The Obama administration is looking for an increase in the budget for the Federal Housing Administration reverse mortgage program as part of its budget requests for 2010 and outlined its spending plans for elderly housing when it released its budget documents last week. The administration has requested that Congress appropriate $798 million for the Home Equity Conversion Mortgage (HECM).
According to the budget documents:
The decline in house prices has adversely affected the projected credit performance of Home Equity Conversion Mortgages. As a result, the program has a positive subsidy rate. The Budget provides both fixed and variable appropriations of credit subsidy to support continuous operation of the program even if actual loan activity exceeds projections. The Budget projects insurance of $300 billion in single-family forward mortgages and $30 billion in Home Equity Conversion Mortgages with an additional $70 billion in commitment limitation available in case these amounts are exceeded during execution.
The budget documents for HUD also address elderly housing programs under the Department of Housing and Urban’ Development’s Section 202 program.
This account includes expansion activities under the Section 202 Housing for the Elderly Program, including funding for the construction of new units via capital advance grants to nonprofit owners, provided that the owner reserves the units for very low income elderly individuals for no less than 40 years. Expansion activities also include project rental assistance (PRAC) provided for an initial period (usually 3 years) to each new project. The Budget proposes separate account funding for supportive housing for the elderly for PRAC renewals, service coordinators and congregate services, conversion to assisted living, and other operating expenses. This will allow the display of "fixed costs" associated with existing units to be separate from the "variable costs" of building new units.
For the full FY 2010 Budget proposal released by the White House, click here.