Can Texas law trump federal guidelines on reverse mortgage?

Can Texas law trump federal guidelines on reverse mortgage?

rwerley | 01/25/2016

Can Texas law trump federal guidelines when it comes to helping senior Texas homeowners obtain a reverse mortgage?

Texas reverse mortgage providers, Bob and Debbie Worley, owners of Lone Star Reverse Mortgage, Inc., (based in Texas) petition federal lawmakers to intervene on behalf of senior homeowners in Texas and persuade the FHA (Federal Housing Administration) to allow Texas law to supersede the FHA requirements as it relates to judgments on mortgage loans.

See below The Worley’s plea to the 38 members of United States House of Representatives that represent the State of Texas.

The below letter dated January 25th 2016 was sent to the 38 members of House of Representatives representing Texas.

Dear Senator

I am the owner of Lone Star Reverse Mortgage, Inc., licensed only in Texas, and recent changes in FHA guidelines have made it impossible for many Texas seniors to obtain reverse mortgages. Our Texas law, Texas Property Code, Title 5, Subtitle B., Chapter 52, Subchapter A., Sec. 52.0012, Release of Record of Lien on Homestead Property, which allows for a partial release of a judgment on real property that is homesteaded, is being usurped.

The Texas Legislature assisted homeowners by passing a law which assures that by way of partial releases, judgments that are not related to the property, such as credit card judgments, cannot stop a homeowner from selling his house, refinancing his mortgage, or getting a new mortgage. Said judgments are inferior to any mortgage loan.  The law allows a homeowner to obtain a partial release for a judgment on his homestead and proceed to obtain a refinance loan on his homestead without having to pay-off the judgment.   The judgment still exists, but is subordinate to the new mortgage.

The law serves a good purpose in that it allows people who cannot pay off their judgments, often due to difficult financial times, to still be able to obtain or refinance a mortgage. The judgments follow the new loan, but do not prevent the homeowner from getting a much needed new loan or to refinance.

This is no longer the case due to a change in FHA guidelines that came into effect April 27, 2015 with the advent of the Financial Assessment element of qualifying for a reverse mortgage.  All judgments that are attached to the title to the property, even those not pertaining to the property, must be paid in full prior to or upon closing on the reverse mortgage.  Partial releases are no longer permitted.  Even credit card judgments which do not apply to the property must be paid in full prior to or upon closing.

Most Borrowers are already in a financial bind and do not have the funds to pay the judgments prior to closing. And many times the gross loan amounts they receive from the reverse mortgages are not be enough to cover the normal closing costs which often include pay-offs of existing mortgages plus the pay-offs of the judgments.  The judgments may have been in existence for a number of years and the balances may have increased dramatically due to applied fees and interest.   Therefore, these Borrowers are unable to refinance their homes and pull the much needed cash from them to help them live comfortably in their own homes until both spouses are permanently gone from the home.

My wife, Deborah, and I have been reverse mortgage loan officers for eleven years and have completed many reverse mortgages for customers who were responsible people but had judgments due to economic crises involving illnesses and losses of loved ones.  Despite the judgments, we were able to help them close on their reverse mortgages thus enabling them to stay in their homes with no mortgage payments until both spouses are permanently gone from the home.  The judgments still existed but did not prevent the homeowner from refinancing. Additionally, since the judgments stayed on the property subordinate to the reverse mortgages, the judgment holders still had the same remedy by law.

Countless numbers of our Borrowers have written to thank us for helping them stay in their homes and retain their dignity for the rest of their lives rather than having to sell their homes or depend on others, including federal aid such as Medicaid, to help them financially.  We cannot tell you how satisfying it is to help Seniors survive in difficult times.  Many are desperately in need of financial relief today and we cannot help them due to this situation.  We have a very successful reverse mortgage company and helping Seniors has become our mission.

The major problem now is that we often cannot help Seniors who have judgments on title due to thenew FHA guideline which is contrary to our existing law.  In many cases, this is hurting the people who need a reverse mortgage most. My request is that you intervene and persuade FHA to allow our Texas law to supersede the FHA requirement as it relates to judgments on mortgage loans.

We are hopeful that you will take this oversight in the FHA guidelines seriously and give it the consideration and respect that senior homeowners in Texas deserve. Please don’t ignore these citizens of Texas who count on you to speak up for them with the federal government. They deserve more than a form letter from your aid in response to this situation. We believe that TEXAS CONGRESSMEN are better than typical congressmen and that you will take the time to research the information above and to help us help SENIORS who so often have no hope and are just barely surviving. Many Seniors are losing their homes and more will be losing their homes because of the FHA requirement related to judgments attached to homestead properties..

If you are not familiar with reverse mortgages, feel free to contact us directly by phone or email. We are seniors ourselves and will not work very many more years but we would like to leave the Seniors with more hope and the ability to improve their lives and not lose their home because of an FHA requirement that gives no credence to our Texas Law.


Bob Worley Debbie Worley
NMLS # 211905 NMLS # 211059
TX Lic.# 50404 TX Lic.# 67929
[email protected] [email protected]

Lone Star Reverse Mortgage, Inc. NMLS # 769381


This website has not been reviewed, approved, or issued by HUD, FHA, or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.


© 2016 Lone Star Reverse Mortgage, Inc., 207 Keel Way, Horseshoe Bay, Texas 78657. Company NMLS ID # 769381.