make conforming changes. SECTION 3. Requires this proposed constitutional amendment to be submitted to the voters at an election to be held November 2, 1999. Sets forth the required language for the ballot.