From the Office of State Senator John Carona

For Immediate Release
December 18, 2002
CONTACT: Alexandra Ritchie, (512) 463-0116

SENATOR JOHN CARONA PRE-FILES REVERSE MORTGAGE FIX

(AUSTIN)--State Senator JOHN CARONA (R-Dallas) today pre-filed SJR 7 removing limitations placed on the use of existing reverse mortgages. "The legislation proposes an amendment to the Texas Constitution to facilitate the repayment of home equity loans," Senator Carona explained. 

SJR 7 addresses problems with current provisions in the Texas Constitution that prohibit the refinancing of home equity loans with anything other than another home equity loan. The proposed amendment would authorize the use of reverse mortgages in addition to other home equity loans to pay off current home equity loans. "My legislation would help older Texas homeowners convert their home equity into tax-free income and pay for living expenses and health care." Reverse mortgages are financial tools providing seniors income from the equity in their home --without requiring repayments while they reside in the home. "This is critical for many seniors who have experienced substantial losses to their income due to the recent stock market downturns," Senator Carona emphasized. 

Amending the Constitution to address these needs will enhance the potential of reverse mortgages, which have been extended to an increasing number of Texas homeowners since they were legislated as authorized liens in 1998 in SJR 12.  This amendment, authored by Senators Carona and Ellis, and sponsored by Representative Hochberg, opened up the mortgage market by redefining reverse mortgages and permitting HUD to insure them. "We need to capitalize on the success of these financial tools to benefit the greatest number of consumers," Senator Carona explained. 

These changes are recommended by the Texas Association of Reverse Mortgage Lenders and the Texas Bankers Association. A related federal act signed in 2000, the American Homeownership and Economic Opportunity Act, supports similar changes for all 50 states. If the bill passes, Texas would be the last state to adopt the changes. 

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