With fiscal year 2011 budget proposals making their way through the House and Senate, the Federal Housing Administration’s reverse mortgage program could see a 150 percent increase in annual insurance premiums, as well as reductions in available proceeds the HECM (Home Equity Conversion Mortgage) program says Generation Mortgage Company.
“Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall,” said Jeff Lewis, Chairman of the Atlanta, GA based reverse mortgage lender.
According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form.
“With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages,” commented Lewis. “Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income.”
In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration’s reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167.
The Senate adjourned for the remainder of the year without passing a proposed FY 2011 appropriation for HUD, they’re expected to reconvene in mid September.