(Corrects paragraph 4 to clarify meaning of reverse annuity mortgage to show that in a reverse annuity mortgage a homeowner keeps the title to the home and borrows against home’s equity)
WASHINGTON, Jan 16 (Reuters) - The U.S. House of Representatives voted Tuesday to waive a cap on the number of reverse mortgages that a federal housing agency may insure for older Americans who want to turn their home equity into cash.
The Federal Housing Administration, which insures many such mortgages, is in danger of hitting the 275,000 ceiling on the number of such loans that it can handle.
Tuesday’s legislation, if passed by the U.S. Senate, would remove the limit and allow the federal agency to continue to underwrite such loans.
Under a reverse annuity mortgage, a homeowner borrows against homeowner equity and receives regular monthly payments from a lender, but retains title to the home. The mortgage is a popular tool for the elderly to use their home equity late in life.
Tuesday’s legislation passed the House unanimously and now goes to the Senate.
Rep. Jim Matheson, Democrat of Utah, sponsored the bill.
“This program was created to serve out seniors who may be ‘cash poor’ but equity rich’,” Matheson said in a statement. “The majority of the loan recipients are elderly widows, who may use the money on health care, medicine, home repairs, or other needs.”
Matheson, who sponsored legislation raising the reverse mortgage limit in a past year, said that he and other lawmakers expect to permanently remove the cap in new legislation soon.