[Congressional Record Volume 151, Number 160 (Wednesday, December 14, 2005)]
[House]
[Pages H11586-H11588]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
REVERSE MORTGAGES TO HELP AMERICA'S SENIORS ACT
Mr. FITZPATRICK of Pennsylvania. Mr. Speaker, I move to suspend the
rules and pass the bill (H.R. 2892) to amend section 255 of the
National Housing Act to remove the limitation on the number of reverse
mortgages that may be insured under the FHA mortgage insurance program
for such mortgages.
The Clerk read as follows:
H.R. 2892
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reverse Mortgages to Help
America's Seniors Act''.
SEC. 2. ELIMINATION OF CAP ON NUMBER OF MORTGAGES INSURED.
Section 255 of the National Housing Act (12 U.S.C. 1715z-
20) is amended--
(1) in subsection (g), by striking the first sentence; and
(2) in subsection (i)(1)(C), by striking ``limitations''
and inserting ``limitation''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Pennsylvania (Mr. Fitzpatrick) and the gentleman from Utah (Mr.
Matheson) each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania.
Mr. FITZPATRICK of Pennsylvania. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, as we continue to try and find the best ways to improve
retirement security for our Nation's seniors, I have looked at numerous
programs to lessen the burden that our numerous seniors face: health
care, transportation, and homeownership. As a former Bucks County
Commissioner and now as a Member of Congress representing
Pennsylvania's 8th Congressional District, I have received many calls
and letters from seniors looking to find ways to pay their bills so
that they could stay in their homes.
Mr. Speaker, earlier this year, I had the great opportunity to meet
Arthur Gerald, a constituent from New Hope, Bucks County, Pennsylvania,
who took advantage of the reverse mortgage program. Arthur was faced
with a horrible decision, whether to sell the home he had built for
himself and his wife to pay mounting financial obligations or face
certain financial ruin. Arthur told me stories of how he, as a young
Broadway actor, moved from New York to Pennsylvania with his wife. His
house was more than a home. It became a centerpiece of the community.
He built a stage in his backyard to perform plays and shows for his
neighbors. His house was a focal point for the community. Listening to
his stories, I realized that the house was more than four walls and a
roof. It was his life, it was his past, and it was his future.
The reverse mortgage allowed Arthur to stay in his home. He harnessed
the power of this loan to achieve financial security and independence
and to preserve his memories.
Today, I am proud to bring bipartisan, AARP-endorsed legislation to
the floor that would help even more seniors preserve their homes and
their memories. The Reverse Mortgages to Help America's Seniors Act,
H.R. 2892, makes necessary improvements to the Department of House and
Urban Development's Home Equity Conversion Mortgage program by removing
the statutory limitation, or ceiling, on the aggregate number of FHA-
insured reverse mortgages that may be issued in any given year. Only a
complete removal of the volume cap will prevent the possibility of
future program disruption that will be detrimental to America's
seniors.
A reverse mortgage is a unique loan that enables senior homeowners to
convert part of the equity in their homes into tax-free income without
having to sell the home, give up title, or take on a new monthly
mortgage payment.
Reverse mortgages are aptly named because the payment stream is, in
fact, reversed. Instead of making monthly payments to the lender as
with a regular mortgage, the lender makes payments to the homeowner.
The homeowner has great flexibility in choosing
[[Page H11587]]
how to receive the money: as a lump sum, fixed monthly payments, a line
of credit, or a combination of all three. No monthly payments are
required during the term of the loan, and it is paid back only when the
resident sells the home, passes away, or permanently moves out of the
home.
A key part of the reverse mortgage program is mandatory counseling.
To make sure that no one rushes into a mortgage that they are
unprepared for, the HECM program requires mandatory counseling prior to
providing the application and the loan.
The HECM program is the oldest and most popular reverse mortgage
product, accounting for 90 percent of the total market. Available since
1989 to homeowners aged 62 or older, the Home Equity Conversion
Mortgage loans are insured by the Federal Government through the FHA.
The HUD HECM program has served its mission at an actual savings to the
Federal Government. H.R. 2892 would increase discretionary receipts by
about $8 million in 2007 and $39 million annually in subsequent years.
The Home Equity Conversion Mortgage program has, in fact, been a huge
success. So much so that the rapid pace of growth created a near crisis
this April when concerns arose about the fact that the cap was being
reached and the program would, in fact, have to be suspended. While the
cap was raised from $150,000 to $250,000 in the 2005 emergency
supplemental appropriation, this was just a temporary solution. My bill
would remove the volume limit and prevent the possibility of future
program disruption and uncertainty in the marketplace.
Reverse mortgages benefit seniors who are land rich and cash poor.
Many seniors are struggling financially because they do not have a
steady income stream coming in, but are sitting on a valuable asset
that is not working for them. The funds from their reverse mortgage can
be used for needs that every senior faces like health care expenses,
prescription drugs, in-home care, prevention of foreclosure, paying off
existing debts, home repairs or modifications, or daily living
expenses.
H.R. 2892 has gained support from both sides of the aisle. I would
like to thank the 34 cosponsors, specifically the gentleman from Utah
(Mr. Matheson), the lead Democrat cosponsor. I think that Congress can
agree, regardless of party affiliation, that we want our seniors
staying in their homes, especially in a fiscally responsible way.
{time} 1915
Home ownership is a key part of the American Dream, and reverse
mortgages allow an avenue of relief for those seniors faced with losing
that dream.
I will leave you with a quote from the AARP: We are pleased to be
able to support Congressman Fitzpatrick's bill eliminating the loan cap
for HECM-qualified, FHA-insured reverse mortgages. We believe that the
reverse mortgage instrument provides older Americans with a valuable
option for meeting their expenses, especially for those households that
are equity-rich but income-poor. This simple but important step will
ensure that this unique financial tool will be available to older
homeowners.
Madam Speaker, the House must pass H.R. 2892.
Madam Speaker, I reserve the balance of my time.
Mr. MATHESON. Madam Speaker, I yield 2 minutes to the gentleman from
Washington (Mr. Inslee).
Mr. INSLEE. Madam Speaker, I very much compliment the prime sponsor
(Mr. Matheson) for this bill. This bill really does unlock a secret to
very significant cash available to our seniors. This limit that we now
have that is going to be removed by this bill really has no particular
reason for its existence, and what we are finding is that there is a
tremendous demand for these reverse mortgages because it could unlock
something like $64 billion of equity that seniors have. Seniors are
equity-rich but cash-poor in a lot of circumstances.
We are also finding that seniors are using these reverse mortgages in
new ways, to help their grandchildren with their college education, for
their recreation, as well as the obvious reasons, for health care and
assisted-living facilities and the like. So this has tremendous
opportunity.
I hope this is a first step in a continued program to make these
mortgages more available. I am working on a bill I hope at some point
will pass that will also go to a unified limitation in the dollar
amount, the cap that now exists and limits the amount of equity that
our seniors can get out of their homes.
Right now, some people can get access to $300,000 plus, but some are
limited to under $170,000. So we hope this is a first step in a
continued effort to making these reverse mortgages more available. I
think seniors will be universally happy with this.
Again, I commend the prime sponsor of this, Mr. Matheson, for his
leadership.
Mr. FITZPATRICK of Pennsylvania. Madam Speaker, I reserve the balance
of my time.
Mr. MATHESON. Madam Speaker, I yield myself such time as I may
consume.
First of all, I am very pleased to have worked with Representative
Fitzpatrick on this important legislation, and I thank him for his
leadership, and I also thank the House leadership and Chairman Oxley
and Ranking Member Frank for getting this important bill to the floor
in such an expeditious manner.
H.R. 2892 is a simple bill that will increase opportunities for our
Nation's seniors to meet their own financial needs. H.R. 2892, the
Reverse Mortgages to Help America's Seniors Act, will eliminate the cap
on the volume of federally insured home equity conversion mortgages, or
reverse mortgages as they are called. These unique loans enable senior
homeowners to convert part of the equity in their homes to tax-free
income without having to sell the home, give up title or take on a new
monthly mortgage. Instead of making monthly payments to the lender, as
with a regular mortgage, the lender makes payments to the homeowner.
The majority of loan recipients are elderly widows.
Under current law, the HUD Home Equity Conversion Mortgage, or
reverse mortgage program, is capped at $250,000 loans. Removing the cap
will provide stability and greater competition in a program that has
proven to be useful for many seniors.
This bill is cost-effective for taxpayers and consumers. In fact, CBO
estimates that lifting the cap will raise revenues by about $8 million
in 2007 and $39 million annually in subsequent years.
This legislation is supported by AARP, the National Reverse Mortgage
Lenders Association and others. Again, I want to thank Mr. Fitzpatrick
for his leadership on this bill, and I want to also thank Mr. Oxley and
Mr. Frank, and I encourage my colleagues to vote for this important
legislation to provide other seniors with greater tools for managing
their expenses.
Madam Speaker, I reserve the balance of my time.
Mr. FITZPATRICK of Pennsylvania. Madam Speaker, I yield 2 minutes to
the gentleman from Florida (Mr. Foley).
Mr. FOLEY. Madam Speaker, I rise today in strong support of Mr.
Fitzpatrick's excellent bill, H.R. 2892, that would remove the Federal
Housing Administration's reverse mortgage volume cap.
I was a former realtor before I entered the Congress, and my district
is the fifth largest Medicare eligible senior district in America, so
this is critically important to their ability to live in their homes
that they have tended to and built up over the years. It allows them to
stay in their communities and their homes and remain healthy and
vibrant in their community.
FHA's reverse mortgage program reflects the very best of FHA, and the
elimination of the loan cap represents an appropriate and welcome
adjustment to the program. Launched in 1989, FHA's Home Equity
Conversion Mortgage program was designed to be an innovative new
mortgage product that would allow seniors to tap into their home equity
in a safe and affordable manner. Previously, the only way for the
homeowner to get cash from their home was to sell their home or borrow
against it and begin making monthly payments. A reverse mortgage is a
product that allows a homeowner age 62 or older to get cash by tapping
their equity without having to make a monthly payment or sell their
home.
[[Page H11588]]
As I mentioned earlier, their home is their nest, their safety net, a
place where they feel independent, secure and feel that their lives
still have value and worth. Staying in their home allows them to bring
their children and grandchildren into that home, oftentimes the place
where they raised those very children. This type of mortgage can be
useful to couples who wish to use their homes to pay off medical bills,
purchase a vacation home or give to their children or grandchildren as
part of a living will.
There are nearly 35 million Americans over 65 years of age, and by
2010, the number of elderly individuals is expected to jump to 40
million and then reach 50 million by 2020. Even more dramatic is the
growth of older seniors, persons age 85 and older. Over the next 35
years, that number is expected to quadruple from 3.5 million to 14
million, those over 85.
So I want to thank Mr. Fitzpatrick for his excellent work on this
bill. Certainly it is a good bill for Floridians, and I know
Pennsylvanians as well. I also want to thank Chairman Mike Oxley for
his hard work as well as Mike Fitzpatrick in bringing this important
piece of legislation to the floor, and I urge my colleagues to support
the measure.
Mr. MATHESON. Madam Speaker, I want to say again that I thank
Representative Fitzpatrick and urge passage of the legislation, and I
yield back the balance of my time.
Mr. FITZPATRICK of Pennsylvania. Madam Speaker, in closing,
approximately 10 years ago there was a pilot project where HUD worked
through the Home Equity Conversion Mortgage program and backed reverse
mortgages for senior citizens in America. Many, many seniors throughout
this country were able to access reverse mortgages to, as you have
heard through the testimony here today, stay in their homes, to retain
the memories of their home, homes where they raised their families,
graduated their children and a place where they just simply want to
retire in.
This has been a pilot project that has worked, and I have heard from
many, many seniors in my district who need this product and have asked
that I sponsor this legislation and make the reverse mortgage product
more plentiful and more available to them as they live out and retire
in the homes that they have raised their families in.
So in closing, Madam Speaker, I would just ask that my fellow Members
of this chamber support this bill and pass it this evening.
Mr. OXLEY. Mr. Speaker, I rise today in support of H.R. 2892, a bill
sponsored by my friend and colleague from Pennsylvania, Michael
Fitzpatrick. Mr. Fitzpatrick's legislation is a response to the
administration's request to access the growing, frequently untapped,
equity that seniors have amassed in their homes. That equity, through a
very successful FHA program can be accessed through Home Equity
Conversion Mortgages.
The number of such loans that the FHA program can handle was capped
so that HUD and Congress could determine the safety and soundness of
the program. Nearly 10 years later, now we know the program is
successful and this bill will ensure that the reverse mortgage program
continues uninterrupted and will not place the FHA insurance fund into
any risks. By removing this cap, more senior citizens will be able to
use the equity in their homes to make them handicapped accessible, to
access money for healthcare, or whatever needs their families have. The
program also ensures that the reverse mortgage is paid back when they
move or when they pass away, and the homeowner will never owe more than
the house is worth.
The number of elderly persons in America continues to rise and with
advances in health care and technology, seniors will certainly
represent a growing number of American citizens. It is of great
importance that these citizens' needs be met and addressed now and that
they will have as many economic resources as possible to support
themselves in the future. Reverse mortgages is a tool that will help in
addressing the needs of seniors today and in the years to come.
A home represents more than just a place to live. It represents
security and memories that are cherished by their owners. Part of that
security can be economic security. I ask that Members of this Congress
unanimously support this bill so that seniors may have the money they
need without having to move from their homes.
Mr. MARKEY. Mr. Speaker, I rise today in support of H.R. 2892, the
Reverse Mortgages to Help America's Seniors Act.
While this bill is helpful and necessary for allowing seniors to
unlock their personal equity gained through homeownership, it also
points to a disturbing, new reality facing millions of senior citizens
throughout our country. The practice of reverse mortgages allows elder
homeowners to borrow against the equity of their homes and H.R. 2892
allows for more seniors to participate in this practice. The increased
demand in reverse mortgages suggests seniors are now facing difficult
spending priorities. As home heating bills are rising to all-time
highs, gasoline prices reaching record levels, municipalities raising
local taxes to compensate for lost federal funds, grandkids' college
financial aid decreasing, the current pension crises growing, and
efforts continuing to jeopardize the future of the Social Security
program, seniors have been left high and dry to fend for themselves in
the face of these new fiscal obstacles. If the ``Ownership Society''
envisioned by the President is, in reality, a ``Forced Borrowing
Society,'' perhaps we need to pay more attention to what is actually
happening to people and less to rhetorical flourishes masquerading as
public policy.
While H.R. 2892 is not a solution to the financial problems facing
seniors, it does allow them to pay for unexpected medical expenses,
home repairs, and a more comfortable retirement. But as my Republican
colleagues prepare to approve billions of dollars in tax cuts for the
highest income earners and arbitrary across-the-board program funding
cuts in social services, seniors are having the rug pulled from under
their feet by the federal government. I urge the passage of H.R. 2892,
because seniors need all available resources to face the broken
promises from the federal government, but let's not forget that there
is a reason why more and more seniors are seeking out these reverse
mortgage loans.
Mr. FITZPATRICK of Pennsylvania. Madam Speaker, I yield back the
balance of my time.
The SPEAKER pro tempore (Miss McMorris). The question is on the
motion offered by the gentleman from Pennsylvania (Mr. Fitzpatrick)
that the House suspend the rules and pass the bill, H.R. 2892.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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