06/28/2013 10:42 AM Filed in: texas constitution | texas home equity
An important Texas Supreme Court decision came down last week that undoes pro-lender regulations that watered down Tex. Const. art. XVI sec. 50(a)(6).
In Fin. Com'n of Texas v. Norwood, 2013 WL 3119481 at *1-2 (Tex. June 21, 2013), the Texas Supreme Court held that regulations issued by the Texas Joint Financial Regulatory Agencies are entitled to no deference from the courts. Each time a court is called on to interpret Section 50, it looks at the regulations de novo. Any regulation that defies the "purpose and text" of Section 50 has no effect.
In Norwood, lenders wanted various kinds of charges, like points, to have no limit. The borrowers argued that anything that is not "principal multiplied by the interest rate" must be part of the cap on fees. The Texas Supreme Court agreed with the borrowers, since agreeing with the lenders would render the cap on "fees" meaningless.
In addition, lenders wanted to allow borrowers to sign closing documents at their home and mail them in. The Texas Supreme Court said that that would undermine the whole point of Section 50's requirement that closings occur at lender, title company, or an attorney's office.
What's so important to me about Norwood is that the Texas Supreme Court expressed such hostility to regulations and even legislation that thwarts Section 50. Political winds can't change Section 50. Only Texas voters can, through amendment.
Emphatic agreement here.
In Norwood, lenders wanted various kinds of charges, like points, to have no limit. The borrowers argued that anything that is not "principal multiplied by the interest rate" must be part of the cap on fees. The Texas Supreme Court agreed with the borrowers, since agreeing with the lenders would render the cap on "fees" meaningless.
In addition, lenders wanted to allow borrowers to sign closing documents at their home and mail them in. The Texas Supreme Court said that that would undermine the whole point of Section 50's requirement that closings occur at lender, title company, or an attorney's office.
What's so important to me about Norwood is that the Texas Supreme Court expressed such hostility to regulations and even legislation that thwarts Section 50. Political winds can't change Section 50. Only Texas voters can, through amendment.
Emphatic agreement here.
