AUSTIN, Tex. -- A state Senate committee has proposed a constitutional amendment that would allow Texans to take out general-purpose second-mortgage loans for the first time.

But consumer protections written into the proposed amendment probably don't go far enough to win over opponents.

The three-member committee, which is circulating a draft of its proposal, last month unanimously recommended that the Legislature submit the issue to voters.

That action, however modest, was a milestone in the debate over home-equity lending: the first time any legislator has voted on the issue in Texas.

But opponents - a coalition of real-estate brokers, home builders, farmers, and consumer groups aren't budging.

"Will there ever be enough safeguards?" asked Tom Smith, Southwest regional director for the consumer group Public Citizen. 'The answer is no."

Champions of home-equity lending, led by the state's bankers, are counting on the renewed attention given to the issue this summer, after the Fifth Circuit Court of Appeals ruled that federal thrift regulations allowing such loans override the Texas Constitution's ban on them.

That sparked a dispute in Washington between U.S. Rep. Henry Gonzalez and Sen. Phil Gramm, over an amendment by Rep. Gonzalez to the pending interstate banking bill.

The amendment essentially overruled the appeals panel by declaring that thrift regulators can't override the Texas Constitution.

The amendment was adopted by the House and is pending in the Senate; Sen. Gramm has vowed to remove the amendment, but even supporters don't think he has much chance of succeeding. And that puts the issue back on the state Legislature.

The state Senate committee's proposal, modeled after a plan offered last session by the Texas Bankers Association, contains a number of new consumer safeguards -- tougher than any other states and tougher than new federal requirements recently adopted by Congress.

The protections are designed to answer concerns raised by small businesses, farmers and the elderly.

Like the earlier proposal from the bankers, the latest draft would permit only one home-equity loan on a mortgage; that would avoid the "stacking" of second and third mortgages that is giving borrowers headaches in California.

It would give borrowers a 15-day cooling-off period before loans are completed, and limit the loans to 70% of a home's equity.

But it also contains some new features, specifically aimed at addressing concerns raised by opponents.

In response to misgivings among home builders and some small businesses that lenders would require a second mortgage to secure business loans, the proposal prohibits lenders from such "cross-collateralization" requirements.

It also bars lenders from calling a loan because of a decrease in the market value of a home, a provision designed to protect the elderly, who frequently see their property values fall as their houses age or their neighborhoods decline. And a lender couldn't demand repayment simply because the borrower defaults on other debts.

"We have tried to respond to our opponents and our critics wherever possible," says Robert Harris, president of the Texas Bankers Association in Austin.

"I can't think of a state that has anything close to this," Mr. Harris added.

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