SRC-JBJ C.S.S.J.R. 12 76(R)BILL ANALYSIS


Senate Research CenterC.S.S.J.R. 12
76R9105 DWS-FBy: Carona
State Affairs
3/12/1999
Committee Report (Substituted)


DIGEST 

Currently, the Texas Constitution authorizes senior citizens to obtain a
reverse mortgage.  Generally, a reverse mortgage, under current law, allows
a senior citizen to receive an extension of credit by mortgaging the credit
against the person's homestead without paying the credit until the person
dies. Some of the constitutional provisions, however, conflict with federal
law and force the Department of Housing and Urban Development (HUD) to not
insure reverse mortgage loans in Texas.  If a mortgage loan cannot be
insured by HUD, the Federal National Mortgage Association (Fannie Mae),
which underwrites more than 90 percent of reverse mortgages nationally,
will not buy the mortgage on the secondary market.  The absence of the
underwriter creates a significant discouragement for lenders to offer
reverse mortgage loans altogether.  Opening up the mortgage market by
constitutionally redefining a reverse mortgage would permit HUD to insure
reverse mortgages, and, subsequently, permit Fannie Mae to buy the Texas
mortgages.  C.S.S.J.R. 12 would require a constitutional amendment to open
the reverse mortgage market in Texas. 

PURPOSE

As proposed, C.S.S.J.R. 12 requires the submission to the voters of a
constitutional amendment to open the reverse mortgage market in Texas. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 50(k) and (p), Article XVI, Texas Constitution,
by redefining "reverse mortgage."  Requires certain advances made on a
reverse mortgage loan to be made according to certain terms established by
the loan documents, rather than a requiring an advance made to be made at
regular intervals according to a plan established by the original loan
agreement. 

SECTION 2.  Requires this proposed constitutional amendment to be submitted
to the voters at an election to be held on November 1, 1999.  Sets forth
required language for the ballot.  

SUMMARY OF COMMITTEE CHANGES

SECTION 1.  

Amends Section 50(k), Article XVI, Texas Constitution, to revise the
exemption from interest or principal payments in the definition of "reverse
mortgage."