April 10, 2008
Senator Claire McCaskill (D-MO) was successful at getting her reverse mortgage bill (S. 2490) added to S. 3221. The Reverse Mortgage Protection Proceeds Act would prohibit lenders from requiring the purchase of an annuity with the proceeds of a reverse mortgage and require HUD to pay for mandatory HECM counseling out of the mortgage insurance fund. It also would create requirements for financial service companies that offer reverse mortgages and other products to have “firewalls and safeguards” between their various lines of business.
The House is assembling its own, potentially broader alternative tax bill, starting with a package of housing-related tax breaks (HR 5720) approved April 9 by the Ways and Means Committee chaired by Rep. Charlie Rangel (D-NY). Both the Senate and House measures include provisions aimed at helping home¬owners refinance their mortgages.
Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, is expected to sponsor a broader housing bill that would allow the FHA to insure refinanced mortgages if lenders agree to cut the outstanding principal on the loan to reflect the reduced value of a property. Frank said his committee will mark up his FHA legislation on April 24. We’re working to make sure our HECM provisions will be incorporated into whatever bill emerges from this mark-up. Rep. Barbara Lee (D-CA) has also introduced a reverse mortgage bill (HR 5758) that is modeled after Senator McCaskill’s legislation (S. 2490). It’s quite possible that Chairman Frank will incorporate HR 5758 into his housing bill.
NRMLA is working with Chairman Frank and Chairman Dodd to get our HECM language included in whatever bill is ultimately passed in the end. Our best assessment right now is that Congressman Frank will take the bill his committee marks-up this week to the House floor and attempt to get it passed with several other bills, including FHA Modernization (with the HECM amendments), as part of a large overall housing package, probably during the first or second week of May.
The FHA Modernization language will include:
• Permanently removal of the FHA reverse mortgage volume cap.
• Allow HECM reverse mortgages to be utilized for home purchase.
• Allow HECM reverse mortgages to be used on cooperatives
• Raising the FHA reverse mortgage lending limits. This limit is currently being negotiated. Minimally we expect it to be $417,000.
Partial reprint from NRMLA Washington Update, author Darryl Hicks.
For up to date information on the latest reverse mortgage products and a customized search for a product appropriate for your needs, contact Angella Conrard, Reverse Mortgage Advisor directly at 866-949-7030.