WASHINGTON, D.C. – August 12, 2013 – (RealEstateRama) — Congressman Mike Fitzpatrick (PA-8) joined President Obama in the Oval Office Friday for the signing of Fitzpatrick’s Reverse Mortgage Stabilization Act [HR 2167] into law.
Fitzpatrick stood alongside fellow original-cosponsor Congressman Denny Heck (D-WA) as the bipartisan bill was signed by the President. The law includes consumer and lender protections meant to strengthen the reverse mortgage program.
“Reverse mortgages are a tool for many seniors who want to access the built-up capital in their home without having to sell or move- allowing them the ability to retire on their own terms,” said Fitzpatrick following the ceremony. “By signing this bipartisan bill into law today, the law now respects that desire while at the same time enacting safeguards for both lenders and seniors. Republicans and Democrats worked together to get something done in Washington.”
The law now requires that any changes to Reverse Mortgage rules that would be made using authority granted by the act must be done to improve the fiscal safety and soundness of the program. According testimony from HUD Secretary Shaun Donavan, the law now includes several reforms, including:
– Performs a financial assessment of borrowers as a basis for loan approval and determining the suitability of various HECM products to protect consumers from acquiring loans not fit for them
– Establishes a tax and insurance set-aside where necessary to pay taxes and insurance on the mortgaged property to avoid defaults otherwise resulting from nonpayment of taxes and insurance
– Limits the draw at origination to mandatory obligations (i.e. closing costs, mortgage liens and federal debt), providing greater flexibility in addressing the individual needs of borrowers than the across-the-board reductions to principal limit factors described above, while still protecting the Fund from losses on loans where the maximum loan amount is drawn up-front
10% of all reverse mortgages in Pennsylvania happen in Bucks County.
Congressman Mike Fitzpatrick is serving his third term in the U.S. House of Representatives. He represents Pennsylvania’s 8th district which includes all of Bucks County as well as a portion of Montgomery County. He serves as the Vice Chairman of the House Financial Services Subcommittee on Oversight and Investigations