By Hochberg H.J.R. No. 114
A JOINT RESOLUTION
1-1 proposing a constitutional amendment authorizing an encumbrance on
1-2 homestead property for the purpose of a reverse mortgage.
1-3 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 50, Article XVI, Texas Constitution, is
1-5 amended to read as follows:
1-6 Sec. 50. (a) The homestead of a family, or of a single
1-7 adult person, shall be, and is hereby protected from forced sale,
1-8 for the payment of all debts except for:
1-9 (1) the purchase money thereof, or a part of such
1-10 purchase money;
1-11 (2) <,> the taxes due thereon;
1-12 (3) <, or for> work and material used in constructing
1-13 improvements thereon, if <and in this last case only when> the work
1-14 and material are contracted for in writing, with the consent of
1-15 both spouses, in the case of a family homestead, given in the same
1-16 manner as is required in making a sale and conveyance of the
1-17 homestead; or
1-18 (4) a reverse mortgage.
1-19 (b) The <nor may the> owner or claimant of the property
1-20 claimed as homestead, if married, may not sell or abandon the
1-21 homestead without the consent of the other spouse, given in such
1-22 manner as may be prescribed by law.
1-23 (c) No mortgage, trust deed, or other lien on the homestead
1-24 shall ever be valid unless it secures a debt described by this
2-1 section, <except for the purchase money therefor, or improvements
2-2 made thereon, as herinbefore provided,> whether such mortgage, or
2-3 trust deed, or other lien, shall have been created by the owner
2-4 alone, or together with his or her spouse, in case the owner is
2-5 married. All pretended sales of the homestead involving any
2-6 condition of defeasance shall be void.
2-7 (d) A reverse mortgage may be made only by a bank, savings
2-8 and loan association, savings bank, or credit union doing business
2-9 under the laws of this state or the United States.
2-10 (e) The legislature shall enact legislation:
2-11 (1) giving a reverse mortgage priority over subsequent
2-12 liens;
2-13 (2) providing penalties for failure of a lender to
2-14 make required advances under a reverse mortgage;
2-15 (3) regulating conditions under which a reverse
2-16 mortgage becomes due and payable;
2-17 (4) providing for consumer information and counseling
2-18 relating to reverse mortgages; and
2-19 (5) otherwise regulating reverse mortgages as the
2-20 legislature determines necessary.
2-21 (f) A lender may not make a reverse mortgage unless the
2-22 legislation required to be enacted under Subsection (e) is in
2-23 effect.
2-24 (g) In this section "reverse mortgage" means a nonrecourse
2-25 loan secured by real property:
2-26 (1) under which cash advances are provided to a
2-27 borrower based on the equity in a borrower's owner-occupied
3-1 principal residence homestead property; and
3-2 (2) that requires no payment of principal or interest
3-3 until the entire loan becomes due and payable. <This amendment
3-4 shall become effective upon its adoption.>
3-5 SECTION 2. This proposed constitutional amendment shall be
3-6 submitted to the voters at an election to be held November 7, 1995.
3-7 The ballot shall be printed to permit voting for or against the
3-8 proposition: "The constitutional amendment allowing reverse
3-9 mortgages."