A home equity conversion mortgage for purchase allows borrowers 62 years of age or older to purchase a new home, using money from the sale of the old home in combination with the proceeds from a home equity conversion mortgage. Home equity conversion mortgages for purchase are not offered in Texas because under current state law, borrowers are not permitted to use equity accumulated in their existing home and a reverse mortgage to finance the purchase of a new home. The proposed constitutional amendment would expressly permit this type of reverse mortgage.
The measure expands the existing loan counseling requirement to include the borrower as well as the spouse. Detailed written notice that includes actions or inactions of the borrower that could result in a possible foreclosure of the reverse mortgage is required 12 days prior to closing on the loan.
Supporters argue that It is not uncommon for older homeowners to find themselves in the market for a new home, whether for purposes of downsizing to a more suitable residence, relocating to be closer to their grown children or to medical care, or simply lowering the cost of homeownership. To do so, Texas seniors currently must sell one home and purchase another, either by paying in cash or by taking out a new mortgage, in two separate transactions, with separate closing costs on each transaction.
No negative comments were recorded during Legislative hearings or floor debate. Additionally, a review of other sources also did not reveal any apparent opposition to the amendment.