Texas Patriots PAC Recommendations

For the Texas Constitutional Amendments

November 7, 2017 Election

 

Proposition 1:  Homestead exemption for partially donated homes of disabled veterans

HJR 21 by Bell (Creighton)

The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of part of the market value of the residence homestead of a partially disabled veteran or the surviving spouse of a partially disabled veteran if the residence homestead was donated to the disabled veteran by a charitable organization for less than the market value of the residence homestead and harmonizing certain related provisions of the Texas Constitution.

Currently, the Legislature provides a partial homestead exemption for a partially disabled veteran if that homestead was donated by a charitable organization at no cost to the disabled veteran.  A veteran who paid part of the cost of a donated home cannot receive the property tax exemption.  This amendment would allow for the same exemption for a veteran’s homestead that was donated at some cost to the veteran, as long as the veteran’s cost was no more than 50 percent of the home’s estimated market value.  Prop 1 would clarify the intent of existing law and provide the same well-earned property tax exemption to a greater number of partially disabled veterans who receive donated homes.

Texas Patriots PAC recommends FOR on Prop 1.

 

Proposition 2:  Revising home equity loan provisions

SJR 60 by Hancock (Parker)

The constitutional amendment to establish a lower amount for expenses that can be charged to a borrower and removing certain financing expense limitations for a home equity loan, establishing certain authorized lenders to make a home equity loan, changing certain options for the refinancing of home equity loans, changing the threshold for an advance of a home equity line of credit, and allowing home equity loans on agricultural homesteads.

The Texas legislature has passed laws that are designed to protect homeowners and their families.  Texas did not even allow home equity loans until 1997. Since then, state laws have been amended to allow for home equity loans, but these laws include strong protections for consumers.  As compared to other states, Texas has some of the strongest protections for home equity borrowers.   These included limits on total debt, limits on the number of loans, regulation of lenders, and protections for the homeowner in cases of default and foreclosure.  Importantly, since home equity loans were first authorized in 1997, the Constitution has capped fees a borrower may be charged on a home equity loan at 3% of the original principal amount of the loan. 

Prop 2 would lower the cap on fees charged to 2% of the original principal amount.  However, Prop 2 would also exclude from the new lower cap certain fees that are currently part of the 3% fee cap.  This exclusion might make home equity loans, especially on smaller loan amounts, more expensive.  The fees excluded from the proposed 2% fee cap are often some of the larger fees like the cost of a third party appraisal, the cost of a property survey, the premium charged for title insurance, and certain title examination report costs. Prop 2 would also allow the refinancing of home equity loans into non-home equity loans, revise provisions governing home equity lines of credit, and expand the list of the types of approved lenders.

We find the ability to refinance home equity loans into non-equity loans problematic for the following reasons: 

1.       It opens the door to lenders selling loans of over-extended borrowers in the secondary markets. Lenders sell loans bundled into a mix of risks. The capability to sell these refinanced loans of over-extended borrowers, and make money on the sale, is reminiscent of what was done with sub-prime loans of the past and was a major cause of the US housing bubble collapse. 

2.       Allowing home equity loans to be refinanced as non-home equity loans would eliminate the current protection requiring the foreclosure of all home equity loans through judicial proceedings (court).  Non-home equity loans are allowed to utilize a private foreclosure procedure.

3.       Finally, currently, all home equity loans are non-recourse loans, meaning that if the lender does not recover the full amount owed by the borrower through the foreclosure, the lender cannot recover its loss from the borrower.  This protection is lost when a home equity loan is refinanced into a non-home equity loan.  While Prop 2 requires lenders to provide borrowers specific notice of this change, it is unclear how well unsophisticated borrowers would understand the nuances of the notice.

The current protections on home equity loans are reasonable for borrowers and lenders, contributed to a stable housing market that was not as seriously affected by the recent housing bubble as those in other states, and should be maintained.

Texas Patriots PAC recommends AGAINST on Prop 2.

 

Proposition 3:  Limiting terms for certain appointees of the Governor

SJR 34 by Birdwell (Geren)

The constitutional amendment limiting the service of certain officeholders appointed by the governor and confirmed by the senate after the expiration of the person's term of office.

Currently, an officer of the state continues to perform the duties of office until the officer's successor is qualified for office.  This is a problem because some gubernatorial appointees are being held over in their positions long after their terms have expired.  Prop 3 would create an exception that would apply to officers appointed by the governor with the advice and consent of the Senate who did not receive a salary.  The proposition would preserve the Senate prerogative for advice and consent by placing term limits at the end of a regular legislative session on the service of appointees whose terms have expired, allowing the Senate to hold confirmation hearings on replacement appointees.  The amendment would also provide the Office of the Governor ample time to find and appoint a willing and qualified successor after an officer's term expires.

Texas Patriots PAC recommends FOR on Prop 3.

 

Proposition 4:  Court notice to Attorney General of constitutional challenge to state laws

SJR 6 by Zaffirini (Schofield)

The constitutional amendment authorizing the legislature to require a court to provide notice to the attorney general of a challenge to the constitutionality of a state statute and authorizing the legislature to prescribe a waiting period before the court may enter a judgment holding the statute unconstitutional.

Prop 4 would require a court to provide notice to the Attorney General if a party to litigation challenges the constitutionality of a state statute. The amendment authorizes the legislature to prescribe a reasonable period after the notice has been provided, which may not exceed 45 days, during which the court may not enter a judgment holding the statute unconstitutional.  In 2013, the Texas Court of Criminal Appeals struck down a Texas law requiring courts to notify the attorney general of such challenges, and the proposed amendment is needed to restore this law.  Without Proposition 4, laws enacted by the Legislature could be struck down without the state having a chance to defend them.  Proposition 4 would be in line with a similar rule relating to federal law and would not deny anyone relief in state courts.

Texas Patriots PAC recommends FOR on Prop 4.

 

Proposition 5:  Amending eligibility requirements for sports team charitable raffles

HJR 100 by Kuempel (Hinojosa)

The constitutional amendment on professional sports team charitable foundations conducting charitable raffles.

Section 47, Article III, Texas Constitution, as originally adopted, required the legislature to pass laws prohibiting all lotteries and gift enterprises and has been interpreted to prohibit most types of gambling in Texas.  In 2015, voters approved HJR 73 by Geren, which allowed certain professional sports team charitable foundations existing on January 1, 2016, to conduct charitable raffles at home games.  “Professional sports teams” were defined as a team organized in Texas that is a member of Major League Baseball, the National Basketball Association, the National Hockey League, the National Football League, or Major League Soccer.  Proposition 5 would expand gambling in Texas by increasing the number of sports team foundations that could conduct such raffles, which could prompt other groups to request the authority to offer them.  The bill also would make a debit card an acceptable form of payment for buying a charitable raffle ticket. 

Prop 5 expands gambling by blurring the distinction between raffles and lotteries. 

Texas Patriots PAC recommends AGAINST on Prop 5.

 

Proposition 6:  Homestead exemption for surviving spouses of certain first responders

SJR 1 by Campbell (Fallon)

The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of all or part of the market value of the residence homestead of the surviving spouse of a first responder who is killed or fatally injured in the line of duty.

The Texas Constitution currently allows the Legislature to exempt from property taxes all or part of the market value of the residence homestead of the surviving spouse of a member of the U.S. armed forces who was killed in action, provided that the spouse had not remarried since the service member’s death.  Proposition 6 would extend a partial or total homestead exemption to the surviving spouse of a first responder who was killed or fatally injured in the line of duty, provided that the spouse had not remarried since the first responder’s death.   This proposition would help ensure that families of fallen first responders, who have already suffered devastating loss in service to their communities, do not face the loss of their home because of the property tax burden, particularly following the death of a first responder who is likely to have been a breadwinner for the family.

Texas Patriots PAC recommends FOR on Prop 6.

 

Proposition 7:  Authorizing Legislature to allow banks to hold raffles promoting savings

HJR 37 by E. Johnson (Hancock)

The constitutional amendment relating to legislative authority to permit credit unions and other financial institutions to award prizes by lot to promote savings.

Texas Constitution, Art. 3, sec. 47 requires the Legislature to prohibit lotteries and gift enterprises in the state, with certain exceptions, including the state lottery, charitable bingo games, and charitable raffles conducted by various nonprofit or religious organizations.  Proposition 7, along with the enabling legislation, HB 471 by E. Johnson, would be a carve-out for one industry to conduct a raffle, which would be the only non-charitable raffle allowed in the state.

Proposition 7 expands gambling by blurring the distinction between raffles and lotteries and creates an unwarranted exception for one industry. 

Texas Patriots PAC recommends AGAINST on Prop 7.