Tennessee Gov. Bill Lee has signed HB 2382 into law, replacing the Home Equity Conversion Mortgage Act with the Tennessee Reverse Mortgage Innovation Act under Chapter 30, Title 47 of the Tennessee Code Annotated. The act took effect immediately on May 19, 2026.
In enacting the law, the Tennessee legislature stated that the intent of the General Assembly is to modernize Tennessee law, align the state with nationwide best practices, expand the financial tools available to senior homeowners and homebuyers, and provide maximum flexibility while maintaining strong consumer protections, thereby positioning Tennessee as a national leader in retirement innovation and flexibility.
Overview
Under prior Tennessee law, private reverse mortgages ostensibly were not allowed in Tennessee because multiple provisions of Tennessee law on reverse mortgages were tied to the U.S. Department of Housing and Urban Development’s Federal Housing Administration home equity conversion mortgage program and Fannie Mae reverse mortgage guidelines. The law defined a reverse mortgage as an FHA-insured home equity conversion mortgage or a loan that complied with Fannie Mae guidelines, specifically the former Fannie Mae Home Keeper loan program, which effectively ceased originations at the end of 2008.
The Tennessee Reverse Mortgage Innovation Act generally removes HUD- and Fannie Mae-specific references to establish a state-law framework for reverse mortgage loans that may be insured or uninsured, including private products, while retaining key consumer protections.
The Act now provides that a reverse mortgage loan may, but need not, be insured or guaranteed by a state or federal agency. Reverse mortgage loans that are not FHA-insured are authorized under the Act, if they comply with all provisions of the Act and applicable federal and state law. Certified counseling by an approved counselor is still required.
Definitions
Under the Tennessee Reverse Mortgage Innovation Act, a “home equity conversion loan” means a reverse mortgage regulated by HUD.
The Act also updates the definition of “reverse mortgage” or “reverse mortgage loan” to apply the “principal residence” requirement and contract-trigger provisions to a broader reverse mortgage framework rather than to a HUD- and Fannie Mae-based “home equity conversion mortgage loan” definition. Under the Act, a “reverse mortgage” or “reverse mortgage loan” means a loan for a definite or indefinite term:
- Secured by a mortgage or deed of trust on the principal residence of the mortgagor;
- The proceeds of which are disbursed to the mortgagor in one or more lump sums, or in equal or unequal installments, either directly by the lender or the lender’s agent;
- That requires no repayment until a future time, upon the earliest occurrence of one or more events specified in the reverse mortgage loan contract; and
- Is labeled clearly on the face of the note and deed of trust or mortgage with the:
- Name of the loan product;
- Name of the lender or insurer; and
- Statement: “This is a reverse mortgage pursuant to Tennessee Code Annotated, Title 47, Chapter 30”
Importantly, for private loans, the Act does not limit reverse mortgages to first-lien loans. Further, while proceeds may be disbursed to a mortgagor, lenders under the prior law also made purchase money reverse mortgages. Therefore, it appears proceeds may continue to be disbursed either to or on behalf of a mortgagor in such purchase money transactions, or for other purposes.
The Act further provides that a reverse mortgage loan may, but need not, be insured or guaranteed by a state or federal agency.
The Act states that authorized lenders include depository institutions, housing finance agencies, and other entities authorized by the Commissioner of Financial Institutions to make reverse mortgages. Previously, such nonbank entities had to be approved by the Commissioner to make HECMs. We believe the amendment carries forward any previously granted authority, to now allow the ability to make reverse mortgages more broadly, including private reverse mortgages. We expect the Commissioner to confirm this and/or provide additional guidance.
Prior law permitted lenders to charge fees for mortgage insurance premiums and other fees subject to HUD and Fannie Mae limitations. The Act removes restrictions tying such fees to the monthly service fees, repair administration fees or insurance premiums permitted by HUD for participation in the Home Equity Conversion Mortgage Program or by Fannie Mae for a Fannie Mae Reverse Mortgage Loan.
Reverse mortgage lenders need to be aware of a new prohibited practice: they may not engage 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.
As under prior law, the Act continues to provide that a reverse mortgage loan contract must conform to the requirements of the Act. A reverse mortgage loan, home equity conversion loan, mortgage, or deed of trust that fails to comply with the Act is unenforceable as to all interest, service fees, and insurance premiums incurred on the loan.
The Tennessee Reverse Mortgage Innovation Act also makes clear that all reverse mortgages, not merely home equity conversion mortgages, are exempt from Tennessee’s high-cost home loan law provisions.
The Act also changes references in Tennessee’s privilege and excise tax laws to make clear that all reverse mortgages, not merely home equity conversion mortgages, are exempt from Tennessee’s such taxes upon recording of a reverse mortgage security instrument, as long as the document contains a certain legend on the first page, as required under Tennessee’s privilege and excise tax laws.
