WASHINGTON, DC - As part of his effort to address the anticipated shortfall of the Mutual Mortgage Insurance Fund caused by the federal reverse mortgage programs, U.S. Senator Robert Menendez (D-NJ), today called for support for his legislation that would provide much needed reforms to protect the Federal Housing Authority's Home Equity Conversion Mortgage (HECM) program. The HECM program insures reverse mortgages, which allow seniors to draw from their home equity in order to meet expenses and stay in their own homes.
"I firmly believe that giving FHA the authority to make these much-needed changes will expedite FHA's ability to ensure long term sustainability for reverse mortgages," said Senator Menendez, as he presided as Chairman over a Senate Banking, Housing and Urban Affairs Subcommittee hearing.
"But the bottom line, from my perspective, where I come from - certainly for the people of my state of New Jersey - is protecting seniors. We all see television commercials promoting reverse mortgages, and we all know they are becoming increasingly popular, and rightfully so. We also know that -- because of declining home values and longer loan-life than expected -- there are real concerns that the HECM portfolio could lead the FHA to have to draw on the U.S. Treasury."
The following experts testified as witnesses at this morning's hearing:
In March, Senator Menendez introduced legislation to help stabilize the HECM program and keep it economically viable, while reducing the cost to taxpayers.
The HECM Stabilization Act of 2013 (S. 469) allows the FHA to implement much-needed reforms to the HECM program such as reducing the amount of money taken by borrowers at origination to sustainable levels, performing borrower financial assessments to determine if a HECM loan is affordable; and establishing escrow accounts with lenders to prevent foreclosures from tax and property insurance delinquencies.
Senator Menendez's opening remarks: