Reverse Mortgage Legislation Update: January 28, 2010

President Barack Obama gave his first State of the Union address last night where he announced plans to freeze government spending starting in 2011 for three years.

While the President announced that spending related to national security, Medicare, Medicaid, and social security would not be affected by the freeze, it remains unclear how the freeze will affect the HECM program, HUD, and the Federal Housing Administration.

In addition, President Obama included language in his speech in reference to the Financial Services Bill currently awaiting the Senate, noting that, “…If the bill that ends up on my desk doesn’t meet the test of real reform, I will send it back until we get it right. We’ve got to get it right.”

It is likely that this is partly in reference to the inclusion of the Consumer Financial Protection Agency (CFPA) in the final version of the bill. Senator Christopher Dodd (D-CT) is allegedly debating removing the CFPA from the bill in the Senate in order to secure the support of centrist Democrats and Republicans. If President Obama sticks to his promise, he will likely veto any version of the bill that does not contain the CFPA.

In addition, Congressman Joe Sestak, D-PA is campaigning to require lenders to provide specific disclosure statements to seniors before they enter a reverse mortgage and require seniors to meet with a counselor before signing the documents.

Written by Reva Minkoff

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