Comptroller's Report
Dear Readers:
10 Principles for Texas
in the 21st Century
- Develop a better-educated workforce
- Direct more of every education dollar into the classroom
- Raise the bar on student performance
- Cut taxes in Texas
- Introduce competition into Texas government
- Improve government performance and accountability
- Reduce the size of government
- Bring common sense to regulations
- Use technology to cut costs and increase quality
- Return control to communities and individuals
Home equity loans have been extremely positive for our Texas economy. And the rate of foreclosure has not increased. National foreclosure rates for home equity loans are 1.3 percent. Texas foreclosure rates for home equity loans are 0.99 percent.
But Texas consumers don’t have the same options as consumers in every other state in the nation. Texas consumers could save $741 million annually using home equity lines of credit instead of other loans—and those savings would be pumped into our Texas economy. Compared to residents in other states who have access to both home equity loans and lines of credit, Texans are still not fully utilizing the financial leverage available from their largest asset.
The current home equity system in Texas has a big hole in it. Texas homeowners, unlike homeowners in every other state, are unable to take advantage of home equity lines of credit. These loans, as you are well aware, essentially allow the homeowner to have a credit card based on their home’s equity. But unlike a regular credit card, the interest rates are substantially lower and tax deductible.
Texas homeowners need and deserve the right to take out these types of loans, but the loans are not currently allowed under Texas law. It’s time we changed the system.
I recently released a report, Home Equity Lending Gaps in Texas, which shows how a new kind of home equity loan could save Texas homeowners millions every year with lower interest payments and federal income taxes. A constitutional change in this area will pump up to $741 million annually back to the Texas economy, back to Texas small businesses and, most importantly, back to the people of Texas.
My economists estimate that if Texas homeowners had the Home Equity Line of Credit option, the economic impact would be almost immediate and, most importantly, would be dramatic.
Based on average credit card and home equity lines of credit interest rates, Texas homeowners could save more than $100 in combined interest payments and federal income tax deductions annually for every $1,000 of credit card debt.
Texans need and deserve the right to take out home equity lines of credit. With this change, hard-working Texans will make lower interest payments, and pay less federal taxes, without incurring an additional dime of debt.
Sincerely,
Carole Keeton Strayhorn
Texas Comptroller
