Can I Declare a Homestead in Two Different States?
Full Question:
Answer:
In order to delare a property as a homestead, it must be a principal residence. A person can only have principal place of residence. Some factors used to determine a primary residence include:
Your place of employment.
The location of your family members' main home.
Your mailing address for bills and correspondence.
The address listed on your:
Federal and state tax returns,
Driver's license,
Car registration, and
Voter registration card.
The location of the banks you use.
The location of recreational clubs and religious organizations of which you are a member.
The examples of what qualifies as a "main home" are listed on the IRS website below:
http://www.irs.gov/publications/p523/ar02.html#en_US_publink100049858
Please see the following CA statutes:
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=00001-01000&file=704.910-704.995
The following is a TX statute:
§ 50. Homestead; protection from forced sale;
mortgages, trust deeds and liens
(a) The homestead of a family, or of a single adult person,
shall be, and is hereby protected from forced sale, for the
payment of all debts except for:
(1) the purchase money thereof, or a part of such purchase
money;
(2) the taxes due thereon;
(3) an owelty of partition imposed against the entirety of
the property by a court order or by a written agreement of
the parties to the partition, including a debt of one spouse
in favor of the other spouse resulting from a division or an
award of a family homestead in a divorce proceeding;
(4) the refinance of a lien against a homestead, including a
federal tax lien resulting from the tax debt of both
spouses, if the homestead is a family homestead, or from the
tax debt of the owner;
(5) work and material used in constructing new improvements
thereon, if contracted for in writing, or work and material
used to repair or renovate existing improvements thereon if:
(A) the work and material are contracted for in writing,
with the consent of both spouses, in the case of a family
homestead, given in the same manner as is required in making
a sale and conveyance of the homestead;
(B) the contract for the work and material is not executed
by the owner or the owner's spouse before the fifth day
after the owner makes written application for any extension
of credit for the work and material, unless the work and
material are necessary to complete immediate repairs to
conditions on the homestead property that materially affect
the health or safety of the owner or person residing in the
homestead and the owner of the homestead acknowledges such
in writing;
(C) the contract for the work and material expressly
provides that the owner may rescind the contract without
penalty or charge within three days after the execution of
the contract by all parties, unless the work and material
are necessary to complete immediate repairs to conditions on
the homestead property that materially affect the health or
safety of the owner or person residing in the homestead and
the owner of the homestead acknowledges such in writing; and
(D) the contract for the work and material is executed by
the owner and the owner's spouse only at the office of a
third-party lender making an extension of credit for the
work and material, an attorney at law, or a title company;
(6) an extension of credit that:
(A) is secured by a voluntary lien on the homestead created
under a written agreement with the consent of each owner and
each owner's spouse;
(B) is of a principal amount that when added to the
aggregate total of the outstanding principal balances of all
other indebtedness secured by valid encumbrances of record
against the homestead does not exceed 80 percent of the fair
market value of the homestead on the date the extension of
credit is made;
(C) is without recourse for personal liability against each
owner and the spouse of each owner, unless the owner or
spouse obtained the extension of credit by actual fraud;
(D) is secured by a lien that may be foreclosed upon only
by a court order;
(E) does not require the owner or the owner's spouse to
pay, in addition to any interest, fees to any person that are
necessary to originate, evaluate, maintain, record, insure,
or service the extension of credit that exceed, in the
aggregate, three percent of the original principal amount of
the extension of credit;
(F) is not a form of open-end account that may be debited
from time to time or under which credit may be extended from
time to time unless the open-end account is a home equity
line of credit;
(G) is payable in advance without penalty or other charge;
(H) is not secured by any additional real or personal
property other than the homestead;
(I) is not secured by homestead property that on the date
of closing is designated for agricultural use as provided by
statutes governing property tax, unless such homestead
property is used primarily for the production of milk;
(J) may not be accelerated because of a decrease in the
market value of the homestead or because of the owner's
default under other indebtedness not secured by a prior valid
encumbrance against the homestead;
(K) is the only debt secured by the homestead at the time
the extension of credit is made unless the other debt was
made for a purpose described by Subsections (a)(1)-(a)(5) or
Subsection (a)(8) of this section;
(L) is scheduled to be repaid:
(i) in substantially equal successive periodic
installments, not more often than every 14 days and not less
often than monthly, beginning no later than two months from
the date the extension of credit is made, each of which
equals or exceeds the amount of accrued interest as of the
date of the scheduled installment; or
(ii) if the extension of credit is a home equity line of
credit, in periodic payments described under Subsection (t)(8)
of this section;
(M) is closed not before:
(i) the 12th day after the later of the date that the owner
of the homestead submits a loan application to the lender
for the extension of credit or the date that the lender
provides the owner a copy of the notice prescribed by
Subsection (g) of this section;
(ii) one business day after the date that the owner of the
homestead receives a copy of the loan application if not
previously provided and a final itemized disclosure of the
actual fees, points, interest, costs, and charges that will
be charged at closing. If a bona fide emergency or another
good cause exists and the lender obtains the written consent
of the owner, the lender may provide the documentation to the
owner or the lender may modify previously provided
documentation on the date of closing; and
(iii) the first anniversary of the closing date of any
other extension of credit described by Subsection (a)(6) of
this section secured by the same homestead property, except a
refinance described by Paragraph (Q)(x)(f) of this
subdivision, unless the owner on oath requests an earlier
closing due to a state of emergency that:
(a) has been declared by the president of the United States
or the governor as provided by law; and
(b) applies to the area where the homestead is located;
(N) is closed only at the office of the lender, an attorney
at law, or a title company;
(O) permits a lender to contract for and receive any fixed
or variable rate of interest authorized under statute;
(P) is made by one of the following that has not been found
by a federal regulatory agency to have engaged in the
practice of refusing to make loans because the applicants
for the loans reside or the property proposed to secure the
loans is located in a certain area:
(i) a bank, savings and loan association, savings bank, or
credit union doing business under the laws of this state or
the United States;
(ii) a federally chartered lending instrumentality or a
person approved as a mortgagee by the United States
government to make federally insured loans;
(iii) a person licensed to make regulated loans, as
provided by statute of this state;
(iv) a person who sold the homestead property to the
current owner and who provided all or part of the financing
for the purchase;
(v) a person who is related to the homestead property owner
within the second degree of affinity or consanguinity; or
(vi) a person regulated by this state as a mortgage broker;
and
(Q) is made on the condition that:
(i) the owner of the homestead is not required to apply the
proceeds of the extension of credit to repay another debt
except debt secured by the homestead or debt to another
lender;
(ii) the owner of the homestead not assign wages as
security for the extension of credit;
(iii) the owner of the homestead not sign any instrument in
which blanks relating to substantive terms of agreement are
left to be filled in;
(iv) the owner of the homestead not sign a confession of
judgment or power of attorney to the lender or to a third
person to confess judgment or to appear for the owner in a
judicial proceeding;
(v) at the time the extension of credit is made, the owner
of the homestead shall receive a copy of the final loan
application and all executed documents signed by the owner
at closing related to the extension of credit;
(vi) the security instruments securing the extension of
credit contain a disclosure that the extension of credit is
the type of credit defined by Section 50(a)(6), Article XVI,
Texas Constitution;
(vii) within a reasonable time after termination and full
payment of the extension of credit, the lender cancel and
return the promissory note to the owner of the homestead and
give the owner, in recordable form, a release of the lien
securing the extension of credit or a copy of an endorsement
and assignment of the lien to a lender that is refinancing
the extension of credit;
(viii) the owner of the homestead and any spouse of the
owner may, within three days after the extension of credit
is made, rescind the extension of credit without penalty or
charge;
(ix) the owner of the homestead and the lender sign a
written acknowledgment as to the fair market value of the
homestead property on the date the extension of credit is
made;
(x) except as provided by Subparagraph (xi) of this
paragraph, the lender or any holder of the note for the
extension of credit shall forfeit all principal and interest
of the extension of credit if the lender or holder fails to
comply with the lender's or holder's obligations under the
extension of credit and fails to correct the failure to
comply not later than the 60th day after the date the lender
or holder is notified by the borrower of the lender's
failure to comply by:
(a) paying to the owner an amount equal to any overcharge
paid by the owner under or related to the extension of
credit if the owner has paid an amount that exceeds an
amount stated in the applicable Paragraph (E), (G), or (O)
of this subdivision;
(b) sending the owner a written acknowledgement that the
lien is valid only in the amount that the extension of
credit does not exceed the percentage described by
Paragraph (B) of this subdivision, if applicable, or is not
secured by property described under Paragraph (H) or (I) of
this subdivision, if applicable;
(c) sending the owner a written notice modifying any other
amount, percentage, term, or other provision prohibited by
this section to a permitted amount, percentage, term, or
other provision and adjusting the account of the borrower to
ensure that the borrower is not required to pay more than an
amount permitted by this section and is not subject to any
other term or provision prohibited by this section;
(d) delivering the required documents to the borrower if
the lender fails to comply with Subparagraph (v) of this
paragraph or obtaining the appropriate signatures if the
lender fails to comply with Subparagraph (ix) of this
paragraph;
(e) sending the owner a written acknowledgement, if the
failure to comply is prohibited by Paragraph (K) of this
subdivision, that the accrual of interest and all of the
owner's obligations under the extension of credit are abated
while any prior lien prohibited under Paragraph (K) remains
secured by the homestead; or
(f) if the failure to comply cannot be cured under
Subparagraphs (x)(a)-(e) of this paragraph, curing the
failure to comply by a refund or credit to the owner of
$1,000 and offering the owner the right to refinance the
extension of credit with the lender or holder for the
remaining term of the loan at no cost to the owner on the
same terms, including interest, as the original extension of
credit with any modifications necessary to comply with this
section or on terms on which the owner and the lender or
holder otherwise agree that comply with this section; and
(xi) the lender or any holder of the note for the extension
of credit shall forfeit all principal and interest of the
extension of credit if the extension of credit is made by a
person other than a person described under Paragraph (P) of
this subdivision or if the lien was not created under a
written agreement with the consent of each owner and each
owner's spouse, unless each owner and each owner's spouse
who did not initially consent subsequently consents;
(7) a reverse mortgage; or
(8) the conversion and refinance of a personal property
lien secured by a manufactured home to a lien on real
property, including the refinance of the purchase price of
the manufactured home, the cost of installing the
manufactured home on the real property, and the refinance of
the purchase price of the real property.
(b) An owner or claimant of the property claimed as
homestead may not sell or abandon the homestead without the
consent of each owner and the spouse of each owner, given in
such manner as may be prescribed by law.
(c) No mortgage, trust deed, or other lien on the homestead
shall ever be valid unless it secures a debt described by
this section, whether such mortgage, trust deed, or other
lien, shall have been created by the owner alone, or together
with his or her spouse, in case the owner is married. All
pretended sales of the homestead involving any condition of
defeasance shall be void.
(d). A purchaser or lender for value without actual
knowledge may conclusively rely on an affidavit that
designates other property as the homestead of the affiant and
that states that the property to be conveyed or encumbered is
not the homestead of the affiant.
(e) A refinance of debt secured by a homestead and
described by any subsection under Subsections (a)(1)-(a)(5)
that includes the advance of additional funds may not be
secured by a valid lien against the homestead unless:
(1) the refinance of the debt is an extension of credit
described by Subsection (a)(6) of this section; or
(2) the advance of all the additional funds is for
reasonable costs necessary to refinance such debt or for a
purpose described by Subsection (a)(2), (a)(3), or (a)(5) of
this section.
(f) A refinance of debt secured by the homestead, any
portion of which is an extension of credit described by
Subsection (a)(6) of this section, may not be secured by a
valid lien against the homestead unless the refinance of the
debt is an extension of credit described by Subsection (a)(6)
or (a)(7) of this section.
(g) An extension of credit described by Subsection (a)(6)
of this section may be secured by a valid lien against
homestead property if the extension of credit is not closed
before the 12th day after the lender provides the owner with
the following written notice on a separate instrument:
"NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY
SECTION 50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION:
"SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION
ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN
YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF
YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS
OF THE LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME.
THE CONSTITUTION PROVIDES THAT:
"(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT
OF EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE;
"(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE
MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL
BALANCES OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN
80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME;
"(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL
LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR
SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
"(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY
WITH A COURT ORDER;
"(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED
3 PERCENT OF THE LOAN AMOUNT;
"(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE
DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE
EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY LINE
OF CREDIT;
"(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;
"(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;
"(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT
IS DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF
CLOSING, UNLESS THE AGRICULTURAL HOMESTEAD PROPERTY IS USED
PRIMARILY FOR THE PRODUCTION OF MILK;
"(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN
AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME
DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT
SECURED BY YOUR HOME;
"(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6),
ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH
YOUR HOME AT ANY GIVEN TIME;
"(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS
THAT EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH
PAYMENT PERIOD;
"(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT
A LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU
RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT
WITHOUT YOUR CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE
DATE ON WHICH YOU RECEIVE A COPY OF YOUR LOAN APPLICATION IF
NOT PREVIOUSLY PROVIDED AND A FINAL ITEMIZED DISCLOSURE OF
THE ACTUAL FEES, POINTS, INTEREST, COSTS, AND CHARGES THAT
WILL BE CHARGED AT CLOSING; AND IF YOUR HOME WAS SECURITY
FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN
SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR
HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS
ON OATH YOU REQUEST AN EARLIER CLOSING DUE TO A DECLARED
STATE OF EMERGENCY;
"(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER,
TITLE COMPANY, OR AN ATTORNEY AT LAW;
"(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF
INTEREST AUTHORIZED BY STATUTE;
"(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS
DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS
CONSTITUTION;
"(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF
THE TEXAS CONSTITUTION MUST:
"(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT
EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO
ANOTHER LENDER;
"(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;
"(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE
BLANKS FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED
IN;
"(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR
POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR
APPEAR IN A LEGAL PROCEEDING ON YOUR BEHALF;
"(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN
APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING;
"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A
DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY
SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
"(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER
WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF
THE LIEN, WHICHEVER IS APPROPRIATE;
"(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING,
RESCIND THE LOAN WITHOUT PENALTY OR CHARGE;
"(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR
MARKET VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND
"(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND
INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S
OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS
PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE
TEXAS CONSTITUTION; AND
"(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:
"(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW
MONEY UNDER THE LINE OF CREDIT;
"(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN
AMOUNT OF AT LEAST $4,000;
"(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR
DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO
OBTAIN ADVANCES UNDER THE LINE OF CREDIT;
"(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND
COLLECTED ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED
AND THE LENDER MAY NOT CHARGE A FEE IN CONNECTION WITH ANY
ADVANCE;
"(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED,
WHEN ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT
EXCEED 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON
THE DATE THE LINE OF CREDIT IS ESTABLISHED;
"(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT
ANY TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF YOUR
HOME, AS DETERMINED ON THE DATE THE LINE OF CREDIT IS
ESTABLISHED, YOU MAY NOT CONTINUE TO REQUEST ADVANCES UNDER
THE LINE OF CREDIT UNTIL THE BALANCE IS LESS THAN 50 PERCENT
OF THE FAIR MARKET VALUE; AND
"(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE
LINE OF CREDIT.
"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE
TEXAS CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50,
ARTICLE XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS
NOTICE."
If the discussions with the borrower are conducted
primarily in a language other than English, the lender shall,
before closing, provide an additional copy of the notice
translated into the written language in which the discussions
were conducted.
(h) A lender or assignee for value may conclusively rely on
the written acknowledgment as to the fair market value of the
homestead property made in accordance with
Subsection (a)(6)(Q)(ix) of this section if:
(1) the value acknowledged to is the value estimate in an
appraisal or evaluation prepared in accordance with a state
or federal requirement applicable to an extension of credit
under Subsection (a)(6); and
(2) the lender or assignee does not have actual knowledge
at the time of the payment of value or advance of funds by
the lender or assignee that the fair market value stated in
the written acknowledgment was incorrect.
(i) This subsection shall not affect or impair any right of
the borrower to recover damages from the lender or assignee
under applicable law for wrongful foreclosure. A purchaser
for value without actual knowledge may conclusively presume
that a lien securing an extension of credit described by
Subsection (a)(6) of this section was a valid lien securing
the extension of credit with homestead property if:
(1) the security instruments securing the extension of
credit contain a disclosure that the extension of credit
secured by the lien was the type of credit defined by
Section 50(a)(6), Article XVI, Texas Constitution;
(2) the purchaser acquires the title to the property
pursuant to or after the foreclosure of the voluntary lien;
and
(3) the purchaser is not the lender or assignee under the
extension of credit.
(j) Subsection (a)(6) and Subsections (e)-(i) of this
section are not severable, and none of those provisions would
have been enacted without the others. If any of those
provisions are held to be preempted by the laws of the United
States, all of those provisions are invalid. This
subsection shall not apply to any lien or extension of credit made after
January 1, 1998, and before the date any provision under
Subsection (a)(6) or Subsections (e)-(i) is held to be
preempted.
(k) "Reverse mortgage" means an extension of credit:
(1) that is secured by a voluntary lien on homestead
property created by a written agreement with the consent of
each owner and each owner's spouse;
(2) that is made to a person who is or whose spouse is
62 years or older;
(3) that is made without recourse for personal liability
against each owner and the spouse of each owner;
(4) under which advances are provided to a borrower based
on the equity in a borrower's homestead;
(5) that does not permit the lender to reduce the amount or
number of advances because of an adjustment in the interest
rate if periodic advances are to be made;
(6) that requires no payment of principal or interest
until:
(A) all borrowers have died;
(B) the homestead property securing the loan is sold or
otherwise transferred;
(C) all borrowers cease occupying the homestead property
for a period of longer than 12 consecutive months without
prior written approval from the lender; or
(D) the borrower:
(i) defaults on an obligation specified in the loan
documents to repair and maintain, pay taxes and assessments
on, or insure the homestead property;
(ii) commits actual fraud in connection with the loan; or
(iii) fails to maintain the priority of the lender's lien
on the homestead property, after the lender gives notice to
the borrower, by promptly discharging any lien that has
priority or may obtain priority over the lender's lien within
10 days after the date the borrower receives the notice,
unless the borrower:
(a) agrees in writing to the payment of the obligation
secured by the lien in a manner acceptable to the lender;
(b) contests in good faith the lien by, or defends against
enforcement of the lien in, legal proceedings so as to
prevent the enforcement of the lien or forfeiture of any
part of the homestead property; or
(c) secures from the holder of the lien an agreement
satisfactory to the lender subordinating the lien to all
amounts secured by the lender's lien on the homestead
property;
(7) that provides that if the lender fails to make loan
advances as required in the loan documents and if the lender
fails to cure the default as required in the loan documents
after notice from the borrower, the lender forfeits all
principal and interest of the reverse mortgage, provided,
however, that this subdivision does not apply when a
governmental agency or instrumentality takes an assignment of
the loan in order to cure the default;
(8) that is not made unless the owner of the homestead
attests in writing that the owner received counseling
regarding the advisability and availability of reverse
mortgages and other financial alternatives;
(9) that requires the lender, at the time the loan is made,
to disclose to the borrower by written notice the specific
provisions contained in Subdivision (6) of this
subsection under which the borrower is required to repay the loan;
(10) that does not permit the lender to commence
foreclosure until the lender gives notice to the borrower, in
the manner provided for a notice by mail related to the
foreclosure of liens under Subsection (a)(6) of this section,
that a ground for foreclosure exists and gives the borrower
at least 30 days, or at least 20 days in the event of a
default under Subdivision (6)(D)(iii) of this subsection, to:
(A) remedy the condition creating the ground for
foreclosure;
(B) pay the debt secured by the homestead property from
proceeds of the sale of the homestead property by the
borrower or from any other sources; or
(C) convey the homestead property to the lender by a deed
in lieu of foreclosure; and
(11) that is secured by a lien that may be foreclosed upon
only by a court order, if the foreclosure is for a ground
other than a ground stated by Subdivision (6)(A) or (B) of
this subsection.
(l) Advances made under a reverse mortgage and
interest on those advances have priority over a lien filed
for record in the real property records in the county where
the homestead property is located after the reverse mortgage
is filed for record in the real property records of that
county.
(m) A reverse mortgage may provide for an interest rate
that is fixed or adjustable and may also provide for interest
that is contingent on appreciation in the fair market value
of the homestead property. Although payment of principal or
interest shall not be required under a reverse mortgage until
the entire loan becomes due and payable, interest may accrue
and be compounded during the term of the loan as provided by
the reverse mortgage loan agreement.
(n) A reverse mortgage that is secured by a valid lien
against homestead property may be made or acquired without
regard to the following provisions of any other law of this
state:
(1) a limitation on the purpose and use of future advances
or other mortgage proceeds;
(2) a limitation on future advances to a term of years or a
limitation on the term of open-end account advances;
(3) a limitation on the term during which future advances
take priority over intervening advances;
(4) a requirement that a maximum loan amount be stated in
the reverse mortgage loan documents;
(5) a prohibition on balloon payments;
(6) a prohibition on compound interest and interest on
interest;
(7) a prohibition on contracting for, charging, or
receiving any rate of interest authorized by any law of this
state authorizing a lender to contract for a rate of
interest; and
(8) a requirement that a percentage of the reverse mortgage
proceeds be advanced before the assignment of the reverse
mortgage.
(o) For the purposes of determining eligibility
under any statute relating to payments, allowances,
benefits, or services provided on a means-tested basis by
this state, including supplemental security income,
low-income energy assistance, property tax relief, medical
assistance, and general assistance:
(1) reverse mortgage loan advances made to a borrower are
considered proceeds from a loan and not income; and
(2) undisbursed funds under a reverse mortgage loan are
considered equity in a borrower's home and not proceeds from
a loan.
(p) The advances made on a reverse mortgage loan under
which more than one advance is made must be made according to
the terms established by the loan documents by one or more of
the following methods:
(1) an initial advance at any time and future advances at
regular intervals;
(2) an initial advance at any time and future advances at
regular intervals in which the amounts advanced may be
reduced, for one or more advances, at the request of the
borrower;
(3) an initial advance at any time and future advances at
times and in amounts requested by the borrower until the
credit limit established by the loan documents is reached;
(4) an initial advance at any time, future advances at
times and in amounts requested by the borrower until the
credit limit established by the loan documents is reached,
and subsequent advances at times and in amounts requested by
the borrower according to the terms established by the loan
documents to the extent that the outstanding balance is
repaid; or
(5) at any time by the lender, on behalf of the borrower,
if the borrower fails to timely pay any of the following that
the borrower is obligated to pay under the loan documents to
the extent necessary to protect the lender's interest in or
the value of the homestead property:
(A) taxes;
(B) insurance;
(C) costs of repairs or maintenance performed by a person
or company that is not an employee of the lender or a person
or company that directly or indirectly controls, is
controlled by, or is under common control with the lender;
(D) assessments levied against the homestead property; and
(E) any lien that has, or may obtain, priority over the
lender's lien as it is established in the loan documents.
(q) To the extent that any statutes of this state,
including without limitation, Section 41.001 of the Texas
Property Code, purport to limit encumbrances that may
properly be fixed on homestead property in a manner that does
not permit encumbrances for extensions of credit described in
Subsection (a)(6) or (a)(7) of this section, the same shall
be superseded to the extent that such encumbrances shall be
permitted to be fixed upon homestead property in the manner
provided for by this amendment.
(r) The supreme court shall promulgate rules of civil
procedure for expedited foreclosure proceedings related to
the foreclosure of liens under Subsection (a)(6) of this
section and to foreclosure of a reverse mortgage lien that
requires a court order.
(s) The Finance Commission of Texas shall appoint a
director to conduct research on the availability, quality,
and prices of financial services and research the practices
of business entities in the state that provide financial
services under this section. The director shall collect
information and produce reports on lending activity of those
making loans under this section. The director shall report
his or her findings to the legislature not later than
December 1 of each year.
(t) A home equity line of credit is a form of an open-end
account that may be debited from time to time, under which
credit may be extended from time to time and under which:
(1) the owner requests advances, repays money, and
reborrows money;
(2) any single debit or advance is not less than $4,000;
(3) the owner does not use a credit card, debit card, or
similar device, or preprinted check unsolicited by the
borrower, to obtain an advance;
(4) any fees described by Subsection (a)(6)(E) of this
section are charged and collected only at the time the
extension of credit is established and no fee is charged or
collected in connection with any debit or advance;
(5) the maximum principal amount that may be extended under
the account, when added to the aggregate total of the
outstanding principal balances of all indebtedness secured
by the homestead on the date the extension of credit is
established, does not exceed an amount described under
Subsection (a)(6)(B) of this section;
(6) no additional debits or advances are made if the total
principal amount outstanding exceeds an amount equal to
50 percent of the fair market value of the homestead as
determined on the date the account is established;
(7) the lender or holder may not unilaterally amend the
extension of credit; and
(8) repayment is to be made in regular periodic
installments, not more often than every 14 days and not less
often than monthly, beginning not later than two months from
the date the extension of credit is established, and:
(A) during the period during which the owner may request
advances, each installment equals or exceeds the amount of
accrued interest; and
(B) after the period during which the owner may request
advances, installments are substantially equal.
(u) The legislature may by statute delegate one or more
state agencies the power to interpret
Subsections (a)(5)-(a)(7), (e)-(p), and (t), of this
section. An act or omission does not violate a provision
included in those subsections if the act or omission
conforms to an interpretation of the provision that is:
(1) in effect at the time of the act or omission; and
(2) made by a state agency to which the power of
interpretation is delegated as provided by this
subsection or by an appellate court of this state or the United States.
(v) A reverse mortgage must provide that:
(1) the owner does not use a credit card, debit card,
preprinted solicitation check, or similar device to obtain
an advance;
(2) after the time the extension of credit is established,
no transaction fee is charged or collected solely in
connection with any debit or advance; and
(3) the lender or holder may not unilaterally amend the
extension of credit.
