Through a vote of the general population, Texas citizens have decided to change the state constitution to allow for all Federal Housing Administration reverse mortgage products under state rule.
Texas is the last state to approve the Purchase reverse mortgage.
“Tonight was a clear and decisive victory for the industry,” said Scott Norman, of Austin, Texas-based Sente Mortgage, who has worked with industry members as well as federal and state government toward the change. “All the credit goes to NRMLA and the Texas Mortgage Bankers Association for their tireless efforts,” Norman said.
Advocates have long campaigned for the passage of Prop 5, a measure to pass legislation, Senate Joint Resolution 18 that approves the Home Equity Conversion Mortgage for Purchase. It received a vote of 139-1 in the House and was approved by the state’s voters on November 5 by a vote of 680,747 to 406,354 as of the time when 99% of the votes had been tallied on November 5.
Under the legislation, the state constitution will be amended to allow for the final loan product, after being limited due to homestead laws within Texas that have prevented the loan until now. The constitution was amended in 1999 to allow reverse mortgage lending and was also amended in 2003 and 2005.
“The constitutional amendment to authorize the making of a reverse mortgage loan for the purchase of homestead property and to amend lender disclosures and other requirements in connection with a reverse mortgage loan,” the legislation states.
The amendment will also include reverse mortgage safeguards, including a requirement that detailed disclosures be made at least 12 days before the closing of a new reverse mortgage loan, that provides prospective borrowers with the information and time necessary to make the loan decision.
Written by Elizabeth Ecker