Although Texas legislators recently changed their laws allowing mortgage originators to extend home equity lines of credit (HELOC), market players do not expect Texas-originated HELOCs in many new issues going forward. Driving this sentiment is the still restrictive policies governing HELOC originations and the high-quality borrower that typically opens a HELOC.
The rules governing the newly allowed mortgage product are seen keeping HELOC originations in check, according to insiders. "The laws governing HELOCs are still restrictive," noted GMAC-RFC managing director Diane Wold. "The new law only allows for an 80% maximum LTV. The purchase market for HELOC product is driven by LTV and mortgage insurance concerns."