State Judge Strikes Down Texas HELOC Rules
AUSTIN – A state judge Monday struck down several rules enacted by the Texas CU Commission and Texas Finance Commission governing home equity lending, handing a partial victory to consumer groups challenging the 2004 implementation of the state’s Home Equity Line of Credit law.
The groups, including Association of Community Organizations for Reform Now, or ACORN, American Association of Retired Persons, and Texas Rio Grande Legal Aid, claimed the rules tilted unfairly toward lenders and created exceptions that go beyond the intent of the law.
The suit claims the volunteer state commissions violated the law's 3% cap on fees by ruling that discount points purchased to lower interest are interest, so do not fall under the cap. The Texas Rio Grande Legal Aid said in some cases people were paying fees of 7% or 8%. Other provisions being challenged are exceptions to the waiting period and a requirement to provide actual loan costs before the closing.
In his ruling, Travis County District Judge Scott Jenkins declared seven of nine rules being challenged invalid.