[Congressional Record (Bound Edition), Volume 151 (2005), Part 21]
[House]
[Pages 28354-28356]
[From the U.S. 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 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.

[[Page 28355]]

  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 
Fitz-
patrick 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.
  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

[[Page 28356]]

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.
  Mrs. MALONEY. Madam Speaker, I rise in support of H.R. 2892, the 
Reverse Mortgages to Help America's Seniors Act.
  By removing the cap on the number of these loans that HUD can 
guarantee, this bipartisan bill allows the program to grow with demand.
  A reverse mortgage is a creative financing tool that allows seniors 
to take some of the equity out of their homes without having to sell 
the home, or take on a new monthly mortgage payment.
  Because it allows seniors to remain in their homes and provides them 
an income, it has proved very popular. These funds can be used for the 
everyday demands that many seniors face and that can become 
particularly urgent for those surviving on a fixed income, such as 
paying off existing debts, paying health care expenses, or paying daily 
living expenses.
  When the statutory cap of 150,000 loans was reached this spring, 
there was consternation that the program would be suspended even though 
it is a win-win: it makes money for taxpayers and benefits seniors.
  As those events demonstrate, the cap serves no useful purpose and 
should be removed. There is no reason to deny seniors this benefit if 
they decide it works for them, especially since it makes substantial 
money for the government--almost $40 million annually after the first 
year.
  I urge my colleagues to vote for H.R. 2892 and make this financial 
tool available to any senior who wants to use it.
  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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