Reverse Mortgages to Help America's Seniors Act

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.

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.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield 2 minutes to the gentleman from Florida (Mr. Foley).

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.

Madam Speaker, I yield back the balance of my time.

Mr. Speaker, as we continue to discuss the best ways to strengthen retirement security for our Nation's seniors, I have looked into numerous programs to lessen the burden that our seniors face in rising health care costs, transportation, and homeownership.

As a long-time Bucks County Commissioner and now as a Member of Congress, I have received many phone calls, many letters from seniors looking to find ways to stay in their homes and pay their bills. How many seniors do the Members know who 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, an asset that they cannot cash in: the home that they want to stay in for their retirement?

Last week, Mr. Speaker, I introduced H.R. 2892. This legislation is bipartisan and is endorsed by AARP. It will eliminate the volume cap on the Department of Housing and Urban Development's Home Equity Conversion Mortgage, commonly referred to as the FHA-insured reverse mortgage program. A reverse mortgage is a unique loan that enables senior homeowners to remain in their homes and be financially independent by converting part of the equity in their homes into tax- free income without having to sell the home, does not require them to give up title, or to take on new mortgage payments. The funds from a reverse mortgage can be used for needs that every senior faces like health care costs, prescription drug costs, in-home care, prevention of foreclosure, paying off existing debts, home repairs, modification, or simple daily living expenses.

Reverse mortgages are aptly named because the payment stream is reversed. Instead of making monthly payments to the lender, as with a regular mortgage, the lender makes payments to the senior homeowner. This unique loan enables senior homeowners who are house rich but cash poor to convert part of their equity in their homes into tax-free income and allow the homeowner great flexibility in choosing how to receive the money. They can opt to receive a lump sum, fixed monthly payments, a line of credit, or a combination of the 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 has permanently moved 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 program requires mandatory counseling prior to applying for a reverse mortgage to ensure that the homeowner has a plan to use the payments in a responsible and beneficial manner. The reverse mortgage program has been successful and popular with senior homeowners, so much so that the rapid growth in these mortgages created a near crisis this April when concerns arose that the cap was going to be reached, leading to a suspension of the program.

While the cap was raised from $150,000 to $250,000 in the 2005 emergency supplemental appropriation bill, this is just a temporary solution. AARP stated that the only complete removal of the volume cap, which is

my bill, H.R. 2892, will prevent the possibility of future program disruptions that will be detrimental to seniors.

The importance of sustaining the FHA reverse mortgage program was further emphasized to me this past Monday while I was visiting in my district in Pennsylvania with several senior homeowners who recently obtained reverse mortgages.

Their stories are the same. They have worked their whole lives to obtain this home and to pay for the home. They have raised their children in the home. They have retired into their homes, and they live on Social Security income with basically no remaining savings. They have converted the equity in their home so that they can repair their homes, they can increase their standard of living, and they can live out their senior years with dignity in their own home.

Mr. Speaker, I think every Member of Congress can agree that seniors must have the option to stay in their homes as long as they wish. Lifelong homeownership is the American Dream. My legislation, H.R. 2892, would provide relief for those seniors faced with losing their homes. As we celebrate National Homeownership Month, it is fitting that Congress enact legislation that will allow existing homeowners to remain homeowners.

Today I call on all of my colleagues on both sides of the aisle to join me in this vital effort and to co-sponsor H.R. 2892.

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.

Madam Speaker, I yield 2 minutes to the gentleman from Washington (Mr. Inslee).

Madam Speaker, I yield myself such time as I may consume.

First of all, I am very pleased to have worked with Representative Fitzpatrick 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.

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. 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.