Bill Could Lift Reverse Mortgage Volume Cap
The U.S. House of Representatives is considering a bill, H.R. 2892, that could eliminate volume caps on reverse mortgages insured by the Federal Housing Administration.[@@]
In federal fiscal year 2005, Congress increased the number of FHA-insured reverse mortgage loans that lenders could issue to 200,000, from 150,000.
Rep. Michael Fitzpatrick, R-Pa., the lead sponsor of H.R. 2892, says his bill will ensure the viability of the reverse mortgage program by completely eliminating the volume cap.
Reverse mortgage loans, available to Americans age 62 and older since 1989, let homeowners convert home equity into tax-free income without selling their homes, giving up their titles or taking on responsibility for new mortgage payments.
Borrowers repay the loans when they sell their homes or die.
Many borrowers use reverse mortgages to pay for home care when they are retired, and some have talked about creating new kinds of reverse mortgages that could be used to pay for nursing home care.
Fitzpatrick said in a recent speech about H.R. 2892 on the House floor that stories about older citizens living in his home district in eastern Pennsylvania inspired the legislation.
“The stories are all the same,” Fitzpatrick said. The older constituents “have retired into their homes, and they live on Social Security income with basically no remaining savings.”
The reverse mortgage program lets those constituents live out their later years in dignity in their own homes, Fitzpatrick said.