The FHA reverse mortgage program would get an extra year of life under legislation introduced last week by Senate Banking Committee Chairman Alfonse M. D'Amato.
The reverse mortgage program and several other government housing initiatives would be kept alive through 1996 as Congress debated the future of the Department of Housing and Urban Development, which runs the program.
Sen. D'Amato said the stopgap funds are needed to protect housing programs while Congress decides their future. Though a critic of many housing programs, Sen. D'Amato praised the reverse mortgage initiative, which has allowed more than 14,000 elderly homeowners to tap the equity in their homes.
The five-year-old reverse mortgage program expired Oct. 1, and Sen. D'Amato's efforts to reauthorize it is awaiting further debate before the busy Banking Committee.
Because there is little time to debate reforms, short-term funding is necessary, said Sen. Connie Mack, co-sponsor of the stopgap bill. "This extension gives us the time needed to enact reforms that will make the program more effective," said the Florida Republican.
Other co-sponsors are Sen. Christopher S. Bond, R-Mo.; Sen. Pete V. Domenici, R-N.M.; Sen. Robert Bennett, R-Utah, and Sen. Richard C. Shelby, R-Ala.
Sen. Bond said the program should be expanded because it is successful and is increasingly popular among elderly homeowners. "This program is designed to allow the elderly to tap the accumulated equity in their homes for needed expenses without the risk of losing the housing," he said.
The reverse mortgage program provides a low-risk way for banks to offer the product, which permits homeowners past age 62 to receive monthly payments based on the equity in their homes. The reverse mortgages are FHA- insured.
The stopgap bill copies many provisions from a budget bill vetoed last month by President Clinton. "The President's veto has placed our nation's housing delivery system in serious jeopardy," Sen. D'Amato said.
The stopgap funding would also increase the number of units eligible for insurance from 25,000 to 30,000.
The bill also provides a one-year renewal of other programs, including:
*Expiring Section 8 contracts.
*Community Development Block Grants.
*FHA multifamily housing lending that shares Fannie Mae, Freddie Mac and state insurance.
*Rural multifamily housing lending.
Most of these programs will be reviewed, Sen. D'Amato said. "Legislation will be introduced in the spring of 1996 which will reorganize, transfer or eliminate housing and community development programs," he said last week.
The House has already passed legislation that will renew many housing programs through 2000, although it lacks a stopgap funding bill. A Capitol Hill aide said Rep. Rick Lazio, chairman of the House banking panel's housing and community opportunity subcommittee, may fight to preserve reforms drafted in his legislation rather than wait for Sen. D'Amato's efforts.
Both sides do agree, however, in long-term plans for the reverse mortgage program. In addition to increasing the number of eligible units to 50,000, both proposals extend the program from single-family dwellings to four-family residences in which the mortgagor occupies one unit.