[Congressional Record Volume 141, Number 106 (Tuesday, June 27, 1995)]
[Extensions of Remarks]
[Page E1340]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                    HOME EQUITY CONVERSION MORTGAGES

                                 ______


                            HON. RICK LAZIO

                              of new york

                    in the house of representatives

                         Tuesday, June 27, 1995
  Mr. LAZIO of New York. Mr. Speaker, today I offered a bill 
reauthorizing the Federal Housing Administration's ability to insure 
home equity conversion mortgages [HECM], one of the most effective 
tools available to older Americans to ensure their own financial 
standing.
  I strongly support the HECM program. Last year I cosponsored the HECM 
expansion and extension provisions included in last year's housing 
bill, which the Senate failed to act on at the close of the last 
session.
  The HECM program is still in its infancy--currently, banks only 
underwrite on average 200 to 400 loans HECM loans per month. This all 
the more reason to support this worthwhile effort, to give the private 
sector time to educate itself and adjust to this valuable program. The 
legislation I am introducing extends the authorization for an 
additional 5 years. This bill also extends the provisions of HECM to 
cover 1 to 4 family units in which the owner resides.
  This is precisely the kind of role FHA has served well in the past 
and should continue to serve into the future: Creating a market for 
valuable financing products and, after they are established, moving out 
to let the private sector operate those products more efficiently.
  By creating a market for reverse mortgages, the HECM program provides 
unique opportunities for older Americans to hold onto their houses 
throughout their lifetime and avoid being house poor, a sad result for 
those Americans who have worked long and hard to keep their house but 
find, later in life, that they cannot afford to live without selling 
their home.
  The program also makes sense from a budget standpoint. It is a net 
inflow to the FHA insurance fund of between $1.5 and $4 million a year.
  Currently, lenders in 47 States, the District of Columbia, and Puerto 
Rico are originating HECM loans.
  The average HECM borrower is 76 years old and has a home value of 
$138,000, but an income of only $10,400. By contrast, the median 
senior's income in the United States today is $18,500 and the median 
home value is only $70,400.
  We should encourage, not punish those who want to stay in their 
houses and stay in the neighborhoods they care about and at the same 
time make their life more livable. What could be better than ensuring 
the quality of life of older Americans at no additional cost to the 
Government?


                          ____________________