FHA Reverse Mortgage Program Receives $150 Million from Appropriators

The first of several meetings during the House Appropriations process went well for the reverse mortgage industry.

When the Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee met last week on Thursday, members provided $150 million for the Federal Housing Administration’s reverse mortgage program.

Despite the Obama Administration’s request for $250 million in the FY 2011 budget, the $150 million “is a funding level sufficient to cover the expected volume for fiscal year 2011,” said Congressman John W. Olver (D-MA), Chair of the committee in a statement.

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Office of Management and Budget (OMB) documents show it estimates there will be $30 billion of HECMs endorsed during FY 2011.  As of May, FHA reports $15.1 billion HECMs have been endorsed for FY 2010, down nearly 30% from FY 2009.

Without the appropriation, FHA would be forced to reduce principal limits for the second year in a row and it’s highly unlikely volume would come anywhere near the $30 billion projected by the OMB.

The subcommittee’s report now goes before the full Appropriations Committee and then to the full House. The Senate will likely pass its own appropriations bill and then there will likely be a conference committee comprised of members of both houses according to the National Reverse Mortgage Lenders Association.

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