By: Carona, Ellis S.J.R. No. 12
SENATE JOINT RESOLUTION
1-1 proposing a constitutional amendment relating to the making of
1-2 advances under and payment of a reverse mortgage.
1-3 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsections (k) and (p), Section 50, Article XVI,
1-5 Texas Constitution, are amended to read as follows:
1-6 (k) "Reverse mortgage" means an extension of credit:
1-7 (1) that is secured by a voluntary lien on homestead
1-8 property created by a written agreement with the consent of each
1-9 owner and each owner's spouse;
1-10 (2) that is made to a person who is or whose spouse is
1-11 62 [55] years or older;
1-12 (3) that is made without recourse for personal
1-13 liability against each owner and the spouse of each owner;
1-14 (4) under which advances are provided to a borrower
1-15 based on the equity in a borrower's homestead or the value of the
1-16 borrower's homestead;
1-17 (5) that does not permit the lender to reduce the
1-18 amount or number of advances because of an adjustment in the
1-19 interest rate if periodic advances are to be made;
1-20 (6) that requires no payment of principal or interest
1-21 until:
1-22 (A) all borrowers have died;
1-23 (B) the homestead property securing the loan is
1-24 sold or otherwise transferred; [or]
2-1 (C) [(B)] all borrowers cease occupying the
2-2 homestead property [as a principal residence] for a period of
2-3 longer than 12 consecutive months [more than 180 consecutive days
2-4 and the location of the homestead property owner is unknown to the
2-5 lender]; or
2-6 (D) the borrower:
2-7 (i) defaults on an obligation specified in
2-8 the loan documents to repair and maintain, pay taxes on, or insure
2-9 the homestead property;
2-10 (ii) fails to maintain the priority status
2-11 of the lien; or
2-12 (iii) commits actual fraud in connection
2-13 with the loan;
2-14 (7) that provides that if the lender fails to make
2-15 loan advances as required in the loan documents and if the lender
2-16 fails to cure the default as required in the loan documents after
2-17 notice from the borrower, the lender forfeits all principal and
2-18 interest of the reverse mortgage; and
2-19 (8) that is not made unless the owner of the homestead
2-20 attests in writing that the owner received counseling regarding the
2-21 advisability and availability of reverse mortgages and other
2-22 financial alternatives.
2-23 (p) The advances made on a reverse mortgage loan under which
2-24 more than one advance is made must be made [at regular intervals]
2-25 according to the terms [a plan] established by the [original] loan
2-26 documents by one or more of the following methods:
3-1 (1) at regular intervals; or
3-2 (2) at any time:
3-3 (A) on request of the borrower; or
3-4 (B) by the lender, on behalf of the borrower, to
3-5 pay any cost, fee, or other charge the borrower is obligated to pay
3-6 under the loan documents [agreement].
3-7 SECTION 2. This proposed constitutional amendment shall be
3-8 submitted to the voters at an election to be held November 2, 1999.
3-9 The ballot shall be printed to permit voting for or against the
3-10 proposition: "The constitutional amendment relating to the making
3-11 of advances under a reverse mortgage and payment of a reverse
3-12 mortgage."