Late last week the Senate passed its version of the Department of Transportation Appropriations Act of 2010 (H.R. 3288) by a vote of 73-25. Since the bills each have their differences, both versions to go a conference committee where House and Senate members iron out the differences and return a compromised version to both the House and Senate for final approval.
Each of the bills handled HUD’s $798 million subsidy request for the Home Equity Conversion Mortgage (HECM) differently. We went into more detail on the differences last week, but clearly the most important part of the bill is the principal limits.
Both bills adjust the principal limits for the HECM, but the House bill would do more damage compared to the Senate version which includes $288 million to cover part of HUD’s subsidy request.
Many question why the government would lower the principal limits during a time when seniors are facing so many hardships.
While most in the industry agree that adjusting the limits on HECMs is a step that HUD needs to take, many feel now is not the time. The National Reverse Mortgage Lenders Association has suggested that HUD could reduce the upfront mortgage premium on HECMs and increase the annual premium to deal with shortfall.