Following its passage of standalone legislation, The Reverse Mortgage Stabilization Act, which will allow the Department of Housing and Urban Development to reform the Home Equity Conversion Mortgage program, the Senate Banking Committee also passed this week the Federal Housing Administration Solvency Act of 2013.
The FHA reform bill also includes language targeting HECM change, in addition to providing the agency with the ability to improve underwriting standards and lender accountability.
Like the legislation passed earlier in the week, the bill, with an amendment introduced by Senators Mark Kirk (R-IL), Bob Corker (R-TN, Patrick Toomey (R-PA) and David Vitter (R-LA) would also grant HUD authority to establish set asides or escrows for reverse mortgage borrowers, require a financial assessment of borrowers, limit they amount they are able to borrow. Additionally, the amendment requires HUD to make a rule against any full draw fixed-rate reverse mortgage under the program and would require the agency to report quarterly basis to the committee on the HECM program, products and defaults, according to a notice from the National Reverse Mortgage Lenders Association.
The Senate is not expected to debate the FHA Solvency Act until after Congress returns from its summer recess, according to NRMLA.
HUD says it expects to introduce changes under the freestanding HECM legislation by the end of August.
Written by Elizabeth Ecker