Official Summary Text
The Home Equity Conversion Mortgage Act governs home equity conversion mortgages in this state. This bill revises the Home Equity Conversion Mortgage Act by renaming it the Tennessee Reverse Mortgage Innovation Act and, instead, governing reverse mortga
ge loans, including proprietary reverse mortgage loans.
GENERAL REMOVAL OF FANNIE MAE REQUIREMENTS
Present law ties multiple provisions of the United States department of housing and urban development's ("HUD") home equity conversion mortgage program and Fannie Mae reverse mortgage guidelines, including provisions governing lender approval language, c
ounseling references, fee limitations tied to caps, and a separate statutory section governing Fannie Mae Reverse Mortgage Loans, to such mortgages in this state.
This bill generally removes those HUD-specific and Fannie Mae-specific references to operate as a state-law framework for reverse mortgage loans that may be insured or non-insured, including proprietary products, while retaining key consumer protections.
AUTHORIZED LENDER DESIGNATION AND APPLICATION
Present law provides two pathways to become an authorized lender. First, the Tennessee housing development agency ("agency") and any bank, savings institution, or credit union may be designated as an authorized lender by giving the commissioner of finan
cial institutions ("commissioner") notice at least 30 days before making a home equity conversion loan or reverse mortgage loan. The notice must be on a form prescribed by the commissioner and must include evidence the applicant is an approved Fannie Mae
o
r HUD lender. The commissioner may object to the notice by denying the designation before it becomes effective, provided the commissioner states the reasons for the objection. Second, any other person, firm, or corporation that is not the agency or a de
pository institution must file a written application with the commissioner to be authorized to make reverse mortgage loans, including the applicant
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s name and business address and evidence the applicant is an approved Fannie Mae or HUD lender.
This bill updates both pathways by removing the chapter
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s reliance on HUD and Fannie Mae approval and substituting a broader "approved lender" standard. Under this bill, the agency and any bank, savings institution, or credit union are authorized lender
s if designated by providing the commissioner at least a 30-day notice on the commissioner
'
s prescribed form prior to making a reverse mortgage loan, and the notice must include all information required by the commissioner, including evidence the applican
t
is an approved lender rather than specifically a Fannie Mae or HUD-approved lender. This bill also revises the application pathway for non-depository entities by removing the requirement to show Fannie Mae or HUD approval and instead requires the applica
nt to demonstrate it is an approved reverse mortgage lender, with the application continuing to be filed in writing with the commissioner and to include the applicant
'
s identifying information.
"REVERSE MORTGAGE" AND "REVERSE MORTGAGE LOAN" DEFINED
Present law defines a "reverse mortgage" as a mortgage or deed of trust securing a home equity conversion loan or reverse mortgage loan, and it defines a "reverse mortgage loan" as a home equity conversion mortgage loan. A "home equity conversion mortga
ge loan" means a loan secured by a first mortgage or first deed of trust on the mortgagor
'
s principal residence, with proceeds disbursed in one or more lump sums or in equal or unequal installments, and requiring no repayment until a future time upon the
ea
rliest occurrence of one or more events specified in the reverse mortgage loan contract. Present law also defines a "Fannie Mae Reverse Mortgage Loan," and it requires different product labeling depending on the loan type. If the loan is a HUD loan, it
must be labeled "Home Equity Conversion Mortgage Loan" with a specific statement on the face of the note and security instrument, while a Fannie Mae Reverse Mortgage Loan instead carries "Home Keeper Mortgage" or "Fannie Mae Reverse Mortgage" labeling.
This bill replaces such HUD and Fannie Mae-dependent definitions with a single, uniform definition of the covered product and uniform labeling requirements. This bill removes the separate definitions for Fannie Mae, Fannie Mae Reverse Mortgage Loan, and
home equity conversion mortgage loan, and it removes the "reverse mortgage loan" definition that tied the term to a "home equity conversion mortgage loan." In place of those provisions, this bill defines a "reverse mortgage" or "reverse mortgage loan" d
ir
ectly as a loan for a definite or indefinite term that is secured by a first mortgage or first deed of trust on the mortgagor
'
s principal residence, the proceeds of which are disbursed to the mortgagor in one or more lump sums or in equal or unequal insta
llments, either directly by the lender or the lender
'
s agent, and that requires no repayment until a future time upon the earliest occurrence of one or more events specified in the reverse mortgage loan contract. The product labeling requirements are sta
nd
ardized by requiring the note and the mortgage or deed of trust to be clearly labeled with the name of the loan product, the name of the lender or insurer, and the statement: "This is a reverse mortgage pursuant to Tennessee Code Annotated, Title 47, Chap
ter 30."
BORROWER ELIGIBILITY AND OCCUPANCY
Present law provides that reverse mortgages are loans secured by the
borrower
'
s principal residence and contain provisions that state the borrower occupies the home and that repayment is triggered by events set out in the loan contract with additional contract terms addressing taxes, insurance, and assessments.
This bill updates the reverse mortgage definition so the "principal residence" requirement and contract-trigger requirements apply to the modernized "reverse mortgage/reverse mortgage loan" definition rather than to a HUD and Fannie Mae-based "home equit
y conversion mortgage loan" definition.
COMPLIANCE, CONTRACT REQUIREMENTS, AND PROPRIETARY LOANS
Present law prohibits an authorized lender from issuing a reverse mortgage loan contract unless the loan complies with HUD program requirements or a similar federal program) and is federally insured, or is a Fannie Mae Reverse Mortgage Loan. Present law
also provides that a noncomplying loan is unenforceable as to interest, service fees, and insurance premiums.
This bill replaces the compliance language to, instead, provide that a reverse mortgage loan contract must conform to the new requirements under the act, and that a reverse mortgage loan, mortgage, or deed of trust that fails to comply is unenforceable a
s to all interest, service fees, and insurance premiums. A reverse mortgage loan may be insured or guaranteed by a state or federal agency and expressly authorizes proprietary reverse mortgage loans that are not insured by the United States federal housi
ng
authority ("FHA"), provided the loans comply with the requirements of applicable federal and state law.
MANDATORY DISCLOSURES AND COUNSELING
Present law requires two related protections before a reverse mortgage may proceed: (i) specified written disclosures within prescribed timeframes and (ii) mandatory borrower counseling. Prior to accepting an application for a home equity conversion loa
n, it is required an authorized lender must refer the borrower to a counselor and must receive certification from the counselor that all borrowers have received counseling. Lenders also must provide applicants with the same written information required e
ar
lier in the process, inform applicants that reverse mortgage counseling is required before the loan can be closed, and provide the names and addresses of counselors listed with HUD or Fannie Mae at least 20 days prior to closing. Present law defines a "c
ounselor" as either an individual who has completed a reverse mortgage counseling training curriculum provided or approved by HUD and whose name is maintained on HUD
'
s list of approved reverse mortgage counselors, or a person or entity qualified under Fan
ni
e Mae guidelines to serve as a counselor in consumer education.
This bill broadens who may serve as a counselor, and it shifts the counseling certification requirement to a uniform closing-based requirement applicable to reverse mortgage loans. First, this bill amends the definition of a "counselor" to include the f
ollowing three categories:
An individual trained and listed by HUD as an approved reverse mortgage counselor.
A person or entity qualified to serve as a counselor in consumer education.
A person or entity approved by the department of financial institutions.
Second, this bill revises the counseling-certification requirement by removing the "prior to accepting an application for a home equity conversion loan" trigger and instead providing that, prior to closing a reverse mortgage loan, the lender must receive certification that all borrowers and necessary loan participants have received independent counseling from a counselor.
Finally, this bill revises the pre-closing disclosure provision by removing the requirement the counselor provide names and addresses 20 business days before closing be limited to HUD or Fannie Mae-listed counselors, while retaining the obligation to provide counselor contact information and to advise that counseling is required before closing.
LIMITATIONS ON LENDER REMEDIES
Present law limits the amount owed when a reverse mortgage loan becomes due and provides that the lender must enforce the debt only through sale of the property and may not obtain a deficiency judgment, with a separate statutory section addressing those
limits for Fannie Mae Reverse Mortgage Loans.
This bill provides that a reverse mortgage loan is a
non-recourse loan and that the lender's recovery is limited to the proceeds from the sale or transfer of the secured property, and it removes the separate Fannie Mae-specific sections.
DEFAULT, ACCELERATION, AND FORECLOSURE TRIGGERS
Present law tightly limits when a reverse mortgage lender may accelerate the debt and force early repayment. A reverse mortgage loan contract may provide for borrower default only upon specified events and conditions, including the following:
Failure to maintain the residence as required by the contract.
Sale or other conveyance of title.
The borrower's death when the home is not the principal residence of a surviving borrower.
Extended non-occupancy tied to illness of at least 12 consecutive months.
Non-occupancy for other reasons of at least 90 consecutive days without the lender's prior written permission.
Failure to pay property taxes, insurance premiums, service fees, or assessments when the contract places those obligations on the borrower.
Loss of first-lien status of the mortgage or deed of trust.
Present law also addresses lender default by treating failure to make required advances as the lender's default and requires that, once repayment is triggered, the lender provide at least 60 days' notice of intent to initiate foreclosure proceedings with interest continuing to accrue during that period if the contract so provides.
This bill redefines a "reverse mortgage" and "reverse mortgage loan" as the core product definition and deletes the HUD and Fannie
Mae-specific definitional, existing default, acceleration, and foreclosure provisions that apply to a reverse mortgage loan. These provisions now attach to the newly created reverse mortgage loans, including proprietary reverse mortgage loans that are no
t FHA-insured. The bill
'
s new compliance section confirms (i) the loan is non-recourse and (ii) a noncomplying reverse mortgage loan, home equity conversion loan, mortgage, or deed of trust is unenforceable as to interest, service fees, and insurance pre
mi
ums. Enforcement triggers will apply across the expanded products, not just HUD and Fannie Mae-specific loans
CONSUMER PROTECTIONS AND REMEDIES FOR NONCOMPLIANCE
Present law establishes a specific list of prohibited acts for authorized lenders involved in reverse mortgage transactions and treats failure to comply with the prohibitions as triggering the unenforceability remedy as to interest, service fees, and ins
urance premiums. Specifically listed prohibitions include the following conduct:
Misrepresenting material facts or making false promises.
Failing to disburse funds in accordance with the reverse mortgage loan contract.
Failing to pay property taxes, insurance premiums, or other assessments when the contract imposes that duty on the lender.
Engaging in any act or practice that is fraudulent, unfair, or deceptive.
Contracting for or receiving shared appreciation in a reverse mortgage transaction, but the shared appreciation prohibition does not apply to a Fannie Mae reverse mortgage loan.
Closing a loan without receiving certification that the borrower received independent counseling.
This bill strengthens consumer protections and removes the language creating the Fannie Mae exception to the shared appreciation prohibition, extending the prohibition on contracting for or receiving shared appreciation to all reverse mortgage loans made
in this state. The bill adds another prohibition on cross-selling, meaning a lender may not require or solicit the purchase of an annuity, insurance policy, or other financial product as a condition of obtaining or authorizing a reverse mortgage loan.
RULEMAKING / ADMINISTRATION
Present law authorizes the commissioner to administer authorization and information-collection functions and provides enforcement mechanisms, including notice of violation and penalties. Present law also authorizes reverse mortgage loans while clarifyin
g that other valid loans are not restricted.
This bill emphasizes expanded financial tools and "maximum flexibility while maintaining strong consumer protections," and aligns them with "best practices nationwide."
ON MARCH 26, 2026, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 2382, AS AMENDED.
AMENDMENT #1:
(1) Retains present law requiring that counselors be trained with HUD-approved training or qualified in consumer counseling under Fannie Mae guidelines;
(2) Defines
"
h
ome equity conversion loan"
to
mean a reverse mortgage regulated by HUD;
and
(3) Retains present law requiring that authorized lenders must be approved Fannie Mae or HUD lenders.
Current Bill Text
Read the full stored bill text
HOUSE BILL 2382
By Vaughan
SENATE BILL 2190
By Stevens
SB2190
011302
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AN ACT to amend Tennessee Code Annotated, Title 39,
Chapter 15, Part 5; Title 45, Chapter 2, Part 12;
Title 45, Chapter 20; Title 47, Chapter 30 and Title
67, Chapter 4, Part 4, relative to reverse
mortgages.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 47-30-101, is amended by deleting
"Home Equity Conversion Mortgage Act" and substituting "Tennessee Reverse Mortgage
Innovation Act".
SECTION 2. Tennessee Code Annotated, Section 47-30-102(1)(C), is amended by
deleting "home equity conversion" and substituting "reverse mortgage".
SECTION 3. Tennessee Code Annotated, Section 47-30-102(4), is amended by
deleting "either", deleting "under Fannie Mae guidelines" in subdivision (B), and adding the
following as a new subdivision:
(C) A person or entity approved by the department of financial institutions;
SECTION 4. Tennessee Code Annotated, Section 47-30-102(6), is amended by
deleting the subdivision.
SECTION 5. Tennessee Code Annotated, Section 47-30-102(7), is amended by
deleting the subdivision.
SECTION 6. Tennessee Code Annotated, Section 47-30-102(8), is amended by
deleting the subdivision.
SECTION 7. Tennessee Code Annotated, Section 47-30-102(11), is amended by
deleting the subdivision and substituting:
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(11) "Reverse mortgage" or "reverse mortgage loan" means a loan for a definite
or indefinite term:
(A) Secured by a first mortgage or first deed of trust on the principal
residence of the mortgagor;
(B) The proceeds of which are disbursed to the mortgagor in one (1) or
more lump sums, or in equal or unequal installments, either directly by the lender
or the lender's agent;
(C) That requires no repayment until a future time, upon the earliest
occurrence of one (1) or more events specified in the reverse mortgage loan
contract; and
(D) Is labeled clearly on the face of the note and deed of trust or
mortgage, with the:
(i) Name of the loan product;
(ii) Name of the lender or insurer; and
(iii) The statement, "This is a reverse mortgage pursuant to
Tennessee Code Annotated, Title 47, Chapter 30";
SECTION 8. Tennessee Code Annotated, Section 47-30-102(12), is amended by
deleting the subdivision.
SECTION 9. Tennessee Code Annotated, Section 47-30-103(b), is amended by
deleting the subsection and substituting:
(b) The Tennessee housing development agency, and any bank, savings
institution, or credit union, must be designated an authorized lender by providing notice,
not less than thirty (30) days prior to making a reverse mortgage loan, to the
commissioner of its intent to make such loans and stating an effective date. This
notification must be made on a form prescribed by the commissioner and must contain
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all information required by the commissioner and contain evidence that the applicant is
an approved lender. The commissioner may object to the notice by denying the
designation prior to the effective date and shall state in the objection the reasons for the
objection.
SECTION 10. Tennessee Code Annotated, Section 47-30-103(c), is amended by
deleting "Fannie Mae or HUD" and substituting "reverse mortgage".
SECTION 11. Tennessee Code Annotated, Section 47-30-104, is amended by deleting
the section and substituting:
(a) A reverse mortgage loan contract must conform to the requirements of this
chapter. A reverse mortgage loan, home equity conversion loan, mortgage, or deed of
trust that fails to comply with this chapter is unenforceable as to all interest, service fees,
and insurance premiums incurred on the loan.
(b) A reverse mortgage loan may, but need not, be insured or guaranteed by a
state or federal agency. Proprietary reverse mortgage loans that are not FHA-insured
are authorized under this chapter; provided, that they comply with all provisions of this
part and applicable federal and state law.
(c) A reverse mortgage loan is a non-recourse loan, and the lender's recovery is
limited to the proceeds from the sale or transfer of the secured property.
(d) Prior to closing a reverse mortgage loan, the lender shall receive certification
that all borrowers and necessary loan participants have received independent
counseling from a counselor.
SECTION 12. Tennessee Code Annotated, Section 47-30-107(b)(2), is amended by
deleting ". These fees shall not exceed the monthly service fee or insurance premium permitted
by HUD for participation in the Home Equity Conversion Mortgage Program or by Fannie Mae
for a Fannie Mae Reverse Mortgage Loan".
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SECTION 13. Tennessee Code Annotated, Section 47-30-107(b)(3), is amended by
deleting ", which complies with Fannie Mae guidelines or HUD regulations".
SECTION 14. Tennessee Code Annotated, Section 47-30-107(b)(4), is amended by
deleting ", if the transaction is a Fannie Mae Reverse Mortgage Loan of any principal amount
notwithstanding § 47-24-102".
SECTION 15. Tennessee Code Annotated, Section 47-30-108(a), is amended by
deleting ", other than a Fannie Mae Reverse Mortgage Loan,".
SECTION 16. Tennessee Code Annotated, Section 47-30-109(b), is amended by
deleting "listed with HUD or Fannie Mae".
SECTION 17. Tennessee Code Annotated, Section 47-30-115(5), is amended by
deleting ", except that this subdivision (5) shall not apply to any Fannie Mae Reverse Mortgage
Loan".
SECTION 18. Tennessee Code Annotated, Section 47-30-115, is amended by adding
the following as a new subdivision:
(8) Engaging in cross-selling by requiring or soliciting the purchase of an
annuity, insurance policy, or other financial product as a condition of obtaining or
authorizing a reverse mortgage loan.
SECTION 19. Tennessee Code Annotated, Section 47-30-117, is amended by
designating the existing language as subsection (a), and adding the following as a new
subsection:
(b) It is further the intent of the general assembly to modernize this chapter to
align this state with the best practices nationwide by expanding the financial tools
available to senior homeowners and homebuyers and to provide maximum flexibility
while maintaining strong consumer protections, thereby positioning this state as a
national leader in retirement innovation and flexibility.
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SECTION 20. Tennessee Code Annotated, Section 47-30-118, is amended by deleting
the section.
SECTION 21. Tennessee Code Annotated, Section 39-15-509(d)(2)(K), is amended by
deleting "home equity conversion mortgage" and substituting "reverse mortgage".
SECTION 22. Tennessee Code Annotated, Section 45-2-1202(5)(K), is amended by
deleting "home equity conversion mortgage" and substituting "reverse mortgage".
SECTION 23. Tennessee Code Annotated, Section 45-20-102(9)(D)(iii), is amended by
deleting the subdivision and substituting:
(iii) A reverse mortgage loan, as defined in the Tennessee Reverse Mortgage
Innovation Act, compiled in title 47, chapter 30;
SECTION 24. Tennessee Code Annotated, Section 67-4-409(b)(2), is amended by
deleting "Home Equity Conversion Mortgage Act, as compiled in title 47, chapter 30" and
substituting "Tennessee Reverse Mortgage Innovation Act, compiled in title 47, chapter 30".
SECTION 25. The Tennessee code commission is requested to revise the heading for
Tennessee Code Annotated, Title 47, Chapter 30, to more accurately reflect the changes made
in this act.
SECTION 26. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 27. This act takes effect upon becoming law, the public welfare requiring it.