Obama Administration wants more Reverse Mortgage Funds
The Obama administration is asking taxpayers to subsidize the Federal Housing Administration’s program for reverse mortgages for the first time.
The administration has requested that Congress appropriate $798 million for the program, according to budget documents released by the White House Thursday. However, the FHA’s flagship single-family mortgage insurance program will remain self-funded, squelching concerns that it would need a taxpayer subsidy.
The FHA’s reverse-mortgage program allows borrowers 62 and older to convert equity in their home into monthly payments or a line of credit. The borrower pays back the loan when the property is sold with the proceeds of the sale. Where the sale proceeds fall short, the FHA steps in to pay the difference.
The Department of Housing and Urban Development, where FHA is located, cited falling home prices as the culprit prompting the request for the taxpayer subsidy. The agency projects that it will insure at least $30 billion in reverse mortgages under the program in 2010.
Some experts have questioned the policy rationale for federal backing of products that allow older Americans to take equity out of their home.
HUD is requesting $43.7 billion in budget authority for 2010, up from $40.7 billion that was authorized in 2009.
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Source: Newswire
