Intersting Washington Post article credits Texas tough home equity lending restrictions as saving the Texas real estate market. Home equity lending is restricted to 80% of the market value of the home. In many parts of the country, home equity became a piggy bank with home owners extracting paper value as soon as they could. Of course, as real values plummeted , this put the borrowers underwater. In 2006, 88% percent of mortgages purchased by Freddie Mac were at least 5% higher then the balances being refinanced.