Dare we say it's a Heck of a bill?
Congressman Denny Heck, D-WA, may be the new kid on the block, but he came out of the gates blazing.
Not only did Heck get the Reverse Mortgage Stabilization Act of 2013 passed by the U.S. House of Representatives Wednesday, it’s his first bill.
With that type of opening record, we’re holding a standard to the congressman to effectively produce such approval in the forthcoming months. But for now, let’s give Heck a pat on the back for his impressive work.
Only a handful of bills introduced by a first-term member of the minority party reach the floor on the U.S. each season. Bravo, Heck.
Now the bill will move to the U.S. Senate, where Sen. Bob Menendez, D-NJ, has introduced similar legislation.
The legislation gives the Federal Housing Administration authority to quickly make commonsense reforms to the federal reverse mortgage program necessary to stabilize the program.
"It’s still possible to get things done in Washington, D.C. if you’re willing to reach across the aisle and focus on the substance of issues," Heck explained.
He added, "This is a bill that will help seniors and others approaching retirement by enacting commonsense reforms to stabilize a widely used federal program. I urge the Senate to take this bill up soon."
Reverse mortgages provide an efficient way for seniors to tap into their home equity to supplement cash flow or meet unexpected needs. The FHA’s insurance of these loans makes them widely available to seniors.
Consequently, the housing downturn exacerbated problems in the in the program and reverse mortgages now account for less than 7% of FHA’s portfolio, but more than 16% of expected losses — proving to be a major headache for the housing agency.
Not to fear, the Reverse Mortgage Stabilization Act is here to try and attempt to write some wrongs.
The bill gives FHA the power to make rule changes by mortgagee letter as long as those changes improve the fiscal situation of the portfolio.
FHA will be able to require financial assessments of borrowers’ budgets, to set up escrow accounts to ensure payment of taxes and insurance and to limit the amount borrowers can take out as a lump sum up front.
Heck’s goal is improve the product for seniors and return the reverse mortgage program to profitability — if successfully executed, Heck deserves a rightfully earned round of applause.