House equity

FHA authority to continue insuring reverse mortgages passes House

A package of six appropriations bills passed by the House of Representatives late last month included language allowing the Federal Housing Administration (FHA) to continue insuring home equity conversion mortgages (HECM). This is according to an announcement from the National Reverse Mortgage Lenders Association (NRMLA) and the wording of the legislative package as reviewed by RMD.

The package, collectively known as the Transportation, Housing, and Urban Development and Related Agencies (THUD) Appropriation Bill 2023, passed the House of Representatives 220-207, a virtually partisan vote that saw all Democrats vote yes while all Republicans voted. no, except for four members who did not vote according to the official count.

“The Transportation, Housing and Urban Development and Related Agencies Funding Bill for 2023 provides funding of $90.9 billion, an increase of $9.9 billion – more than 12% – from compared to 2022,” reads an announcement from the House Appropriations Committee. “This includes an increase of $8.9 billion for the Department of Housing and Urban Development and $833 million for the Department of Transportation. In total, the bill provides $168.5 billion in total fiscal resources, an increase of $11.5 billion from 2022.”

Late last week, the Senate released its own version of the appropriations bill, which uses the same language relating to the HECM program as its House counterpart, according to the NRMLA in an emailed announcement to members. The NRMLA also said its work played “an essential role” in integrating the language into the package.

Current law governing the HECM program imposes a limit, or “cap,” on the number of HECM loans the FHA can insure. However, this cap has been consistently suspended by Congress since 2007.

Late in the Trump administration, in its final budget proposal, HUD, under Secretary Ben Carson, sought to permanently remove the cap. This recommendation continued in the first budget proposal released by the Biden administration and reappeared in the Congressional rationale document for the budget request released earlier this year.

“This proposal would remove the statutory cap on the number of HECM loans that can be insured by the FHA, which is routinely removed in the 2023 Finance and Appropriation Acts,” it says. As described, this limit has indeed been lifted in the last budget proposal.

Read the announcement of the move to the House Appropriations Committee.