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National Mortgage Professional
Jul 13, 2007

House considers reverse mortgage legislationMortgagePress.comReverse mortgages The U.S. House of Representatives is considering legislation that would make substantial improvements to the federal reverse mortgage program, including a plan that would allow older homeowners to access greater amounts of equity from their homes, according to the National Reverse Mortgage Lenders Association (NRMLA). The Expanding American Homeownership Act of 2006 (HR 5121) would do the following: • Create a single national loan limit for FHA Home Equity Conversion Mortgages (HECMs). The HECM program accounts for 90 percent of all reverse mortgages made in the United States. Currently, lending limits vary by county and range from $200,160 to $362,790. If the legislation passed, there would be one single limit equal to the conforming mortgage limit set by Freddie Mac, which is currently $417,000. Thus, seniors could convert greater amounts of equity from their homes into retirement income. • Implement a home-purchase HECM option that would allow seniors to purchase newer housing that better suits their needs. • Remove the existing cap on the number of HECM loans that the FHA can insure. The last provision is also contained in HR 2892 and S 1710, the Reverse Mortgage to Help America's Seniors Act, which is still pending approval in the Senate after having passed the House of Representatives in December. "Taken together, these proposed changes would greatly benefit homeowners who are considering a reverse mortgage as part of their retirement planning," said Peter Bell, president of NRMLA. "A single national loan limit would be especially helpful. It would benefit homeowners living in high-valued homes in counties where the FHA lending limit is much lower, which limits the amount of proceeds available from a reverse mortgage. We applaud the Department of Housing and Urban Development and Congress for proposing to correct this problem." No companion bill has been introduced in the Senate yet, although one is expected shortly. Announcement of the House bill comes on the heels of a New York Times editorial published on April 22, which suggested that seniors would benefit from using private home equity through a reverse mortgage to help pay for healthcare and other necessary services that prolong "aging in place." The editorial concluded that "both the states and the federal government need to enact comprehensive incentives and consumer protections to encourage people to use reverse mortgages to pay for services that will allow them to grow old at home." For more information, visit www.house.gov.
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