By Carona                                             S.J.R. No. 12
         76R880 DWS-D                           
                                 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) and (p), 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     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 more than 180
 2-3     consecutive days [and the location of the homestead property owner
 2-4     is unknown to the lender]; or
 2-5                       (D)  the borrower defaults on an obligation
 2-6     specified in the loan documents and the default jeopardizes the
 2-7     lender's security interest  in the homestead property;
 2-8                 (7)  that provides that if the lender fails to make
 2-9     loan advances as required in the loan documents and if the lender
2-10     fails to cure the default as required in the loan documents after
2-11     notice from the borrower, the lender forfeits all principal and
2-12     interest of the reverse mortgage; and
2-13                 (8)  that is not made unless the owner of the homestead
2-14     attests in writing that the owner received counseling regarding the
2-15     advisability and availability of reverse mortgages and other
2-16     financial alternatives.
2-17           (p)  The advances made on a reverse mortgage loan under which
2-18     more than one advance is made must be made [at regular intervals]
2-19     according to the terms [a plan] established by the [original] loan
2-20     documents by one or more of the following methods: [agreement]
2-21                 (1)  at regular intervals; or
2-22                 (2)  at any time under a line of credit:
2-23                       (A)  on request of the borrower; or
2-24                       (B)  by the lender, on behalf of the borrower, to
2-25     pay any cost, fee, or other charge the borrower is obligated to pay
2-26     under the loan documents.
2-27           SECTION 2.  This proposed constitutional amendment shall be
 3-1     submitted to the voters at an election to be held November 2, 1999.
 3-2     The ballot shall be printed to permit voting for or against the
 3-3     proposition:  "The constitutional amendment relating to the making
 3-4     of advances under a reverse mortgage and payment of a reverse
 3-5     mortgage."