Congress Raises Cap on FHA Reverses

Congress has raised a cap on FHA reverse mortgages from 150,000 to 250,000 and averted a shutdown on originations as part of an $82 billion supplemental appropriations bill to fund the war in Iraq and military activities in Afghanistan.The Department of Housing and Urban Development pushed for the increase when it became clear that increased demand for FHA home equity conversion mortgages had pushed total originations near the 150,000 cap. Lenders originated 38,000 HECMs in fiscal year 2004, and Federal Housing Administration data show that originations are running 30% above last year's pace. Congress established the 150,000 cap in 1998 when it agreed to make the HECM pilot program a permanent program. The Senate approved final passage of the supplemental appropriations bill Tuesday night. The president is expected to sign the bill.