TennesseeTennessee law sets rules and protections for reverse mortgage borrowers
Tennessee law sets reverse mortgage rules, including independent counseling before closing and a ban on tying the loan to buying another financial product.
What it does
A reverse mortgage is secured by a borrower's main home, and repayment waits until an event named in the loan contract. The loan papers must clearly identify the product and lender or insurer.
Before closing a reverse mortgage, the lender must receive proof that borrowers and necessary loan participants received independent counseling. The loan does not have to carry government insurance.
A lender can recover only proceeds from selling or transferring the property securing a reverse mortgage. If the loan breaks the chapter's rules, its interest, service fees, and insurance premiums cannot be enforced.
Lenders may not require or solicit borrowers to buy an annuity, insurance policy, or another financial product as a condition of getting or authorizing a reverse mortgage.
Argument forBorrowers may better understand a reverse mortgage before closing because lenders must confirm that they received independent counseling.
Argument againstBorrowers may have fewer loan options if lenders decide the chapter's contract rules and required counseling make these loans harder to offer.
More detail
A reverse mortgage is a loan secured by the borrower's main home, with repayment delayed until a contract event. The loan may pay proceeds to the borrower in one or more lump sums or installments, directly or through the lender's agent. The loan papers must clearly name the loan product and lender or insurer, and say it is a reverse mortgage under Tennessee law.
Before closing, the lender must receive certification that borrowers and necessary loan participants received independent counseling. The requirement applies to lenders closing a reverse mortgage and the borrowers and other participants needed for that loan. The loan may be insured or guaranteed by a state or federal agency, but it does not have to be. The lender must receive the certification before closing.
A reverse mortgage is non-recourse, so the lender's recovery is limited to proceeds from sale or transfer of the secured property. This applies to reverse mortgages covered by the chapter. A loan that fails to comply with the chapter cannot be enforced as to its interest, service fees, or insurance premiums.
A lender may not require or solicit the purchase of another financial product as a condition of obtaining or authorizing a reverse mortgage. Covered products include an annuity, an insurance policy, or another financial product.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- May 26Pub. Ch. 1027Latest
- May 26Effective date(s) 05/19/2026
- May 19Signed by Governor Bill Lee.Became Law
- May 7Transmitted to Governor for his action.To Governor
- May 5Signed by Senate SpeakerMajor
- Apr 30Signed by H. SpeakerMajor
- Apr 23Enrolled; ready for sig. of H. Speaker.Minor
- Apr 20Senate substituted House Bill for companion Senate Bill.Major
- Vote recorded FLOOR VOTE: Third Consideration 4/20/2026 Passed. Result: pass.Upper
- Apr 20Amendment withdrawn. (Amendment 1 - SA1018)
- Apr 20Passed Senate, Ayes 26, Nays 4, PNV 1Passed Senate
- Mar 30Received from House, Passed on First ConsiderationMinor
- Mar 26Sponsor(s) Added.Minor
- Vote recorded HOUSE CALENDAR & RULES COMMITTEE: H. Placed on Regular Calendar for 3/26/2026 3/19/2026. Result: fail.Lower
- Vote recorded FLOOR VOTE: REGULAR CALENDAR AS AMENDED PASSAGE ON THIRD CONSIDERATION 3/26/2026 Passed. Result: pass.Lower
- Mar 26H. adopted am. (Amendment 1 - HA0661)Major
- Mar 26Passed H., as am., Ayes 69, Nays 13, PNV 3Passed House
- Mar 26Engrossed; ready for transmission to Sen.Minor
- Mar 19H. Placed on Regular Calendar for 3/26/2026
- Mar 18Placed on cal. Calendar & Rules Committee for 3/19/2026
- Mar 12Sponsor(s) Added.Minor
- Mar 11Rec. for pass. if am., ref. to Calendar & Rules CommitteeMinor
- Vote recorded HOUSE COMMERCE COMMITTEE: Rec. for pass. if am., ref. to Calendar & Rules Committee 3/11/2026 Passed. Result: pass.Lower
- Mar 4Rec for pass if am by s/c ref. to Commerce CommitteeMinor
- Vote recorded HOUSE BANKING AND CONSUMER AFFAIRS SUBCOMMITTEE: Rec for pass if am by s/c ref. to Commerce Committee 3/4/2026 Passed. Result: pass.Lower
- Mar 4Placed on cal. Commerce Committee for 3/11/2026
- Feb 25Placed on s/c cal Banking & Consumer Affairs Subcommittee for 3/4/2026
- Feb 5P2C, ref. to Commerce CommitteeMinor
- Feb 5Assigned to s/c Banking & Consumer Affairs SubcommitteeMinor
- Feb 4Intro., P1C.Minor
- Feb 2Filed for introductionIntroduced
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