As politicians head back to Washington to vote on healthcare and a range of other issues, the reverse mortgage industry waits to see what the Home Equity Conversion Mortgage (HECM) will look like starting in FY 2010.
The House passed its appropriation bill in August and requires that HUD operate the HECM program at a net zero subsidy rate, eliminating the need for the $798 million subsidy requested by HUD earlier this year. In order to accomplish that, the House bill includes changes which would lower the principal limits for the program by an estimated 10%. The bill also extends the $625,500 lending limit for FY 2010.
The Senate’s appropriation bill provides $288 million to cover part of the shortfall and requires HUD to reduce the principal limit by 5% and create an additional 2.66% subsidy on all new guaranteed loan commitments exceeding the estimated total of $30 billion generated in that fiscal year. It also includes an amendment which terminates the $625,500 lending limit on January 1, 2010, bringing it back to $417,000.
About the only thing that the two bills share in regards to reverse mortgages are that both extend the suspension of the cap on the number of HECMs that can be endorsed through September 30, 2010. So where do we go from here?
With politicians back from their August recess, the Senate still needs to vote on its version of the appropriations bill. Assuming that it’s passed, both versions of the bill go to a Conference Committee where members iron out the differences and return a compromised version to both the House and Senate for final approval.