Texas, which has long had its own reverse mortgage rules since being the last state to introduce Federal Housing Administration reverse mortgages 12 years ago, remains as the last state without the Home Equity Conversion Mortgage Purchase product. This is despite being one of the highest-producing states for reverse mortgages, a San Antonio news outlet reports.
Reverse mortgage lenders in the state are working with local government in an effort to amend the rules regarding the HECM Purchase. However, a change awaits the upcoming 2013 legislative session, Sente Mortgage’s Scott Norman told the outlet.
The San Antonio Express-News writes:
“Texas cannot quite catch up to the evolution of the reverse mortgage.
When the first reverse mortgage was issued in Texas 12 years ago, the state had been the only one for about a decade without the financial product.
Texas now is the only state without the legal status to allow a new type of reverse mortgage, the kind used by seniors to buy a house, not just to draw down the equity in their existing house.
The delay in reverse mortgages in Texas stems historically from the homestead protections in the state’s constitution that made home-equity lending against the law until 1997. Reverse mortgages are a form of home-equity lending. It took additional constitutional amendments to match state law with national reverse-mortgage requirements for reverse mortgages and lines-of-credit loans.
Almost 50,000 reverse mortgages have been issued in Texas since 2000, making Texas the second-largest market for the product. But another constitutional amendment will be necessary to allow reverse mortgages for purchase…
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Written by Elizabeth Ecker