WASHINGTON, Dec 15 (Reuters) – The U.S. House passed a bill late Wednesday to eliminate the cap on federally insured reverse mortgages, which allow the elderly to convert part of their home equity into income without selling their houses.

The bill, introduced by Pennsylvania Republican Rep. Michael Fitzpatrick, was passed by the House but similar legislation has not been moved out of committee in the Senate.

Currently, the number of reverse mortgages insured by the Federal Housing Administration under the Home Equity Conversion Mortgage program is capped by Congress at 250,000. The FHA insures 90 percent of all U.S. reverse loans.

Fitzpatrick’s legislation would eliminate the cap.

In a reverse mortgage, homeowners aged 62 or older can get a monthly check or a lump sum payment against their home’s value. This allows seniors who may be asset-rich but cash-poor to keep their houses by raising money from home equity.

Source: Reuters

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