[Congressional Record Volume 153, Number 8 (Tuesday, January 16, 2007)]
[House]
[Pages H534-H536]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    AUTHORITY TO CONTINUE TO INSURE HOME EQUITY CONVERSION MORTGAGES

  Mr. SCOTT of Georgia. Madam Speaker, I move to suspend the rules and 
pass the bill (H.R. 391) to authorize the Secretary of Housing and 
Urban Development to continue to insure, and to enter into commitments 
to insure, home equity conversion mortgages under section 255 of the 
National Housing Act.
  The Clerk read as follows:

                                H.R. 391

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORITY TO INSURE HOME EQUITY CONVERSION 
                   MORTGAGES.

       The Secretary of Housing and Urban Development may, until 
     the date specified in section 106(3) of the Continuing 
     Appropriations Resolution, 2007 (Division B of Public Law 
     109-289; 120 Stat. 1313), insure and enter into commitments 
     to insure mortgages under section 255 of the National Housing 
     Act (12 U.S.C. 1715z-20), without regard to the limitation in 
     the first sentence of such section 255(g), as amended by 
     section 131 of the Continuing Appropriations Resolution, 2007 
     (120 Stat. 1316).

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Georgia (Mr. Scott) and the gentlewoman from Illinois (Mrs. Biggert) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Georgia.
  Mr. SCOTT of Georgia. Madam Speaker, I yield myself such time as I 
may need.
  First of all, H.R. 391 is a bill sponsored by my good friend and 
colleague from Utah (Mr. Matheson). H.R. 391 would prevent any shutdown 
of the Federal Housing Administration, FHA, reverse mortgage program. 
This program is also known as the Home Equity Conversion Mortgage 
program, or the HECM program.
  As we are all aware, the Federal Government is currently operating 
with temporary funding authority that expires on February 15, 2007. The 
FHA can insure no more than 275,000 FHA reverse mortgages cumulatively 
nationwide under this authority.
  A reverse mortgage is a unique loan that enables senior homeowners to 
remain in their homes and remain financially independent by converting 
part of their home equity into income without having to sell their 
home, give up title, or take on a new monthly mortgage payment.
  Reverse mortgage is an apt name because the payment stream is 
reversed. Instead of making monthly payments to the lender, as with a 
regular mortgage, the lender makes payments to the homeowner. Payments 
to the borrower come in the form of a lump sum, monthly payments, a 
line of credit, or a combination thereof. Thus, the funds can be 
adapted to the financial needs of the senior taking out that particular 
loan.
  Mr. Matheson's bill is necessary because surging FHA reverse mortgage 
loan volume could result in this current national volume cap of FHA 
reverse mortgage loans being reached before February 15.
  The FHA HECM program is the oldest and most popular reverse mortgage 
product, accounting for 90 percent of the total market. It has been 
available since 1989 to homeowners aged 62 or older. HECM loans are 
insured by the Federal Government through the Federal Housing 
Administration at the Department of Housing and Urban Development, HUD.
  The HECM program was created to serve our seniors who are cash poor 
but equity rich. The majority of loan recipients are elderly widows. 
The funds from a reverse mortgage can be used for anything: daily 
living expenses; home repairs or modifications; health care expenses, 
including prescription drugs or in-home care; existing debts; and other 
needs. This is extraordinarily important and timely legislation for our 
seniors.
  The HUD HECM program has proven to be a growing success, serving its 
mission, while actually making money for the Federal Government. Its 
rapid pace of growth created a near crisis in 2005 when the number of 
FHA reverse mortgage loans began to near a statutory volume cap on the 
number of reverse mortgages that FHA could insure, leaving the program 
on the edge of suspension.
  However, emergency appropriations legislation for fiscal year 2005 
raised the volume cap from 150,000 to 250,000. Last fall, in the face 
of a similar concern, the limit was increased a little further to 
275,000. However, current projections show a very real risk that the 
cap will be met before February 15.
  In 2006, the House passed a bill that included a provision 
eliminating the FHA reverse mortgage volume cap, but unfortunately, the 
Senate did not act on this bill. As a result, in the short term, the 
statutory cap needs to be kept above the actual number of loans, or HUD 
will be required under law to suspend the program. That is why we need 
this very important piece of legislation passed.
  Madam Speaker, I reserve the balance of my time.
  Mrs. BIGGERT. Madam Speaker, I yield myself such time as I may 
consume.
  I rise today in support of H.R. 391, legislation that would 
temporarily remove the cap on the number of home equity conversion 
mortgages that may be insured by the Department of Housing and Urban 
Development's FHA program. I would like to thank my colleagues, 
Congressman Jim Matheson, and Congresswoman Ginny Brown-Waite, for 
introducing this important bill.
  This legislation is similar to H.R. 2892, the Reverse Mortgages to 
Help America's Seniors Act, which was approved by the House by voice 
vote in the previous Congress.
  Madam Speaker, this legislation would enable senior homeowners to

[[Page H535]]

continue to tap into an important source of cash, the equity in their 
own homes. Nicknamed ``reverse mortgages,'' these HECMs allow Americans 
age 62 and older to maintain financial independence while staying in 
their own homes.
  The reverse mortgage is a unique loan that allows seniors who are 
homeowners to convert part of the equity in their homes into tax-free 
income without having to sell their home, give up title, or take on new 
mortgage payments.
  The funds collected from a reverse mortgage can be used for whatever 
needs a senior may have, including home repairs, health care costs, 
debts or simple daily living expenses.
  Instead of making monthly payments to the lender, as with a regular 
or forward mortgage, the senior can receive payments or a payment from 
the lender. Under the reverse mortgage, senior homeowners can receive a 
lump sum, fixed monthly payments, a line of credit or a combination of 
the three, depending on their individual situations.
  The program 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.
  With a reverse mortgage, senior homeowners who are house rich but 
cash poor can access cash for their needs while keeping their homes.
  When the Home Equity Conversion Mortgage program was initially made 
permanent, the number of such loans that the FHA program could handle 
at any given time was capped so that HUD and Congress could determine 
the safety and soundness of the program.
  Nearly 10 years later, we now know the program is successful. In my 
home State of Illinois alone, the number of FHA-insured reverse 
mortgages has nearly doubled since 2004 to just short of 2,000 in 2006.
  With the removal of the cap, more seniors will be able to put the 
equity in their homes to work for them.
  Under this bill, the cap only will be removed through February 15, as 
was noted. It is my hope that by temporarily removing this cap, which 
currently limits the number of outstanding loans to 275,000, another 
measure that we will consider later could expand the removal further, 
eventually leading to a permanent fix.
  According to the AARP, a leading supporter of this bill, only the 
complete removal of the volume cap will prevent the possibility of 
detrimental program disruptions in the future.
  Living in the home that may have seen the raising of children and the 
joy of grandchildren should be an option for seniors well into 
retirement. I urge my colleagues to join me in supporting this 
important bill that will protect the ability of seniors to stay in 
their homes and provide them with economic security.
  Madam Speaker, I reserve the balance of my time.
  Mr. SCOTT of Georgia. Madam Speaker, I yield 3 minutes to the 
distinguished gentleman from Utah (Mr. Matheson), who has provided 
sterling leadership on this issue and is an outstanding leader in the 
Financial Services Committee.
  Mr. MATHESON. Madam Speaker, I really would like to first thank 
Chairman Frank and Ranking Member Bachus for their help in moving ahead 
with this bill. I am pleased to have worked with the Financial Services 
Committee on this legislation, and I appreciate leadership's prompt 
scheduling of this bill today for consideration.
  I would also like to thank some of the Financial Services Committee 
members who have worked with me on this legislation, including 
Congresswoman Ginny Brown-Waite of Florida who introduced the bill with 
me. It is a good, bipartisan bill.
  There are many members of the committee who have cosponsored the 
bill, including Chairman Frank, Ranking Member Bachus, Chairwoman 
Waters and Ranking Member Biggert, members Geoff Davis and Gary Miller.
  I want to thank the staff of the Financial Services Committee as 
well. They have been very helpful in moving this legislation along.
  You have heard a description of this. It is quite frankly a rather 
simple bill. It will temporarily lift the statutory limitation, or cap, 
on the number of home equity conversion mortgages that the FHA may 
insure. As you have heard, the current limit right now is at 275,000 
HECM mortgages, and it is important we are considering this legislation 
right now because we are approaching that limit. In fact, as I 
understand it, right now the portfolio stands at over 260,000 today, 
and there are many more loans in the pipeline waiting for HUD 
endorsement for insurance. So this is a timely bill.
  My bill would lift the cap in order to prevent FHA lending to shut 
down this very popular and necessary program, and my bill would suspend 
the cap through the time covered under the current continuing 
resolution.
  This bill is a good step to take today, but it is just one step. We 
are going to need to go further. Along with many of my colleagues who 
are on the floor with me today, I plan to introduce a separate bill 
that will permanently eliminate the cap.
  Now, this program, you have heard the description from both Mr. Scott 
and Mrs. Biggert, it helps so many seniors who really have a need.

                              {time}  1515

  It is such an important program, and it is great that we have an 
opportunity right now to eliminate what would be an unnecessary 
impediment to having seniors take advantage of this opportunity.
  We should provide stability to this program, and we should avoid any 
disruption and uncertainty in the marketplace by passing this bill 
today and moving ahead on the broader legislation in the near future.
  So I encourage my colleagues to join me in supporting H.R. 391 and 
providing seniors with the assurance that they can utilize this 
important program and not face an arbitrary deadline by hitting the 
cap. I urge passage of this bill.
  Mr. SCOTT of Georgia. Madam Speaker, I have no further speakers at 
this time.
  Let me just say in concluding, this is vitally important, this is 
vitally important to all Americans, but it most certainly is 
extraordinarily important to our seniors, and especially those that are 
widowed, so that we can lift this cap to save this program. It is a 
very, very important program.
  Again, I commend Mrs. Biggert and all of those on the House Financial 
Services, and Mr. Matheson for the brilliant leadership he has provided 
us with, and the fact that we all stand ready to assist Mr. Matheson 
when he brings the other bill back so that we can permanently solve 
this problem.


                             General Leave

  Mr. SCOTT of Georgia. Madam Speaker, I ask unanimous consent that all 
Members have 5 legislative days within which to revise and extend their 
remarks on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore (Ms. Solis). Is there objection to the 
request of the gentleman from Georgia?
  There was no objection.
  Mr. SCOTT of Georgia. Madam Speaker, I yield back the balance of my 
time.
  Mrs. BIGGERT. Madam Speaker, in closing let me just say that the 
number of elderly people in America continues to rise, and with 
advances in health care and technology seniors will continue to 
represent a larger percentage of the population. It is important that 
these citizens have as many economic resources as possible to support 
them in the future.
  Further, studies show that given the chance seniors overwhelmingly 
desire to live out their lives in their own homes. The reverse mortgage 
is an important tool that can help in addressing the needs of seniors 
today and in the years to come.
  I thank the gentleman from Utah for introducing this bill, and I 
thank the gentleman from Georgia for managing the bill. I urge support 
of this legislation.
  Mr. BACHUS. Madam Speaker, I rise today in support of H.R. 391, 
sponsored by my colleagues Congresswoman Ginny Brown-Waite and 
Congressman Jim Matheson, which would temporarily remove the cap on the 
number of reverse mortgages that may be insured by the Federal Housing 
Administration (FHA).
  The FHA reverse mortgage program, known as HUD's Home Equity 
Conversion Mortgage Program, or ``HECM,'' is the oldest and most 
popular reverse mortgage program in the country, accounting for 90 
percent of the total market. It has been available since 1989 to

[[Page H536]]

homeowners age 62 and older and is an important tool providing seniors 
with much-needed cash flow.
  By 2010, the number of elderly Americans is expected to top 40 
million. Over the next 35 years, the expected number of older seniors--
those age 85 and older--will quadruple from 3.5 million to 14 million. 
Besides finding safe and affordable housing, seniors face the challenge 
of paying for daily expenditures and rising healthcare costs. These 
growing financial responsibilities are coupled with a diminishing 
income and cash flow.
  The reverse mortgage product fills in this gap by enabling senior 
homeowners to remain in their homes and maintain financial 
independence. Through this program, seniors 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. Previously, 
the only way for a homeowner to extract cash from their home was to 
sell it, or to borrow against it and begin making monthly payments.
  The HECM program was created to serve our seniors who are ``cash 
poor'' but ``equity rich,'' and the majority of loan recipients are 
elderly widows. The funds from a reverse mortgage can be used for 
anything: daily living expenses; home repairs or modifications; health 
care expenses, including prescription drugs or in-home care; existing 
debts; prevention of foreclosure; and other needs.
  For example, a 75-year-old with a home worth $100,000 could receive a 
reverse mortgage loan that could payout $500 per month for almost 12 
years. This loan is then repaid when the borrower dies or the home is 
sold.
  Not only do seniors face a shortage of affordable housing, but 
surveys show that most seniors prefer to live out their lives in the 
own homes. According to a study by AARP, over 80 percent of respondents 
indicated that they wanted to stay in their current residence as long 
as possible. Further, according to the National Council on the Aging, 
of the over 27 million households in the U.S. over 62 years of age, 82 
percent live in homes that they own and over 74 percent own those homes 
free and clear.
  In 1998, Congress adopted legislation making the HECM program 
permanent, but set a cap of 150,000 loans that could be outstanding at 
any one time. Because production of HECM loans began to bump up against 
that cap, Congress first increased the authorization cap to 250,000 in 
2005 and then to 275,000 in late 2006. However, there are indications 
that this increase may not be sufficient, and that this cap will stifle 
the ability of seniors to tap into this important equity as a way of 
addressing everyday needs. According to the Wall Street Journal, in 
Fiscal Year 2006, homeowners took out a record 76,351 reverse 
mortgages, which represents an increase of 77 percent over the previous 
year.
  This legislation will remove the cap on the number of reverse 
mortgages that can be insured by the HECM program through February 15, 
the date on which the current Continuing Resolution expires. This 
measure is similar to H.R. 2892, the ``Reverse Mortgages to Help 
America's Seniors Act,'' which was passed by the House by voice vote in 
the last Congress. While only a temporary fix, today's bill will pave 
the way for removal of the cap through the end of 2007.
  For most seniors, and most Americans, a home represents more than 
just a place to live. It holds treasured memories and provides economic 
security to support increasingly longer lives. I urge Members to 
unanimously support this bill so that seniors can maintain their 
independence and stay in their homes.
  Mrs. BIGGERT. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Georgia (Mr. Scott) that the House suspend the rules and 
pass the bill, H.R. 391.
  The question was taken; and (two-thirds of those being in the 
affirmative) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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