Neugebauer Statement: FHA’s Reverse Mortgage Program is Troubling
Congressman Randy Neugebauer (R-TX), Chairman of the Financial Services Subcommittee on Housing and Insurance, gave the following statement at a hearing today to examine the troubled Federal Housing Administration (FHA). The hearing, entitled, “Sustainable Housing Finance: The Government’s Role in Multifamily and Health Care Facilities Mortgage Insurance and Reverse Mortgages,” is the Subcommittee’s third this year on the need for FHA reform. See the Financial Services Committee’s Release here. Neugebauer’s statement follows:
“Thank you all for attending this important hearing examining FHA’s Home Equity Conversion Mortgage (HECM) program. Or as we more commonly call it, the reverse mortgage program. We’re also going to examine and FHA’s multifamily portfolio, including its hospital program.
“We already know that FHA is nearing insolvency, and is putting taxpayers at risk of another government bailout. We’ve examined FHA’s operations, mission creep, and financial issues. Today’s hearing gives us the chance to investigate the rest of their portfolio.
“I’d like to begin with the reverse mortgage program, which makes up 7% of the agency’s single-family loan guarantees, but accounts for 17% of its losses. The program was the driving factor behind the President’s FY14 budget request for a $1 billion lifeline from taxpayers to support the agency.
“What’s most troubling about the reverse mortgage program is that there are no income or credit requirements for participation. It often leaves seniors in financial hardship. Borrowers end up not being able to pay the property taxes and maintenance on their home. It puts their retirement savings at risk.
“I’m also concerned with FHA’s multifamily housing programs. It’s frustrating that there is not enough transparency in FHA’s financial data reporting to allow Congress to fully assess the multifamily program’s fiscal health.
“I’m hoping that we can learn more about both the multifamily program and the FHA’s hospital program today. For instance, I’d like to get a better understanding of why the Agency is exhausting large amounts of its multifamily commitment authority to insure large, urban hospitals that would likely be built regardless of FHA’s support.
“The FHA was intended to help low-income and first-time buyers purchase a home. Given its financial hardship, it’s hard to see how FHA can carry out its original mission, much less these other programs.”