Report: Progress of American Housing & Foreclosure Act

To All:

As a member of NRMLA (National Reverse Mortgage Loan Association), I receive current legislative updates. Below is the latest update sent out by our President, Peter Bell.

After almost a year and a half the Reverse Mortgage major improvements and expansions look as though they'll be approved, not as its' own bill, but as a part of the larger FHA Housing Rescue Bill. This bill has again been expanded to include the recent financial support for FannieMae and FreddieMac.

As each house has passed the bill, in their own version, by overwhelming bipartisan majorities, it appears that the new larger bill will be passed, the small differences between the House and Senate worked out, and that the President will sign it in spite of past threats of a veto. There is much in this bill that the President wants, to be part of his legacy.

This is an extremely important bill, not just for those facing foreclosure and for the home loan secondary market, but for thousands of senior citizens who need to avail themselves of the Reverse Mortgage due to spiraling costs of the basics of life such as food, medicine, heating, and medical care. Due to the decrease in housing values it has been increasingly harder for these Senior Citizens to obtain the needed funds from their homes because of lack of enough equity.

This bill will also make it possible for Senior Citizens to use the funds to purchase properties, and therefore be able to downsize. And, now those Senior Citizens living in Co-ops will also be able to have the same advantages as those who own single family homes.

In addition, the costs of the loan will decrease by limiting the amount of origination fees that lenders are allowed to charge.

Gloria

NRMLA Member Alert: House Poised to Vote on Housing Bill This Week

The legislative saga of the HECM amendments will continue this week as the major housing bill containing these [new] provisions is brought to the House floor for yet another vote, currently scheduled for Wednesday, July 23.

As we last reported, the Senate passed a version of this bill (H.R. 3221) late on Friday, July 11, and sent it over to the House for its concurrence. If you remember from our previous report, the Senate leadership had hoped to pass a version of the bill referred to as the “managers’ amendment,” that included refinements to the bill made after it was reported out of committee.

However, due to procedural maneuvering by a couple of Senators, the managers’ amendment could not be brought to the floor for a vote. Instead, the prior version of the bill, with the language exactly as it was reported out of committee, is what was brought to the floor and passed.

The House has several items it wants to amend in the version passed by the Senate, including some items of concern to House members and other items that would have been included in the managers’ amendment had it been passed.

In addition, after the Senate passed its bill last weekend, the White House called for a plan to provide financial support for Fannie Mae and Freddie Mac. The White House plan requires Congressional action on a few of its provisions.

Congressman Barney Frank, chairman of the House Financial Services Committee, is incorporating these new provisions providing financial support and supervision to the GSEs into the version of H.R. 3221 that he is planning to bring to the House floor on Wednesday.

It is expected that the House will approve this bill fairly quickly and send it back to the Senate, which could follow suit and act quickly, as well.

That means it is quite possible that this major housing bill could be sent to the President sometime this week. That could bring us to the end of this saga – unless the President chooses to veto the bill, a threat that he has made on and off again throughout the deliberation on this bill.

The actual draft that will be brought to the House floor has been in negotiation and drafting all weekend, so we don’t yet know for sure exactly what will be included.

Items of concern that directly impact HECMs [Reverse Mortgages]
include the following:

1.) Elimination or suspension of the authorization cap for HECMs. My guess is that we’ll see a continuation of the suspension, not a complete elimination yet this year. [Each year Congress has had to approve a monetary cap for the total amount of dollars that FHA could insure for reverse mortgages. Each year the demand has exceeded the monetary limit, and Congress has suspended the limit; hence the request to eliminate the cap altogether. gb]

2.) Single national loan limit for HECM, which could come out at any of a few options. As of now, it could end up at $417,000 or $550,000 or $625,500. It could also end up at $417,000, but with a provision allowing it to be adjusted to $625,500 in high cost areas. Or, a whole new level could emerge from final negotiations. (The confusion on exactly where loan limits are set stems from the fact that they are determined by cross-referencing language in a few separate provisions, all of which are being negotiated and drafted simultaneously.)

3.) Origination fee limitation, likely to end up at 2% of first $200,000 of maximum claim amount, plus 1% of any additional maximum claim amount, up to a cap of $6,000.

4.) HECM for home purchase

5.) HECM for coops

6.) Language from Sen. Claire McCaskill impacting a few areas, including restricting sales and compensation for other financial services offered in conjunction with a HECM, counseling requirements and limiting participation to HUD approved entities only...

...If a bill is signed into law, we anticipate that it will take HUD 30 to 60 days to publish mortgagee letters implementing the single national loan limit and origination fee limitation, and we understand a new higher floor (the current floor is $2,000). Additional mortgagee letters implementing HECM for home purchase and HECM for coops will be published several weeks later.

Peter H. Bell
President