House Expected To Sign Housing Bill This Week, Reverse Mortgages Could Get Higher Loan Limits & More

image Yesterday NRMLA announced that the housing bill which includes the HECM amendments will be brought to the House floor for yet another vote that is currently scheduled for Wednesday, July 23. 

The Senate recently passed a version of H.R. 3221 late on Friday, July 11, and sent it over to the House for its concurrence. Originally, 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, NRMLA is reporting that because of 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 plans 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.  If everything goes smoothly it’s possible that  the 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 NRMLA isn’t sure exactly what will be included.  Items of concern that directly impact HECMs 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.
  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.

NRMLA reports that If a bill is signed into law, we can 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.

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