1-1 By: Carona S.J.R. No. 12
1-2 (In the Senate - Filed December 7, 1998; February 1, 1999,
1-3 read first time and referred to Committee on State Affairs;
1-4 March 15, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 8, Nays 0; March 15, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.J.R. No. 12 By: Nixon
1-8 SENATE JOINT RESOLUTION
1-9 proposing a constitutional amendment relating to the making of
1-10 advances under and payment of a reverse mortgage.
1-11 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Subsections (k) and (p), Section 50, Article XVI,
1-13 Texas Constitution, are amended to read as follows:
1-14 (k) "Reverse mortgage" means an extension of credit:
1-15 (1) that is secured by a voluntary lien on homestead
1-16 property created by a written agreement with the consent of each
1-17 owner and each owner's spouse;
1-18 (2) that is made to a person who is or whose spouse is
1-19 62 [55] years or older;
1-20 (3) that is made without recourse for personal
1-21 liability against each owner and the spouse of each owner;
1-22 (4) under which advances are provided to a borrower
1-23 based on the equity in a borrower's homestead or the value of the
1-24 borrower's homestead;
1-25 (5) that does not permit the lender to reduce the
1-26 amount or number of advances because of an adjustment in the
1-27 interest rate if periodic advances are to be made;
1-28 (6) that requires no payment of principal or interest
1-29 until:
1-30 (A) all borrowers have died;
1-31 (B) the homestead property securing the loan is
1-32 sold or otherwise transferred; [or]
1-33 (C) [(B)] all borrowers cease occupying the
1-34 homestead property [as a principal residence] for a period of
1-35 longer than 12 consecutive months [more than 180 consecutive days
1-36 and the location of the homestead property owner is unknown to the
1-37 lender]; or
1-38 (D) the borrower:
1-39 (i) defaults on an obligation specified in
1-40 the loan documents to repair and maintain, pay taxes on, or insure
1-41 the homestead property;
1-42 (ii) fails to maintain the priority status
1-43 of the lien; or
1-44 (iii) commits actual fraud in connection
1-45 with the loan;
1-46 (7) that provides that if the lender fails to make
1-47 loan advances as required in the loan documents and if the lender
1-48 fails to cure the default as required in the loan documents after
1-49 notice from the borrower, the lender forfeits all principal and
1-50 interest of the reverse mortgage; and
1-51 (8) that is not made unless the owner of the homestead
1-52 attests in writing that the owner received counseling regarding the
1-53 advisability and availability of reverse mortgages and other
1-54 financial alternatives.
1-55 (p) The advances made on a reverse mortgage loan under which
1-56 more than one advance is made must be made [at regular intervals]
1-57 according to the terms [a plan] established by the [original] loan
1-58 documents by one or more of the following methods:
1-59 (1) at regular intervals; or
1-60 (2) at any time:
1-61 (A) on request of the borrower; or
1-62 (B) by the lender, on behalf of the borrower, to
1-63 pay any cost, fee, or other charge the borrower is obligated to pay
1-64 under the loan documents [agreement].
2-1 SECTION 2. This proposed constitutional amendment shall be
2-2 submitted to the voters at an election to be held November 2, 1999.
2-3 The ballot shall be printed to permit voting for or against the
2-4 proposition: "The constitutional amendment relating to the making
2-5 of advances under a reverse mortgage and payment of a reverse
2-6 mortgage."
2-7 * * * * *