The U.S. House of Representatives Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee approved the FY 2011 budget and now heads to the full Appropriation Committee.
The subcommittee included a $150 million to support the HECM program during FY 2011 according to the National Reverse Mortgage Lenders Association. Congressman John W. Olver (D-MA), Chair of the subcommittee said the $150 million “is a funding level sufficient to cover the expected volume for fiscal year 2011.”
The Obama Administration requested $250 million for the HECM program in the FY 2011 budget to offset projected losses for the Federal Housing Administration’s reverse mortgage program, but it’s unlikely the industry will endorse the $30 billion it projected for the upcoming fiscal year. As of May, FHA reports show that $15.1 billion HECMs have been endorsed during FY 2010, down nearly 30% from the previous year.
FHA is expected to lower principal limits one to five percent depending on the age of the borrower and increase the annual mortgage insurance premium from 0.50% to 1.25% with or without the appropriation. However, if the appropriation is not provided, FHA will be forced to reduce the amount of money available to seniors through the program by 21% said Commissioner David Stevens during testimony before the THUD subcommittee earlier this year.
The budget now heads to the full House Appropriations Committee and then to the full House.
“NRMLA will be aggressive every step of the way to ensure the $150 million appropriation remains in the final bill by following up with members of the Appropriations Committee to continue building support for HECM,” said the association in an alert to members.
