Earlier this week President Bush signed into law H.R. 5140, the Economic Stimulus Act of 2008. A handful of Reverse Mortgage Daily readers contacted me about the bill and asked if the increase in loan limits would apply to reverse mortgages? Unfortunately not.
There are a few members of the Senate who have been against the expansion of the HECM program for different reasons. One is Sen. Tom Coburn, who is a Republican from Oklahoma who is hesitant to expand the government program because he believes that FHA will “crowd out” other private sector reverse mortgages. Coburn feels that Congress should wait until the GAO report on the HECM program called for in the FHA Modernization bill is completed before taking any action on the program.
In a letter sent out by the National Reverse Mortgage Lenders Association, they noted that the Economic Stimulus package was moved through Congress with tremendous speed and completed within three weeks – a highly unusual accomplishment in this Congress. In order to get the bill passed quickly there was a consensus to try to pass a narrowly focused bill that avoids any provisions that might slow it down. Several items that it had considered were removed, including Sec. 255, the section of the US Housing Act Authorizing HECMs.
Where this leaves us then, is that we are now back to looking to the FHA Modernization bill to provide us with the following:
- A single national loan limit (or higher loan limits) for HECMs
- Elimination of the authorization cap
- HECM for home purchase
- HECM for coops
- The GAO study
- New limitation on origination fees
The letter from NRMLA also brought up a few good points in relation to the passage of the Economic Stimulus bill. First of all, will the new temporary loan limits for Fannie Mae be applicable to HomeKeeper reverse mortgages? Secondly, since the language in the pending FHA Modernization bills would create a single national loan limit for HECMs at the GSE loan limit, which at the time of enactment was $417,000 nationwide, would we now use the higher temporary limits or would $417,000 be our cap? NRMLA is working to obtain answers to both of these questions and will report as soon as they know.