HECM for Purchase transactions may be legal in 49 states… but not in Texas.  Due to protections against homesteading in the Texas Constitution, a constitutional ammendment will be required in order to legalize HECM for Purchase transactions. Right now, the borrower must own the equity in the home before a reverse mortgage can be applied for.

Variations in the Texas Constitution are nothing new. Although reverse mortgages have been around since 1961, they did not become legal in Texas until 1999. Now, the Texas Mortgage Lenders Association will seek a constitutional amendment in the summer of 2011, meaning it may be three years before buyers in Texas are eligible for the program.

While these additional protections are perhaps unsurprising, it is also fair to say that many did not see the hecm for purchase program coming.  And the Texas Constitution was created long before reverse mortgages were.  Ideally, the state of Texas will be able to change their Constitution soon in order to allow elderly borrowers to benefit from the program, especially as the country emerges from its recession. But realistically, the 2012 estimate given in the article is more realistic.