WASHINGTON, D.C. – May 23, 2013 – (RealEstateRama) — While Congress considers legislation that would enable FHA to swiftly implement reforms to help stabilize the HECM program, members of the Housing and Insurance Subcommittee voiced concerns during a hearing last week about the projected losses attributed to HECM and whether FHA should continue playing a role in the reverse mortgage business.
Representatives Michael Fitzpatrick (R-PA) and Denny Heck (D-WA) announced during the hearing that they will co-sponsor legislation to give FHA the authority it needs to implement reforms by mortgagee letter.
The Senate is considering a similar bill introduced by Senator Robert Menendez (D-NJ). Rep. Fitzpatrick expressed his support for the HECM program, but admitted it needs fixing.
Subcommittee chairman Randy Neugebauer (R-TX) asked Deputy Assistant Secretary for Single Family Housing Charles Coulter why FHA is insuring reverse mortgages when the private sector is not.
DAS Coulter responded that FHA was established by Congress to serve the financial needs of underserved markets. He further noted that aging Baby Boomers will not enjoy the same retirement benefits as their parents, who had defined pensions and relatively stable 401(k) plans. “They will be heavily dependent on home equity,” said Coulter, to finance their retirement years. Rep. Heck asked Coulter point blank whether the bill he is co-sponsoring with Rep. Fitzpatrick will result in fewer seniors being hurt and a better performing MMI fund. Coulter responded that the legislation, if adopted, would indeed do these things.
The subcommittee’s ranking member, Rep. Michael Capuano (D-MA), said he is concerned that younger spouses are being asked to sell their homes shortly after a spouse passes away. DAS Coulter agreed. He said that FHA will be looking to make program changes involving non-borrowering spouses.
To view the complete hearing, please click here.