76R14487 DWS-F
By Carona S.J.R. No. 12
Substitute the following for S.J.R. No. 12:
By Solomons C.S.S.J.R. No. 12
A 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. Sections 50(k), (p), and (r), Article XVI, Texas
1-5 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;
1-16 (5) that does not permit the lender to reduce the
1-17 amount or number of advances because of an adjustment in the
1-18 interest rate if periodic advances are to be made;
1-19 (6) that requires no payment of principal or interest
1-20 until:
1-21 (A) all borrowers have died;
1-22 (B) the homestead property securing the loan is
1-23 sold or otherwise transferred; [or]
1-24 (C) all borrowers cease occupying the homestead
2-1 property for a period of longer than 12 consecutive months without
2-2 prior written approval from the lender; or
2-3 (D) the borrower:
2-4 (i) defaults on an obligation specified in
2-5 the loan documents to repair and maintain, pay taxes and
2-6 assessments on, or insure the homestead property;
2-7 (ii) commits actual fraud in connection
2-8 with the loan; or
2-9 (iii) fails to maintain the priority of
2-10 the lender's lien on the homestead property, after the lender gives
2-11 notice to the borrower, by promptly discharging any lien that has
2-12 priority or may obtain priority over the lender's lien within 10
2-13 days after the date the borrower receives the notice, unless the
2-14 borrower:
2-15 (a) agrees in writing to
2-16 the payment of the obligation secured by the lien in a manner
2-17 acceptable to the lender;
2-18 (b) contests in good faith
2-19 the lien by, or defends against enforcement of the lien in, legal
2-20 proceedings so as to prevent the enforcement of the lien or
2-21 forfeiture of any part of the homestead property; or
2-22 (c) secures from the holder
2-23 of the lien an agreement satisfactory to the lender subordinating
2-24 the lien to all amounts secured by the lender's lien on the
2-25 homestead property
2-26 [(B) all borrowers cease occupying the homestead
2-27 property as a principal residence for more than 180 consecutive
3-1 days and the location of the homestead property owner is unknown to
3-2 the lender];
3-3 (7) that provides that if the lender fails to make
3-4 loan advances as required in the loan documents and if the lender
3-5 fails to cure the default as required in the loan documents after
3-6 notice from the borrower, the lender forfeits all principal and
3-7 interest of the reverse mortgage; [and]
3-8 (8) that is not made unless the owner of the homestead
3-9 attests in writing that the owner received counseling regarding the
3-10 advisability and availability of reverse mortgages and other
3-11 financial alternatives;
3-12 (9) that requires the lender, at the time the loan is
3-13 made, to disclose to the borrower by written notice the specific
3-14 provisions contained in Subdivision (6) of this subsection under
3-15 which the borrower is required to repay the loan;
3-16 (10) that does not permit the lender to commence
3-17 foreclosure until the lender gives notice to the borrower, in the
3-18 manner provided for a notice by mail related to the foreclosure of
3-19 liens under Subsection (a)(6) of this section, that a ground for
3-20 foreclosure exists and gives the borrower at least 30 days, or at
3-21 least 20 days in the event of a default under Subdivision
3-22 (6)(D)(iii) of this subsection, to:
3-23 (A) remedy the condition creating the ground for
3-24 foreclosure;
3-25 (B) pay the debt secured by the homestead
3-26 property from proceeds of the sale of the homestead property by the
3-27 borrower or from any other sources; or
4-1 (C) convey the homestead property to the lender
4-2 by a deed in lieu of foreclosure; and
4-3 (11) that is secured by a lien that may be foreclosed
4-4 upon only by a court order, if the foreclosure is for a ground
4-5 other than a ground stated by Subdivision (6)(A) or (B) of this
4-6 subsection.
4-7 (p) The advances made on a reverse mortgage loan under which
4-8 more than one advance is made must be made [at regular intervals]
4-9 according to the terms [a plan] established by the [original] loan
4-10 documents by one or more of the following methods:
4-11 (1) at regular intervals;
4-12 (2) at regular intervals in which the amounts advanced
4-13 may be reduced, for one or more advances, at the request of the
4-14 borrower; or
4-15 (3) at any time by the lender, on behalf of the
4-16 borrower, if the borrower fails to timely pay any of the following
4-17 that the borrower is obligated to pay under the loan documents to
4-18 the extent necessary to protect the lender's interest in or the
4-19 value of the homestead property:
4-20 (A) taxes;
4-21 (B) insurance;
4-22 (C) costs of repairs or maintenance performed by
4-23 a person or company that is not an employee of the lender or a
4-24 person or company that directly or indirectly controls, is
4-25 controlled by, or is under common control with the lender;
4-26 (D) assessments levied against the homestead
4-27 property; and
5-1 (E) any lien that has, or may obtain, priority
5-2 over the lender's lien as it is established in the loan documents
5-3 [agreement].
5-4 (r) The supreme court shall promulgate rules of civil
5-5 procedure for expedited foreclosure proceedings related to the
5-6 foreclosure of liens under Subsection (a)(6) of this section and to
5-7 foreclosure of a reverse mortgage lien that requires a court order.
5-8 SECTION 2. This proposed constitutional amendment shall be
5-9 submitted to the voters at an election to be held November 2, 1999.
5-10 The ballot shall be printed to permit voting for or against the
5-11 proposition: "The constitutional amendment relating to the making
5-12 of advances under a reverse mortgage and payment of a reverse
5-13 mortgage."