Dear Sir,
Throw enough money at an issue, and you can make even the worst idea sound as American as "Mom and apple pie." In the case of home-equity lending, it's disturbing to think that Mom might end up losing her house and kitchen because of an idea that lenders say is in the best interest of Texans. The only thing being cooked here is a recipe for disaster.

On November 4, Texas voters will decide whether to turn their backs on more than 150 years of Texas heritage and allow expanded home-equity lending in their state. The language on the constitutional amendment ballot is deceivingly simple: "The amendment to the Texas Constitution expanding the types of liens for home equity loans that a lender, with the homeowner's consent, may place against a homestead."

In reality, if you want the loan, you'll use your home for collateral.

Look at the bottom line, as all lenders do, and you'll see who's making the push and why. A July survey by a Houston financial company estimates if the proposition passes the home-equity loan volume in Texas for the first two years will be $17.9 billion. That's a staggering amount of money and new business for lenders. The Wall Street Journal describes in an August 20 article "the prospect of homeowners rushing to apply for loans has more lenders licking their chops than running for cover." Millions of dollars of advertising and message control have promoted this concept as a "property rights issue" for Texans. After all, we're the only state in the nation that does not allow this type of borrowing.

Texas Farm Bureau has always been against weakening the homestead protections so prominent in our Texas Constitution. Supporters of home-equity lending thought they had taken us out of the picture by taking agriculture "out of the bill." Well, proponents couldn't even do that right. They left milk producers "in the bill" and vulnerable to home-equity loan pressures. But even Texas farmers not engaged in milk production can still be sucked into home-equity lending.

The idea that signing this type of loan is strictly a voluntary decision is not true. I contend there will be instances when pressure from outside influences will force a person to sign on the dotted line and put their home in jeopardy. Let me give you an example.

When a farmer and rancher seeks to secure an operating loan for that year, personal assets such as equipment, land and livestock are typically used as collateral. If in the lender's opinion not enough collateral is available to secure the loan, other sources of collateral must be found. Perhaps, the lender suggests a Certificate of Deposit. The presence of a CD, the producer is told, would qualify him or her for the loan.

If the farmer or rancher happens to reside in a house in town, as many do, apart from land designated for agricultural use, and there is more than 20 percent equity available in the home, then there's the solution to the problem: equity in the home could be used to purchase the CD. There are no stipulations in the November proposal as to how proceeds from a home-equity loan can be applied. In this instance, the CD could then be utilized to secure the needed operating loan for the producer.

Surprised? You shouldn't be. Such a scenario does not violate the proposal's prohibition against cross-collateralization or its exemption prohibiting agricultural homesteads from being eligible.

There are other factors that can influence one's decision to mortgage the home, and these factors impact all homeowners. I've been told of instances in other states where a family member, perhaps a child or grandchild, tugs at the heartstrings of a parent or grandparent in asking for help with a new business venture or idea. All that's needed is a little more money to get the business off the ground. Bowing to the pressure of family loyalty and love, the parent or grandparent puts the value of their home to work.

A home-equity loan is made and the money is sent to the grateful family member, but through no fault of anyone except the business climate at the time, the business fails and a home is lost. It's not that difficult to imagine. It happens. And now we're told by the lenders that this idea's time has come for Texas. Think about all of the homes that would have been subject to foreclosure in the mid-80s during the oil and real estate crisis if this type of lending had been allowed.

For more than 150 years, the homestead protections built into the Texas Constitution have served the state and its people well. Now is not the time to rewrite Texas tradition and common sense.

Vote "no" with me to defeat the home-equity lending proposal in November.

Bob Stallman,President
Texas Texas Bureau