SENATOR JOHN CARONA ON PROPOSITION 5
On November 5, 2013, Texans will have the opportunity to go to the polls and vote for Proposition 5, a constitutional amendment to authorize the use of reverse mortgages for purchase.
Proposition 5 was authorized for placement on the ballot after the Texas Legislature overwhelmingly approved Senate Joint Resolution 18, authored by Senator John Carona, Chair of the Senate Committee on Business and Commerce.
"Proposition 5 gives seniors access to reverse mortgages for purchase, a financing tool available nationwide that provides homeowners with the opportunity to save money, while also offering flexibility in the purchase of a new home," said Senator Carona. "This law will be unique to Texas, however, in that it offers increased consumer protections, including a 12-day disclosure period."
Reverse mortgages for purchase are financing tools often used by seniors who are looking to downsize their home or relocate to be closer to family. This tool, available in all states but Texas, will offer homeowners age 62 years and older the opportunity to access the equity in their current home and, at the same time, finance the purchase of a new home. Combining the two transactions into one, this method of finance allows homeowners to save on closing costs and retain a portion of equity from the sale of their home to put toward everyday living expenses.
Supported by consumer groups such as AARP, passage of Proposition 5 will also strengthen consumer protections for all types of reverse mortgages by requiring that the borrower be provided with a detailed notice explaining obligations under the mortgage and requiring that the notice be signed within a 12-day disclosure period. The measure additionally enhances the existing mandatory counseling requirement for borrowers by requiring counseling to take place within six months prior to closing.
For more information on the November 2013 election, visit the Secretary of State's website at www.sos.state.tx.us.