A congressional hearing devoted explicitly to questions and answers regarding the Federal Housing Administration’s reverse mortgage program today presented a look into current issues of Congressional concern, including the current cap on the number of reverse mortgages allowed under FHA insurance.
The issue has come to light in recent conversations among members of Congress and the reverse mortgage industry with today’s hearing providing the opportunity for some outside the industry to weigh in on the topic.
AARP addressed the cap in written testimony presented by Lori Trawinski, Senior Strategic Policy Advisor for AARP’s Public Policy Institute.
“To guarantee continuity of the HECM program, AARP supports legislation that would remove the statutory limit on the number of loans that can be insured by HUD in a given year,” Trawinski said. “Loan limits were imposed when the HECM program was a pilot program. The loan number cap has been raised several times over the years and has, at times, led to a halt in originations when the cap was reached. Lifting the statutory loan limit would be helpful in encouraging lenders to offer reverse mortgages and remain committed to this market.”
Industry advocates, including the National Reverse Mortgage Lenders Association, have addressed the issue of late, however without any outcome expected immediately.
And not everyone is in favor of removing the cap, or having the government involved in guaranteeing reverse mortgages in the first place.
“I am not against reverse mortgages as an equity extraction tool. But I do not see any reason for the Federal government to guarantee and subsidize it,” said Dr. Anthony Sanders, professor of Real Estate Finance at George Mason University during his testimony.
“At a minimum, the Federal government should get out of the reverse mortgage insurance and subsidization business, particularly since there is an easy alternative: seniors sell their home and buy a smaller dwelling or rent.”
Overall, the questions from members of Congress led to discussion among those ingrained in the industry as well as from affiliated businesses.
“We were pleased to see the various stakeholders including senior advocacy groups, counseling organizations, the industry and HUD are all in sync that the program is valuable, it helps seniors, and steps have been made to improve the program’s performance,” Peter Bell, NRMLA president and CEO told RMD.
Written by Elizabeth Ecker