Lazio Hopes To Pass ARM Bill This Year

Staff for Rep. Rick Lazio, R, N.Y., say they are hopeful that Congress will pass legislation this year that would increase the availability of government-insured adjustable-rate mortgages.Rep. Lazio's American Homeownership Act of 1998 (H.R. 3899) would raise to 40% from 30% the annual cap on ARMs insured through the Department of Housing and Urban Development, with fixed-rate mortgages accounting for the balance. Currently, ARM commitments cannot exceed 30% of HUD's total insurance volume from the previous year. "We originally hoped the bill would be marked up in subcommittee before Congress adjourned Aug. 6 but that is looking doubtful," a Lazio staffer told MortgageWire. "Now we're looking at early September as a possible date for a mark-up." HUD stopped insuring ARMs in April after reaching the 30% cap. The agency cannot insure any more ARMs until October when the new fiscal year starts. The Lazio legislation also mandates inspections on FHA home purchases and makes the agency's reverse mortgage program permanent. At a hearing Thursday, the National Association of Home Builders said it supports several provisions found in the Lazio bill but said it would like to see the ARM cap raised even higher. "If Congress believes a cap is needed, then a cap of 50% would better serve the thousands of prospective purchasers who rely on FHA-insured ARMs to qualify for a home purchase," Don Martin, the NAHB's president, testified before the Housing and Community Opportunity subcommittee chaired by Rep. Lazio.