Legislation to legalize home equity lending in Texas is entering what's probably the home stretch, and lenders are already in the mood to party.

The Texas Senate voted April 20 to amend the state's 156-year-old constitutional prohibition on most home equity lending. That action in itself was historic. Never before had a home equity bill gotten beyond a state legislative committee.

Under its legal prohibition, Texas has become an enormous untapped market for equity lending that has lenders salivating.

Today, the state House begins considering the constitutional amendment. Its Financial Institutions Committee will debate the bill before it can be sent to the House floor for a vote.

At least 100 of the 150 state representatives must support the amendment before it can be presented to the voters in the fall. And time is running out. This session of the Texas Legislature, which meets every two years, is to end May 29.

"This is the big, final push," said Rob Norcross, a spokesman for the Texas Conference for Homeowners' Rights. "It's looking good."

Lenders certainly hope so. They have long sought legalization of second mortgage lending in the Lone Star State. According to a Texas Senate report, at least $100 billion of home equity is untapped.

Nationally, more homeowners are borrowing against their home equity. A recent American Financial Services Association report found that 13% of all homeowners had taken on home equity loans, up from 11% five years earlier.

"We haven't ordered the champagne yet, but I think there will be some celebrations by bankers in Texas if the bill (is) passed," said Gary W. Schur, president of First National Bank of Munday, Tex.

Passage of the home equity bill by the state Senate was hailed by bankers as a major victory.

"It is a huge step in this state to have gotten it past the Senate," said Kelly S. Rodgers, assistant general counsel of the Texas Bankers Association.

The high spirits bubbled despite some disappointment among bankers over provisions in the Senate version of the amendment. Among the most significant is one that would bar bankers from lending on more than 90% of a property's value.

"It is going to limit the availability of home equity loans," Ms. Rodgers said. But "we are pleased, all in all."

What distinguishes this drive to allow home equity lending is that the public no longer views the issue as just a lenders' issue, observers said. It has become a homeowners' issue.

State Rep. Debra Danburg of Houston, the amendment's House sponsor, is corraling votes for its passage. And word has it that she has recruited 85 to 95 legislative supporters.

A three-week advertising blitz begins this week.

Bankers are confident this is the year Texans will become second- mortgage borrowers.

"My gut feeling is that we will get there," said Christopher Williston, president and chief executive, Independent Bankers Association of Texas. "I really do."

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