PUBLISHED INITIALLY ON 2/15/16.
REPUBLISHED WITH UPDATES ON 12/12/17
/There are two rules that Texas notary signing agents must know about Home Equity Lines of Credit (HELOCs) secured by a homesteaded Texas property. /
- The documents must be signed in the office of the lender, an attorney at law, or a title company.
- After the documents are signed, the borrowers may expect to receive a copy of all signed documents and the loan application. Some lenders push that instant delivery, and some say it is not necessary. Keep an eye out for those instructions within the documents OR in another document.
These rules come from the Texas Constitution and have been simplified in the Texas Administrative Code, Chapter 153. You'll find both of those below, if you are interested in seeing why signing agents are plagued by these requirements.
Home equity lending in Texas started in the mid-1990s.
Bankers weren't even sure how to handle the loans and most refused to do them. It took several years to get the processes, rules, and lender penalties worked out. Finally, it was established that if a lender didn't do something right, it could pay a $1,000 penalty to the borrower and all would be forgiven.
Until this type of loan was approved in Texas, Texans could not take loans out on the equity in their homes. This is probably one reason why Texas has always had a strong economy. Until then, all Texans strived to pay off their mortgages and be debt free.
If you are interested in the history of HELOCs in Texas, you can poke around on the Wayback Machine to view the old website of the Texas Finance Commission. I read many hours on the old website in the years 2004 - 2006.
As I recall, the reason for the borrower having to sign the documents in a title company, law office, or at the lender's office is because members of the Finance Commission (so they said) were concerned about predatory lending and that homesteaded property not be easily foreclosed upon. Requiring borrowers to forego the ease of a signing agent visiting their homes was supposed to create a situation in which predatory lending wasn't welcome. However, I remember signing many equity loans in the offices of one of the most aggressive and predatory lenders Texas has ever seen, Beneficial Finance that has since been bought out by HSBC and closed all the offices that issued those types of loans.