Text to Appear on the Ballot:
The constitutional amendment to authorize the making of a reverse mortgage loan for the purchase of homestead property and to amend lender disclosures and other requirements in connection with a reverse mortgage loan.
Propositions 5 deals with reverse mortgages. A reverse mortgage is a type of loan in which a creditor or qualified bank provides a customer with money based on the equity in the borrower’s home. In a way, the homeowner is getting a new loan from the bank for the home they already live in, without having to give up the property. This type of loan only applies to people over the age of sixty-two, and as long as they stay current on their taxes and payments, it can be a good way for seniors on a fixed income, who may be property-rich and cash-poor, to obtain money to pay for things like living expenses and healthcare. The loan does not have to be repaid until the borrower permanently moves from the home, sells the home, or if the borrower passes away.
Reverse mortgages have been available in Texas since 1999, but Texas is the only state that does not allow people to use a reverse mortgage to buy a new home. This amendment would remove that restriction. In addition, the proposed amendment requires that the borrower fulfill a counseling requirement before the reverse mortgage is closed. The Proposed amendment also requires that the lender provide a detailed written notice twelve days before the reverse mortgage closes. The notice must indicate what actions or inactions by the borrower could result in the loss or foreclosure of the home.
This proposition was proposed by Senator John Carona as Senate Joint Resolution and cosponsored in the House by Mike Villareal.
Vote on the Legislation:
House: 139 in favor, 1 opposed, 2 present
Senate: Passed unanimously on voice vote