Washington, DC – Under legislation passed today by the U.S. Senate, Idaho seniors will be able to continue to access the equity in their homes, according to Idaho Senator Mike Crapo. The U.S. Senate passed S. 2338, the Federal Housing Administration (FHA ) Modernization Act of 2007, which included Crapo’s amendment to permit FHA’s reverse mortgage program for seniors to continue. Absent the action by Congress, the program would have been halted. Crapo, who serves on the Senate Banking Committee which has jurisdiction over housing issues, voted in favor of the measure, which passed on an overwhelming vote of 93 to 1.
“The Senate took an important step today in advancing legislation to modernize FHA programs so that they can be better tools for lenders to use in serving the housing needs of American families who are not served or are underserved by conventional markets,” Crapo said. “Modernizing the FHA enables it to play a larger role in strengthening the mortgage markets, while offering borrowers a safe and fair mortgage alternative.”
The FHA Modernization bill would increase access to FHA-insured loans at a time when many people need to refinance loans to remain in their homes. While safeguarding American taxpayers, the legislation provides certain relief by lowering some down payment requirements, allows FHA to keep up with marketplace changes, and includes Crapo’s provisions to permit FHA’s reverse mortgage program for seniors to continue and flourish. The FHA’s reverse mortgage program enables senior homeowners to remain in their homes and financially independent by converting part of their home equity into tax-free income. The seniors are able to do so without having to sell their home, give up their title, or take on a new monthly mortgage payment.
Crapo continued, “I am especially pleased that this legislation removes the statutory cap on the number of reverse mortgages that FHA can insure and will prevent the possibility of future program disruption. The program’s rapid growth created a near-crisis in 2005 when concerns arose that the cap was being reached and the program would be suspended. Currently, the cap is temporarily suspended.
“The Federal Housing Administration’s reverse mortgage program is an important example of a successful public-private partnership. It allows our elderly citizens the opportunity to age in place, by spending their own equity and retaining their dignity. Predictions are being made that, in the future, these loans will be a common financial planning tool for retirees.”
Crapo, who serves as the Ranking Member of the Senate Banking Subcommittee on Housing, Transportation, and Community Development, spoke on the Senate floor during debate over S. 2338. The House has passed a separate version of the bill, so the two measures must be conferenced before final action can be taken by Congress.