A House panel unanimously approved legislation Thursday that would raise the cap on the number of adjustable-rate loans that the FHA program may insure annually.
Under the bill passed by the House Banking Committee's housing subcommittee, the number of FHA adjustable loans may not exceed 40% of the total number of FHA mortgages issued in the previous year. The current limit is 30%. However, lenders would be required to charge higher premiums on the loans that exceed the old 30% cap.
The legislation also makes permanent the government's reverse mortgage program, which lets senior citizens receive payments based on the equity in their homes. The size of the program would more than double to $12 billion in outstanding loans from $5 billion. Originators would have to disclose which fees on these loans are mandatory in order to discourage abusive charging practices.