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Reverse Mortgage Stabilization Act of 2013

Floor Speech

Location: Washington, DC


Mr. HECK of Washington. Madam Speaker, I yield myself such time as I may consume.

I would like to begin by reciprocating and thanking the gentleman from Texas for his leadership on this issue, and perhaps as notably the gentleman from Pennsylvania for his leadership and cooperation and collaboration in helping to solve this important problem. I thank you, sir. And, more importantly, I thank you on behalf of the many people who will benefit as a result of our action here today.

Madam Speaker, currently the Federal Housing Administration underwrites 100 percent of all reverse mortgages. Let me say that again. The Federal Housing Administration underwrites 100 percent of all reverse mortgages, and that is a program that is deeply troubled, as enumerated by the capable chair of the Financial Services Committee.

And so if you believe, as I do, that reverse mortgages are a financial product that actually ought to be available to some people, but under appropriate circumstances and conditions, it's all the more important that we enact H.R. 2167 today, and not just because TV pitchmen--let's see if I can name them all--James Garner, Henry ``the Fonz'' Winkler, Fred Dalton Thompson, Pat Boone, and Robert Wagner--entreat our elderly to do so, but because this legislation is very important.

So the question is, as with all legislation: What's the problem? There's probably no better statement of the problem than is represented in this chart which says that 7 percent of the FHA's portfolio is related to reverse mortgages, but 17 percent of their portfolio that is underwater is attributable to reverse mortgages. That is a stark, salient representation of why this legislation is needed.

I might add, frankly, that if you were to compare reverse mortgages across all, just the going forward, 30-year fixed mortgage market, it would be even more stark. This is against all products.

So what's the solution? As the chair indicated, it is to give the FHA the authority through mortgagee letter to adopt certain reforms. The alternative is to wait and to endure the arduous rulemaking process.

I had an agency in the office the other day for which I had a problem, and I sought a solution through the rulemaking process. I asked them, what's the minimum amount of time that would be required for adoption of rules, and they indicated the best of circumstances would be 18 months--sighed, paused--then said more like 24 to 36 months. We can't wait that long, Madam Speaker.

So what are those reforms that are likely to be adopted via mortgagee letter at the FHA? I think most notably, it would require a financial assessment of potential borrowers to ensure that this financial product is suitable for them. There are others as well. It may reduce the amount of funds granted up front to the borrower, and it may require escrow for provision of payment of taxes and insurance, something that is not uncommon in the mortgage industry.

But the financial assessment portion that very well may ensue as a result of passage of this legislation, it's important to note that that is a tool and technique used by the VA when it underwrites reverse mortgages. Let me say that again. The VA uses this tool to underwrite reverse mortgages. And how much of a problem does the VA have with reverse mortgages? Zero. Zero.

So we know with a virtual certainty that this solution which the gentleman from Pennsylvania and I bring to you today will solve the problem.

Finally, let me just say this is a twofer. We don't often get the opportunity for a twofer. This will extend some consumer protection insofar as there are consumers who will not purchase or who will purchase under different terms and conditions this product in a way that will not render them at risk as they are today. And secondly, it will inarguably improve the portfolio of the FHA. So, ladies and gentlemen, I entreat you to vote ``yes,'' and I thank once again both the chair of the committee and the gentleman from Pennsylvania.

I reserve the balance of my time.


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