Federal Legislation Affects Reverse Mortgages

7 Mar

Two issues exist that affect reverse mortgages:

 

The first is the current budget sequester.  With federal funding cut to HUD grants that provide reverse mortgage counseling,

“From HUD’s perspective, the March 1 sequestration would also have even broader harmful effects on middle class families, on communities, and on the economy across the nation. Specifically: Sequestration would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling though HUD housing counseling grants,”  said  Department of Housing and Urban Development Secretary Shaun Donovan.

 

The second is the current cap set by Congress on the total number of HECM reverse mortgages that can be insured by the FHA.  The cap has been raised from 2,500 loans in 1990 to 25,000 loans by the end of 1995., with subsequent raises of the cap leading to its current level, set in 2006 at 275,000.

“A major issue faced by the reverse mortgage industry is that, while the HECM program was made permanent back in 1998, there has been a statutory limit on the number of loans FHA is authorized to insure,” NRMLA President Peter Bell said in testimony presented to the Senate Banking Committee. “Although the cap has been routinely raised or suspended by Congress in a series of consecutive appropriations measures and continuing resolutions, the existence of the cap deters some industry participants from making the commitment required to fully embrace reverse mortgage lending, thus keeping competition in the market at a minimal level.”

“NRMLA urges Congress to support the continued availability of Home Equity Conversion Mortgages by permanently removing the cap on the number of HECMs that FHA may insure to minimize any possible disruption in the availability of this importance personal financial management tool,” Bell said.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: