Under a constitutional amendment in Texas that allows for the reverse mortgage purchase loan within the state’s law, lenders also will have to adhere to a new set of disclosures that are now in effect in Texas.
While the reverse for purchase is still forthcoming, the governor has made Prop 5, the bill voted into law as a result of the state’s early November election, effective as of November 22, according to sources in Texas.
As a result of the filing, all lenders must include a “12-day disclosure” when closing a reverse mortgage loan. This disclosure allows the borrower a 12-day “cooling off” period during which he or she can opt not to move forward with the loan.
According to the bill text, the loan may not be closed “before the 12th day after the date the lender provides to the prospective borrower the following written notice on a separate instrument, which the lender or originator and the borrower must sign for the notice to take effect…”
The bill includes the disclosure text to be presented to all borrowers.
As of November 22, the new rule is required for all reverse mortgage loans in Texas. The reverse mortgage for purchase is expected to be available some time in the first quarter of 2014. Although it has been signed into law, reverse mortgage lenders are working with legislators and attorneys to verify the loan details before offering it to the public.
Written by Elizabeth Ecker