From the Office of State Senator John Carona

December 7, 1998
CONTACT: John Krueger, 512/463-0116


(AUSTIN)--State Senator JOHN CARONA (R-Dallas) today pre-filed three bills addressing financial-related matters. The bills are clean-up legislation to address inconsistencies or outdated language currently present in Texas statutes or the State Constitution, Senator Carona explained.

SJR 12 addresses problems in the current wording of the Constitutional provisions authorizing reverse mortgages in Texas. Texas provisions are inconsistent with U.S. Department of Housing and Urban Development (HUD) guidelines for reverse mortgage underwriting by Fannie Mae. Fannie Mae is the federally chartered underwriter of mortgages in the secondary market and currently underwrites more than 90 percent of reverse mortgages nationally, but not in Texas. My legislation would eliminate the problems and open the reverse mortgage market in Texas, Senator Carona explained. If we are going to authorize reverse mortgages in our Constitution, we should make sure it works by removing roadblocks that discourage this type of lending to our seniors, he added. Reverse mortgages are financial tools allowing seniors income from the equity in their home--without requiring repayments while they live in the home.

SB 84 adds Roth IRAs to the list of assets protected from seizure by creditors. Individual Retirement Accounts have long been protected from seizure for debt payment, and this bill simply gives equal protection to the recently created Roth IRA, Senator Carona remarked.

The third bill Senator Carona pre-filed enhances the commercial acceptability of letters of credit. The current statute relating to letters of credit was first adopted in 1967. The changes contained in SB 85 harmonize modern commercial practices, including the use of electronic medium and clarifying the legal obligations of issuers for prompt pay. This legislation simply updates the commercial practices regarding letters of credit to reflect the numerous technological changes since this law was first passed, Senator Carona said. These changes are recommended by the official sponsors of the Uniform Commercial Code, the American Law Institute, and the National Conference of Commissioners on State Laws. Over 20 states have already adopted the changes.