What does Texas law say about reverse mortgage loans?

Reverse mortgages are much like Texas home equity loans, in that there are a great many safeguards that protect property owners. These include:

  • Voluntary consent to the lien by all owners and their spouses.
  • Loans are non-recourse to the borrower unless obtained through fraud.
  • Advances are provided based on the amount of equity the borrower has in his or her home.
  • Lender may not require repayment of principal or interest until all borrowers have died; the homestead property is sold or otherwise conveyed; all borrowers cease to occupy the property for more than 12 consecutive months without lender approval; or default on certain obligations in the deed of trust.
  • Foreclosure may commence only after sufficient notice and an opportunity to cure.

The cost and fees associated with a reverse mortgage loan are typically higher than for a regular mortgage or a home equity loan. In addition, borrowers are required to go through counseling regarding the advisability of a reverse mortgage loan. Reverse mortgages are not a good idea for everyone. Homeowners considering such a strategy should consult with their CPA or financial advisor, and then speak with a lender who understands reverse mortgages.