President Obama today signed into law a bill that will grant the Department of Housing and Urban Development to move forward with reverse mortgage program reform.
The Reverse Mortgage Stabilization Act authorizes the Secretary of HUD to establish additional requirements to improve the fiscal safety and soundness of the Home Equity Conversion Mortgage Program.
National Reverse Mortgage Lenders Association President and CEO Peter Bell attended the signing of the bill at the White House with HUD Secretary Shaun Donovan, Reps. Denny Heck (D-WA) and Michael Fitzpatrick (R-PA), Assistant Secretary of Housing/FHA Commissioner Carol Galante, NRMLA reported to members late Friday.
“Both HUD and aging Americans are fortunate the department has a leadership team consisting of Shaun Donovan, Carol Galante and Deputy Assistant Secretary Charles Coulter with rich experience in housing finance,” Peter Bell said following the signing ceremony. “They have repeatedly demonstrated keen insight into the evolution of the [HECM] program and an ability to make any necessary changes to strengthen the performance of the insurance fund and also protect borrowers.”
Introduced by Reps. Fitzpatrick and Heck, the bill passed by unanimous consent in the House in June and later through Senate in late July.
HUD has been working with NRMLA and the reverse mortgage industry toward program changes that will help protect borrowers and shore up the FHA’s insurance fund, which came under scrutiny following an annual audit in late 2012 that projected substantial FHA losses due to the HECM program.
Among the changes being discussed by a forthcoming mortgagee letter are a financial assessment of borrowers, mandatory set asides or escrows for tax and insurance payments, restrictions in the upfront draw allowed under the loan, and inclusion of all spouses on reverse mortgage loans.
“All of these changes consider both the best interests of borrowers and the ongoing health of the government insurance fund,” Bell said. “Historically, HUD has made smart changes to improve the HECM program, strengthen the insurance fund, and fulfill its mission of helping aging Americans maintain and remain in their homes.”
Written by Elizabeth Ecker