Update: Purchase Reverse Mortgage in Texas

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Update: Reverse Mortgage for Purchase in Texas

texas purchase reverse mortgage

Legislation is expected to be pre-filed in the Texas legislature before the end of the month that would give registered voters the ability to decide in November 2011 whether HECM Reverse Mortgage for Purchase should be allowed in Texas State. The state legislature, which meets every other year for only 140 days, convenes on January 11, 2011.

"We're pretty far along in the process, but we still have a long way to go," says Scott Norman, who this year is serving as President of the Texas Mortgage Bankers Association. Norman, a former member of NRMLA’s Board of Directors, has been working with legislators and consumer groups to build support.

Norman played a crucial role getting constitutional amendments passed in 1999 that permitted reverse mortgages in Texas (although the first loans weren't insured until early 2001) and again in 2007 that allowed for lines of credit. In both cases, legislation had to be approved first and then the electorate had to approve a referendum allowing the section of the state's constitution dealing with home equity lending to be amended.

A few months after the Federal Housing Administration implemented HECM Reverse Mortgage for Purchase in October 2008, Norman and his legal advisors determined that a strict interpretation of the Texas constitution does not permit reverse mortgages to be used as a home purchase tool. Stay tuned and sign up for updates by clicking here

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6 Comment(s)

Carole

12/11/10 5:12pm

Its time that Texas gets with it. Reverse purchase mortgages are in many states and I am so surprised that Texas of all states is not approved yet. Get on the program. There are many of seniors that want to buy in Texas and can only buy if it is approved. Don't take too long, we don't have that much time left. By they way, I have a reverse purchase in Florida, but would like to move back to Texas, if only...........

A.R.Perry

1/3/11 2:47pm

I am 79 and my wife is 82- our mortgage is paid off. We have a large lot and an older home that is requiring more and more maintenance. I want to sell it and apply part of the proceeds as a down payment on a new or - or newer improvement on a smaller lot and annualized the balance on an immediate annuity to live on along withe social security and a small IRA. Is it possible that a legislative amendment to approve the reverse purchase mortgage in 2011. I have asked my Texas congressmen and senator for assistance. Senator Dan Patrick say he will support it. I hope to take advantage of the HECM program before I get too old.- Thanks Alvin

John

2/5/11 8:53am

What is the hold up? The end resulsts of The Reverse Mortgage for Purchase is really no different than the Reverse Mortage on existing homes! Pass the law and lets get on with business. This should be a no brainer it hurts no one and helps seniors who now would have to get a regular mortgage for a purchase and pay closing costs and then turn around and do Reverse Mortgage and pay more closing costs!

Linda

9/21/11 11:52pm

Come on Texas........I am waiting to move back home. I presently live in Florida and want to move back to Texas. I am retired and need a reverse mortgage in order to make the move.

A.R.Perry

4/29/12 5:27pm

This info applies to 2011-and as we all know it did not get on the agenda for vote in 2011-what i am interested in is 2013. With the pull out of most of the bigger players like B of A,Chase,Wells Fargo is there anyone else to move the process forward for a vote in 2013 ? Could we possibly contact Rick Perry for his help ?-I thought that I had help from some of my legislators like Dan Patrick in 2011-but the outcome is evident. As I understand it -the Texas Constitution does not allow for a reverse for purchase mortgage and the sale of the borrowers home to close at the same time because the purchaser must have equity in the new purchase. Could the purchaser sell his home,make the required down payment and after the right time apply for a reverse HECM on the new home,and would this pass muster or not ? please advise if any bankos or mortgage companies are still trying on this and whom I should contact to try to help ?I understand that is a rather lengthy process under the best of circumstances- I only hope that I live long enough to enjoy Thanks for any advice AR.Perry 327 Concordia-Katy,TX 77450.

Mike Branson

4/30/12 4:29pm

You are correct in that it is the Texas laws that currently prohibit the reverse mortgage purchase at this time. You can, however, purchase a home with a standard mortgage or for cash and then refinance at a later time with the reverse mortgage loan. Some lenders do put a limit on the time between when a borrower has purchased and when they can do the refinance, but with the obvious reason of the Texas laws, you should not have a problem with getting a lender to make an exception. The real shame is that you would have to incur some duplicate costs this way by doing a second transaction shortly after the purchase and if you can't qualify for a traditional mortgage or do not have the funds to pay cash for the home, the current laws keep you from using the reverse mortgage to buy at this time.

As far as getting the laws changed, that would be a matter of getting support from local legislators so that a Bill could be introduced at the state level and passed to change the law. Legislators often have different priorities so it would be a matter of making your request a priority to enough of them to get the Bill written and then passed. Certainly getting the Governor to understand the issue and support it would not hurt.

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