Senate Bill Pushes Suspension on Number of FHA Reverse Mortgages Allowed

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 The amendment was withdrawn, however, leaving the future of the HECM cap still in question after being suspended through the current fiscal year.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

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  • I am pleased to see the suspension of the cap for HECM’s. However, this is just another pressure on the reverse mortgage the industry does not need at this time.

    With endorsements falling, Met life Exiting the industry and more fears what the CFPB may do as far as the compensation rule, we don’t need this!

    You also can’t ignore what other new regulations that may be lurking in the hall ways on the part of the CFPB to impose on our industry?

    I feel the cap should be removed. This problem has plagued our industry as long as I have been in it. It places an undo amount of insecurity on the part of lenders and companies. How do companies plan for aggressive expansion with this hanging over the industry like a Black cloud?

    There is reason to be optimistic about the future if we did not have big brother (Federal Government) swarming all over us.

    John A. Smaldone

  • John,

    What is odd is that it does not matter if Democrats are controlling Congress or Republicans, the result is the same — short-term suspension.

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