Reverse Mortgage Guide

The CongressDaily is reporting that Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, wants to raise reverse mortgage loan limits to “almost $730,000.”

According to the publication, the reason Frank wants to raise the HECM loan limit is to collect more fees. Those fees would then be used to underwrite expected losses from the $300 billion FHA mortgage bailout program which is now moving through Congress.

“By lifting the cap on the FHA reverse-mortgage program, Frank said, the measure could bring in $300 million annually. He noted that raising the FHA loan limit would raise tens of millions of dollars annually, and he wants the cap to go up to almost $730,000,” according to CongressDaily.

The publication reports that Sen. Richard Shelby (R-AL) is opposed to raising the reverse mortgage loan limit to more than $550,000.

Frank wants to raise the HUD HECM mortgage insurance premium to pay for something other than reverse mortgage losses. That sounds like taxing Peter to pay Paul, not an attractive strategy if you’re Peter.

As well, one would hope that the lower origination fees required under H.R. 3221 would not be lost. The bill caps reverse mortgage origination costs at $6,000 — but does not cap HUD insurance premiums.

For the full story from the CongressDaily, see: Frank Eyeing New Sources To Pay For FHA Financing Bill

This entry was posted on Thursday, May 29th, 2008 at 12:55 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.