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Less than 10 years ago the state of Texas allowed for mortgage companies to use home equity loans as a way to provide mature Americans with cash payments. The Texas home equity loans involves numerous restrictions and requirements that may not exist for such loans made in other states. The reason is due to the seemingly outdated Texas Homestead Act. This act was implemented to prohibit false or improper claims of debt by creditors against a deceased’s surviving family. The act was a method of protection unless the creditor wanting the property was a mortgage company or other legitimate creditors as identified by the state Constitution. Unfortunately, this very act is limiting, if not prohibiting, the ability for mortgage companies and mature Americans in Texas to use the Federal Housing Authority (FHA) and the United States Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) for New Home Purchase Program.
The HECM for New Home Purchase program is an unprecedented program which allows mature Americans, 62 years and older, the ability to use a reverse mortgage to pay for a new home. The new program is in effect in 49 states except for Texas.
Texas has what some lenders consider to be a slow legislative process. The Texas Legislation only meets every 14 or more months to address statewide issues. The projected date of the HECM for New Home Purchase being passed and implemented is 2012, which will continue to put Texas behind the mortgage curve. According to state Constitution, there are certain technicalities that must be met before a valid lien can be obtained. These stipulations are what are causing the inability for mature Texans to participate in the HECM for New Home Purchase program.
Currently mature Texans seeking to participate in the HECM program can only use the equity in their current home for a reverse mortgage. The overall HECM program allows for equity in mature Americans homes to be as a equity loan which is paid to the borrower, with no repayment date unless the borrower dies or moves out of their primary residence. The program is based on the current value of the home, the age of the youngest borrower and the current interest rate.
Some mortgage companies are urging mature Texans to contact their local and state representatives to voice concerns on being excluded from a program which could assist many mature Texans. While the HECM for purchase program is currently unavailable the original HECM program is available to provide supplemental monthly income for mature Texans.
If you would like an information packet or would like to set up an appointment with one of our Reverse Mortgage Specialists, please call (866) 683-3690 or complete our online Reverse Mortgage Information
Tags: texas aarp purchase, texas hecm purchase, texas hud purchase, texas reverse mortgage laws
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