|As of now, Texans cannot use the home equity conversion mortgages for purchase because state law prohibits financing a new home using a reverse mortgage and equity amassed from the existing home to purchase a new residency. This type of reverse mortgage would be available if this proposed amendment is passed by voters.
According to the Texas Legislative Council, SJR 18 would also expand the required financial counseling on reverse mortgages. The borrower and their spouse would have to complete the counseling before closing on the reverse mortgage. Also, it would make required written notices, which are provided by lenders, to include information about how the borrower's actions or lack thereof could result in foreclosure. This notice would have to be delivered 12 days before closing.
During legislative meetings, supporters of the proposition provided a handful of reasons as to why this proposed amendment should pass. Primarily, they say that it's common for older homeowners to find themselves looking for a new home, and under current law these homeowners would have to make two separate transactions to buy a new one. This law would allow for only one transaction, saving the homeowner from having to pay a few thousand dollars in closing fees.
There was no opposition to this proposed amendment during house and senate committee hearings.
Check back tomorrow for information on propositions seven, eight and nine.
Background on Constitutional Amendments: The Legislature proposes constitutional amendments in joint resolutions in the Senate and House. Each amendment must be passed by both bodies by a two-thirds vote, and the governor does not have the ability to veto proposed amendments. If approved by the majority of voters, the amendments take effect immediately unless specified in the resolution.
Source: Texas Legislative Council.