The House of Representatives passed HR 3288 late last week by a vote of 255-168, which made appropriations for the Departments of Transportation, HUD, and related agencies for FY 2010.
The bill includes
two three provisions for reverse mortgages, one which extends the higher loan limit for FY 2010.
Sec. 235. For mortgages for which the mortgagee issues credit approval for the borrower during fiscal year 2010, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)).
The bill also instructs HUD’s secretary to adjust programs (ie HECM) to operate at a net zero subsidy rate:
That for new loans guaranteed pursuant to section 255 of the National Housing Act (12 U.S.C. 1715z-20), the Secretary shall adjust the factors used to calculate the principal limit (as such term is defined in HUD Handbook 4235.1) that were assumed in the President’s Budget Request for 2010 for such loans, as necessary to ensure that the program operates at a net zero subsidy rate:
This would adjust the principal limit calculation for the HECM program, however it’s unclear how much it will change the calculation.
Also, Jim Veale pointed out the following, which will lift the cap on HECMs until at least October 1, 2010:
“SEC. 217. Notwithstanding the limitation in the first sentence of section 255(g) of the National Housing Act (12 U.S.C. 1715z—20(g)), the Secretary of Housing and Urban Development may, until September 30, 2010, insure and enter into commitments to insure mortgages under section 255 of the National Housing Act (12 U.S.C. 1715z—20).”
Earlier today I spoke with Jeff Lewis, Chairman of Generation Mortgage, about the potential changes to the HECM and he said, “We need the industry to motivate the seniors who have been helped by reverse mortgages to make sure their voices are heard on the Hill.” He added that, “Now is not the time to tinker with a program that helps seniors stay in their homes and live a comfortable life”.
Next the Senate will draft its version of the bill, however if the if the Senate amends any part of it or creates its own bill, differences will have to be resolved and the revised or new bill approved by both the House and the Senate before going to the President for his signature.
Have you contacted your Senator to voice your opinion on changing the HECM program?