Judge Strikes Down Texas HELOCRules

AUSTIN, Texas - (05/02/06) – A state judge Monday struckdown several rules enacted by the Texas CU Commission and TexasFinance Commission governing home equity lending, handing a partialvictory to consumer groups challenging the 2004 implementation ofthe state’s Home Equity Line of Credit law. The groups,including Association of Community Organizations for Reform Now, orACORN, American Association of Retired Persons, and Texas RioGrande Legal Aid, claimed the rules tilted unfairly toward lendersand created exceptions that go beyond the intent of the law. Thesuit claims the volunteer state commissions violated the law's 3%cap on fees by ruling that discount points purchased to lowerinterest are interest, so do not fall under the cap. The Texas RioGrande Legal Aid said in some cases people were paying fees of 7%or 8%. Other provisions being challenged are exceptions to thewaiting period and a requirement to provide actual loan costsbefore the closing. In his ruling, Travis County District JudgeScott Jenkins declared seven of nine rules being challengedinvalid.