White House Requests $250 Million Credit Subsidy for Reverse Mortgage Program

The Obama Administration is requesting $250 million in credit subsidy for the Federal Housing Administration’s reverse mortgage program along with a contingency appropriation to meet all program demand, even if demand exceeds projections.

According to budget documents, FHA is projecting insurance of $223 billion in single family forward mortgages and $30 billion in Home Equity Conversion Program (HECM) with an additional $148 billion in commitment limitation available in case these amounts are exceeded during execution.

In addition, the administration is projecting the reverse mortgage industry will endorse 120,429 units in 2010 and 119,953 units in 2011.

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The subsidy request is lower than the previous $789 million requested in the 2010 budget.

UpdateNational Mortgage News is reporting that the administration is proposing changes to the Home Equity Mortgage Conversion program that will raise premiums and “slightly lower loan limits.”  RMD contacted HUD for confirmation, but has yet to receive a response.

The budget still needs to be passed by the Senate and House.  The WSJ has a great interactive graph showing the process you can see here.