After debating earlier this year a set limit on the number of federally-insured reverse mortgages that the Federal Housing Administration can have outstanding, members of Congress last week pushed the decision to extend through another fiscal year as part of the Senate’s 2013 appropriations bill.
The bill extends the suspension of the cap on the Home Equity Conversion Mortgages (HECM) through Fiscal Year 2013, which begins October 1.
The Senate appropriations bill will come to a full vote in the Senate, and the House will develop a similar appropriations bill, which it has yet to do.
Initially, the number of reverse mortgages that could be insured by FHA was set at 2,500 loans, at the program’s inception as a pilot in the late 1980s. Later the number was raised, ultimately landing at 275,000 in 2006. The cap has not increased since that time, but it has been suspended repeatedly, allowing for additional loans to be made and insured.
Congress debated the cap on the HECM program in March, at which point representatives argued it should be removed. A House Financial Services Committee markup brought the issue to light in discussing a potential amendment introduced by Rep. Michael Fitzpatrick (D-Pa.) that would eliminate the cap. The amendment was withdrawn, however, leaving the future of the HECM cap still in question after being suspended through the current fiscal year.
Written by Elizabeth Ecker