House Passes HUD Budget, Ranking Members Voice Support for HECM Program

The US House of Representatives passed the Transportation, Housing and Urban Development (THUD) appropriations bill for FY 2011 by a vote of 251 to 167 on Thursday.

When the debate began, the Federal Housing Administration’s reverse mortgage program had a $150 million appropriation but passed with $140 million.  While the number may be lower, debate among members of the House proved that representatives in Washington, DC, are getting behind the program.

Rep. E.B. Johnson, D-Texas, introduced an amendment to increase funding for HUD’s Community Development Grant program by $10 million and reduce funding for the Mutual Mortgage Insurance Program by the same amount.  The money would be taken from the reverse mortgage program.

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“This program is not without controversy, many do not understand that the proceeds may impact medicaid eligibility,” she said.  “At a time when property values remain low, a reverse mortgage might not be the best route for individuals”.

Johnson’s amendment was approved but not without opposition from ranking Republican and Democratic leaders in the House.

Interestingly enough, ranking minority member of the THUD Subcommittee, Tom Latham, R-Iowa, opposed reducing the amount of money available for the program.  He introduced an amendment last year to take away the $798 million appropriation needed and lead to a 10% principal limit reduction for the HECM product.  His views of the program have clearly changed.

“My concern is that this is taking money out of reverse mortgages for seniors,” he said on the House floor.  “The problem is that if there is an increase in demand, it simply can not happen without the funding.”

Chairman of the THUD Subcommittee, John Olver, D-Maryland stepped in and voiced his opposition as well.  However, Olver said he was assured that after looking at the HECM situation and the needs of the program, it could yield the $10 million dollar offset.  According to sources in Washington, HUD assured Olver the $10 million wouldn’t have any impact on the program for the next fiscal year.

Having both ranking Republican and Democratic members of the THUD Subcommittee step up to support the HECM program is a big change from last year.

“It’s a great reflection of the kind of support we have in Washington today,” said Jeff Lewis, Chairman of Generation Mortgage and the leader behind the Coalition for Independent Seniors.  “People need to recognize that there will be a lot of incidents along the way, but we are in a much better place on Capitol Hill than we were a year ago.”

The Senate has yet to bring its THUD appropriations bill to the floor and it’s not clear when that will happen, but support for the program in the Capital is clearly improving.

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    • Atare,

      You are right.

      Last year we all heard that it was Representative Latham (R-IA) in the House Appropriations subcommittee that oversees the HUD appropriation who recommended and fought that the HECM program not be granted the $798 million requested. That was absolutely true.

      Here Representative Latham is protecting the $150 million appropriation. What changed his view? Perhaps far more importantly what happened that the House Democrats simply went along with Representative Latham last year but not this?

      It is not a $10 million appropriation to a worthy cause that is a problem. It is choosing the HECM program as the program to reduce which is.

      While it seems clear there are fewer Congressional Democrats who do not support FHA or the HECM program than Congressional Republicans, the overwhelming Congressional members of both parties in fact support both FHA and the HECM program. What we saw last year was how shallow that “overwhelming support” really is even among Congressional Democrats who held the vast majority in both the House and the Senate. Now we see it in the House once again.

      We not only need to shore up support among Republicans but perhaps more importantly, we need to shore up the support for the HECM program among Democrats. It is in crucial times like these when we see how much support the program actually has.

      • The Critic —

        I share your bewilderment about squeezing $10 million from HECM to serve another cause, worthy or otherwise.

        It shows that our leaders in Congress still don't get the strategic value of reverse mortgages and our industry in the age of runaway national debt and aging boomers. As I argued in a recent post (“Reverse Mortgages as National Security Assets,” http://www.thinkreverse.com), if we are going to solve the national debt crisis, we are going to need private resources; and reverse mortgages are the keys to unlocking vaults holding trillions in private resources. When they understand this aspect of reverse mortgages, they will see reverse mortgages and supporting the HECM insurance fund differently. Similar to other essential national security assets, necessity will compel them to support it and the industry.

        I ascribe the behavior of the House last year to bailout fatigue. As always, your incisive comments are instructive and refreshing.

        Thanks,

        Atare

  • The Critic –rnrnI share your bewilderment about squeezing $10 million from HECM to serve another cause, worthy or otherwise. rnrnIt shows that our leaders in Congress still don’t get the strategic value of reverse mortgages and our industry in the age of runaway national debt and aging boomers. As I argued in a recent post (“Reverse Mortgages as National Security Assets,” http://www.thinkreverse.com), if we are going to solve the national debt crisis, we are going to need private resources; and reverse mortgages are the keys to unlocking vaults holding trillions in private resources. When they understand this aspect of reverse mortgages, they will see reverse mortgages and supporting the HECM insurance fund differently. Similar to other essential national security assets, necessity will compel them to support it and the industry.rnrnI ascribe the behavior of the House last year to bailout fatigue. As always, your incisive comments are instructive and refreshing.rnrnThanks,rnrnAtare

  • It appears that representative Johnson may have some real explaining to do when it comes to giving out scholarships…nnhttp://thehill.com/homenews/house/116449-watchdogs-not-sure-johnson-will-face-ethics-probe-over-scholarship-flapn

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