Legislation lifting cap on reverse mortgage program passesMortgagePress.comReverse mortgages
The U.S. House of Representatives has passed legislation that
eliminates the cap on the number of reverse mortgages that can be
insured by the U.S. Department of Housing and Urban Development
(HUD).
The Reverse Mortgages to Help America's Seniors Act, sponsored
by Reps. Michael Fitzpatrick, R-Pa., and Jim Matheson, D-Utah,
amends the National Housing Act by removing the existing cap of
250,000 reverse mortgages that HUD can insure at any given time.
Right now, there are about 150,000 Home Equity Conversion Mortgage
(HECM) loans—the only type of reverse mortgage loans insured
by the Federal Housing Administration—outstanding.
A Senate version of the bill introduced by Sen. Rick Santorum,
R-Pa., is pending approval. Both bills enjoy bipartisan support in
Congress and are endorsed by consumer groups, such as AARP.
"NRMLA commends Reps. Fitzpatrick and Matheson for their
leadership in getting this bill through the House of
Representatives," said Peter Bell, President of NRMLA. "As the
popularity of reverse mortgages continues to grow nationally, it's
absolutely critical that the cap is removed to avoid a disruption
in the marketplace."
During the most recent federal fiscal year, ending Sept. 30,
2005, HUD insured a record number of reverse
mortgages—43,131—for a fifth consecutive year. The
federally insured HECM accounts for 90 percent of all reverse
mortgages made in the United States.
When Congress created the HECM program in 1988, a cap was
imposed, so lawmakers could periodically monitor the program's
performance and costs to the government. Now that the program has a
track record, Bell said that there's no continuing need for a cap,
because the HECM program generates sufficient funds to cover its
costs through mortgage insurance premiums paid by borrowers.
For more information, visit www.house.gov.
