A woman down the street from me — I’ll call her Carol, because she’d kill me if I used her real name — spent most of last year trying to get a reverse mortgage on her bungalow off Chestnut Avenue. She’s in her mid-seventies, owned the house outright for decades, and figured the equity would carry her through retirement. Straightforward plan. Good house. Clear title, she thought.

What she didn’t know was that she’d signed up for Travis County’s property tax deferral program a few years back, and that deferral had quietly attached itself to her home as a lien. Not a mortgage lien. Not a judgment lien. A tax lien. And when the reverse mortgage lender’s underwriter started pulling title, that lien popped up and nearly killed the whole deal.

This is one of those situations where two programs that each make good sense on their own terms turn into a conflict the moment they’re stacked on the same property.

What the Deferral Actually Does to Your Title

A property tax deferral — available in Texas to homeowners 65 and older, as well as to certain disabled homeowners — lets you stop paying current property taxes while you live in the house. The taxes don’t disappear. They accumulate, plus interest (somewhere around 5% per year as of recent state rules, though that can shift), and a lien is placed against the property to secure everything the county is owed.

The county records that lien. It sits there, attached to your deed, and it has priority. That part matters enormously.

In Texas, property tax liens are senior to almost everything else. They can even leapfrog a first mortgage in terms of collection rights. So when a lender — especially a reverse mortgage lender operating under FHA’s HECM program — looks at that title, they’re seeing a lien they can’t simply subordinate or ignore.

For a conventional mortgage, you’d typically pay off what you owe and move on. A reverse mortgage is more complicated because you’re not making payments, which means the lien can keep growing, and the lender is worried about what happens when the home eventually sells.

Why Reverse Mortgage Lenders Flinch at This

HECM rules require that the reverse mortgage be in first lien position. That’s not negotiable. If there’s a tax deferral lien sitting ahead of it in priority, the lender literally cannot fund the loan without resolving that conflict.

There are really only a few paths forward:

  1. Pay off the deferred taxes at closing using proceeds from the reverse mortgage, which terminates the deferral and clears the lien
  2. Negotiate with the taxing authority — some counties will subordinate their lien, though this is not guaranteed and Travis County isn’t always fast about it
  3. Walk away from the deferral before applying, which means coming up with the money to settle the accumulated back taxes and interest first
  4. Accept that the reverse mortgage may not be possible under current conditions

Option one is the most common resolution, but it only works if the deferred tax balance plus interest doesn’t eat so much of the available equity that the reverse mortgage still makes sense. If Carol had accumulated four or five years of deferred taxes on a Travis County assessment — and Travis County assessments have not been gentle — that number could be $15,000 to $30,000 or more depending on her home’s value and exemptions. That comes off the top.

The Same Conflict Can Block the Deferral, Too

Here’s the other direction this goes wrong, and it catches people who already have a reverse mortgage and then try to add the tax deferral.

Texas law permits seniors with reverse mortgages to apply for property tax deferrals, but the reverse mortgage servicer has to consent, and the HECM servicer’s guidelines typically prohibit it. The reason: if you defer taxes and the lien that results gains priority over the reverse mortgage, the lender is suddenly in a legally inferior position on a loan they thought was secured. That’s not something they’ll agree to.

So if you’re sitting in a house with a HECM and you’re struggling with property taxes, the deferral route may be closed off. You’d need to look at other options — a property tax loan from a private lender (a whole separate conversation with its own risks), using a set-aside from the reverse mortgage if one was established at origination, or working directly with the appraisal district on hardship provisions.

Property taxes are genuinely a hidden affordability crisis for a lot of Texas seniors, and the programs meant to help don’t always play well together.

What You Should Do Before You’re in Carol’s Spot

If you or someone you’re helping is anywhere near this situation, get ahead of it. The problems here are almost entirely preventable if you know to ask the right questions early.

  • Pull a title search before you apply for anything. Don’t assume you know what’s on your title. A deferral lien will show up there, and so will anything else that’s accumulated quietly over the years. Public record searches — even AI-assisted ones — can miss things, so pay for a proper title examination from a licensed company.
  • Call the appraisal district and ask specifically about any deferred balances. In Travis County you can do this online or by phone. Get the number in writing.
  • Talk to a HUD-approved housing counselor before applying for a HECM. It’s actually required, but most people treat it as a box to check. Use that meeting to ask directly about deferral conflicts. A good counselor will know.
  • If you’re considering starting a deferral, check your existing liens first. Don’t assume your servicer will approve it. Get written confirmation.

One more thing worth noting: senior homeowners in Texas are navigating some significant property tax changes right now, and some of the legislative adjustments in play could affect how deferrals are structured going forward. What’s true today may not be the full picture in a year or two.

Carol got her reverse mortgage in the end. The deferred taxes were paid out of the closing proceeds, the lien cleared, and the underwriter was satisfied. But it cost her two extra months, a second title search, a lawyer to write a letter to the county, and more stress than a woman in her seventies should have to deal with over a form she signed in good faith.

Before you sign anything that attaches a lien to your house — for any reason — ask who else holds a lien and whether they’ll care. That question alone could save you from the whole mess.