The U.S. Senate has approved freshman Rep. Denny Heck’s first bill on a unanimous voice vote, sending the Olympia Democrat’s reverse-mortgage legislation to President Obama for signing.
Heck says H.R. 2167 gives the Federal Housing Authority new tools for making sure that the loans are in the interest of elderly owners of homes who borrow against their home value. He thinks it could reduce the number of problem loans in FHA’s portfolio.
Without the changes that take effect in September, Heck said FHA was "perilously close" to having to shut down the reverse mortgages program or make changes that would have made far fewer loans available to seniors. The loans help many seniors stay in their homes longer as they age.
"So while we basically raised lending standards, we saved the program," Heck said in a telephone interview Wednesday afternoon from Washington, D.C. “It goes straight to the president and it’s a very high priority for the FHA. So his signing it would seem to be a foregone conclusion.’’
Getting a freshman-sponsored bill passed is somewhat unusual, and Heck said he’d heard it was just the second time in 20 years – at least for a measure, like this one, that actually changes the U.S. code. He credited his staff’s perseverance and "luck" – as well as help from Republican U.S. Rep. Mike Fitzpatrick of Pennsylvania, who made sure it moved in the House in June.
Heck thinks he also got help from Democratic Sen. Mark Warner of Virginia in getting Republican Tennessee Sen. Bob Corker to lift his foot off the bill in the upper chamber. The bill came up with little warning Tuesday evening and passed - without requiring amendments.
The bill will have a couple of effects and Heck said both seniors and taxpayers stand to gain. “It’s going to enable the FHA to engage in … a financial advisability and suitability assessment (of a borrower),” Heck explained. “That can lead to ‘you don’t get it all up front’ or ‘we are going to require you to set up an escrow so you can pay your taxes and insurance.’ ’’
The new tools are similar to what has been used by the Veterans Administration when it has handled this kind of loan. VA had few problems with reverse mortgage loans, and Heck hopes that will be the case for FHA.
A similar version of this story is being prepared for Thursday's print editions.