Have you heard about the CAP?

2 Apr

                 The number of reverse mortgages that can be insured by the Federal Housing Administration remains in question after a congressional hearing last week.

There has been discussion of an amendment introduced by Rep. Michael Fitzpatrick (D-Pa.) that would eliminate the cap currently held on the number of reverse mortgages insured by the Federal Housing Administration. The amendment was withdrawn on Tuesday, leaving the future of the HECM cap still in question after being suspended through the current fiscal year.

When it launched in the late 1980s and early 1990s as a pilot program, the FHA’s reverse mortgage program was capped in the number of loans outstanding that could be insured by FHA.

That number was set first at 2,500 in 1987 and was later raised in 2006 to 275,000—this cap is currently suspended and suspensions have been repeatedly extended by Congress.

“In the current economic environment the need for financial relief for senior citizens continues to increase,” said Rep. Fitzpatrick. “For many Americans in their later stages of life home equity is their largest single asset. FHA HECM mortgage products give seniors the opportunity to tap the equity in their homes to improve their quality of life without taking on the burden of a monthly mortgage payment.”

Currently the HECM program is operating under a suspension of the cap through a continuing resolution that expires September 30, 2012.

Mention of the possible elimination of the cap on HECM loans by NRMLA President Peter Bell at last week’s NY Eastern Regional Meeting was greeted with optimism by the nearly 300 industry members in attendance at that meeting.

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