Return to TFB Main Page
Return to Current Edition
Texas Agriculture Archive

July 5, 2002

Home equity....another tussle in 2003?

On June 4, the House Agriculture and Livestock Committee met in a joint hearing with the House Committee on Financial Institutions to "evaluate the ability of the Texas agriculture community to gain access to capital markets throughout the state and to identify barriers to financing viable agriculture and value-added enterprises." Several issues were discussed including the risk/reward problems for financing and investing in agricultural operations as well as the need for additional value-added marketing opportunities. However, the committee hearing quickly turned to a topic that Texas Farm Bureau knows all too well... home equity lending and opening-up the provisions so hotly debated in 1997, particularly those that protect agricultural homesteads.

Testimony from representatives of financial institutions claimed that credit is available for farmers, but the inability for farmers to apply for home equity loans is a big barrier. They suggested the law should be changed next session to allow all agricultural producers, not just dairy, to borrow money on their homestead. One witness even suggested that he had agricultural clients that wanted to use their homestead as collateral and that the Farm Bureau position against home equity lending was not reflective of the organization's membership.

As most Farm Bureau members know, in 1997 State Senator Jerry Patterson led an effort to allow property owners to mortgage the equity in their property.

At that time the Texas Farm Bureau opposed the legislation for fear that financial institutions would take advantage of borrowers desperate for additional capital. Texas Farm Bureau lost the battle and the law was changed. However, the organization was successful in obtaining an exemption for agricultural operations other than dairy. Today financial institutions are prohibited from forcing agricultural borrowers to use equity in their property as collateral. Texas Farm Bureau policy continues to "...oppose any changes in the original Home Equity Lending provisions that would weaken the protections and safeguards in the law adopted by the state."

As we enter the policy development process for this fall, Farm Bureau members are encouraged to evaluate this particular policy as well as others and be prepared to voice their positions when the state legislature convenes again in '03.

It is your organization.