The Senate and House appropriators have two different approaches on how to cover the the Federal Housing Administrations $798 subsidy request for the reverse mortgage program but both involve adjusting the amount seniors receive from he product.
Last week, the House passed its appropriation bill for FY 2010 and requires that HUD operate the HECM program at a net zero subsidy rate which eliminates the need for the $798 million. However, the changes to the program will lover the available benefits for reverse mortgage borrowers.
National Mortgage News is reporting that the Senate Appropriations Committee is willing to provide $288 million to cover part of the shortfall. The Senate bill also requires HUD to reduce the loan proceeds seniors receive by 5%, which gives us a better idea of how much the program would be adjusted under the House version of the bill.
As an alternative, the National Reverse Mortgage Lenders Association is proposing that HUD reduce the upfront mortgage premium on HECMs and increase the annual premium to deal with shortfall. NRMLA’s president Peter Bell told NMN that, "We are willing to work with HUD to re-engineer the mortgage insurance premium."