Lenders Fidget Over HECM Cap

Originations of Federal Housing Administration reverse mortgages are on a tear this year, but lenders are worried that election politics could lead to a shutdown in the first quarter and disrupt the program designed to help seniors tap the equity in their homes.Lenders are expected to bump up against a cap on FHA home equity conversion mortgages by February or March, according to the National Reverse Mortgage Lenders Association. "We are very nervous," said NRMLA president Peter Bell. "Lifting the cap is a do-or-die issue for the HECM business." The House has passed a bill, sponsored by Rep. Michael Fitzpatrick, R-Pa., that eliminates a 250,000-loan cap on the number of HECM loans the FHA can insure. But the Senate has not acted on the Fitzpatrick bill (H.R. 2892) or a similar bill introduced by Sen. Rick Santorum, R-Pa. "We are anxious to see the Senate move before they adjourn before the election," Mr. Bell said. With political control of the House and the Senate up for grabs, "who knows what will happen after the election?" he added.