National Reverse Mortgage Lenders Association President, Peter Bell, testified before the Subcommittee on Housing and Community Opportunity yesterday and discussed the state of the Home Equity Conversion Mortgage (HECM) program.
The session was meant to address the questions about the Federal Housing Administration’s future where FHA commissioner, David H. Stevens, assured lawmakers that his agency would not need a bailout and that it was managing its risks.
“Let me simply state at the outset that based on current projections, absent any catastrophic home price decline, F.H.A. will not need to ask Congress and the American taxpayer for extraordinary assistance — we will not need a bailout,” Mr. Stevens said in his testimony..
While there was plenty of concern about the size of FHA’s possible losses, Bell helped to calm those fears in relation to the HECM program which according to a recent Congressional Budget Office (CBO) presentation has generated a cumulative net gain of nearly $7 billion for FHA since its inception.
Accordingly, the HECM program has not played a role in FHA’s recent capital reserve account losses, Bell said in his testimony.
Bell also address the reduction in principal limits would he said comes at a great cost to some seniors who will not be able to utilize HECMs to preserve their ability to continue living in their homes, forcing them to move out.
You can read a copy of Bell’s testimony below.