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.
