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."