The Senate Tuesday passed a bill to stabilize the Federal Housing Administration’s reverse mortgage program, pending the president’s signature, the Department of Housing and Urban Development will have the authority it has been seeking to more closely manage the program.
The house bill, H.R. 2167 was heard on the Senate floor late Tuesday and was passed by unanimous consent.
The bill, also known as the Reverse Mortgage Stabilization Act of 2013, was introduced by Rep. Denny Heck (D-Wash.) and Rep. Mike Fitzpatrick (R-Penn.) in May. It authorizes the Secretary of Housing and Urban Development to establish additional requirements to improve the fiscal safety and soundness of the HECM program, essentially allowing the HUD secretary to make program changes via mortgagee letter.
HUD has been seeking the additional authority to manage the program following an audit of FHA’s insurance fund in 2012 and a report to Congress this year indicating the program’s losses could cause FHA to require a Treasury bailout for the first time.
Representatives of the department have stressed the need for a sensible and calculated approach to making the changes, rather than “blunt” changes that would too strongly limit the program’s use among senior borrowers.
The National Reverse Mortgage Lenders Association has stated its support of the program changes and passage of the bill through the Senate. NRMLA thanked several senators as well as its legislative staff upon the bill’s passage.
“My deepest thanks to Congressmen Denny Heck and Mike Fitzpatrick, and Senators Bob Menendez and Mike Crapo, for their belief in the value of the HECM program,” said NRMLA President Peter Bell. “We also appreciate that Senators Bob Corker, Pat Toomey, Mark Kirk Jerry Moran and Kirsten Gillibrand and their staffs were willing to engage in dialogue with us and hear our points on this matter.”
The climate in Washington has presented challenges for many lawmaking efforts of late, NMRLA noted.
“This would not have happened without the fantastic work and perseverance by our NRMLA legislative team, Melody Fennel, David Horne and Scott Olson,” Bell said. “Not much gets enacted by Congress these days. Our team accomplished this against all odds.”
HUD has said it is targeting several program changes in the near term: limiting the amount of the allowable draw; where appropriate, mandating the use of escrow accounts or a set-aside to ensure continued and timely payment of property charges including taxes and insurance, and; requiring the use of a financial assessment as part of the loan origination process to ensure the appropriateness of HECM products for potential borrowers.
Written by Elizabeth Ecker