Reverse Mortages to Help America's Seniors Act

REVERSE MORTGAGES TO HELP AMERICA'S SENIORS ACT -- (House of Representatives - December 14, 2005)

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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.

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.

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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.

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