The Federal Housing Administration is working on a proposed rule that would require reverse mortgage lenders to conduct financial assessments of seniors taking out Home Equity Conversion Mortgages to ensure they can afford to pay homeowner’s insurance and property taxes.
FHA commissioner Carol Galante told Senate appropriators Wednesday afternoon that her office expects to issue the proposal for public comment in July or August.
This proposal would require lenders to conduct a financial assessment of the borrower to determine their ability to pay insurance and taxes. If necessary, the borrower would have to set aside funds to ensure payment of the taxes and insurance.
The commissioner stressed that FHA has been urging Congress to pass legislation that would allow her agency to immediately mandate these reforms via mortgagee letters. And she is still hoping that Congress will move quickly so FHA can regulate the troubled HECM via mortgagee letters.
Galante noted that it can take up to 18 months to complete the regulatory process of proposing and finalizing a rule.
But Sen. Susan Collins, R-Maine, noted that FHA has been aware of these problems since the beginning of 2012.
“You should have done the rulemaking last January,” Collins said, so the HECM rule would be in place now.
Legislation to allow FHA to run the HECM program via mortgagee letter has been introduced in the House and Senate.
Supporters are trying to get the House bill (H.R. 2167), sponsored by Reps. Michael Fitzpatrick, R-Pa., and Denny Heck D-Wash., on the suspension calendar for a quick vote.
Sen. Robert Menendez, D-N.J., has introduced a similar bill in the Senate.
