Texas legislation voted in a new law regarding reverse mortgages for purchase. Currently, Texas is the only state that does not allow a reverse mortgage for purchase.
A reverse mortgage allows senior homeowners to now receive funds vs. paying the remaining mortgage based on the difference between the LTV, loan to value and appraisal of the property.
A reverse mortgage for purchase, under theHousing and Economic Recovery Act of 2008, allows the borrower over 62 years old to take the proceeds of the reverse mortgage to use towards the purchase a new residence in one transaction without the additional costs and closings. The purpose is for certain seniors that require relocation closer to family members or needing to downsize their residence to fit their physical needs (i.e., handrails, one-level properties, ramps, wider doorways, etc.).
Texas is already the 2nd largest market for reverse mortgages and accounts for 8% of the market share nationally, totaling over $5 billion in reverse mortgages as since 2005.
Scott Norman of Senate Reverse Mortgage said, "This was a critical piece of legislation for homeowners in Texas. Today’s vote by the House was clearly supportive of reverse mortgage lending and the goal to provide enhanced consumer disclosures for all borrowers."
The Texas House of Representatives passed Senate Joint Resolution 18, with a vote of 139-1 after the Senate passed it unanimously, 31-0. The voters will have the final say this November.
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