House passes bill aimed at easing federal home loan debt

Members on both sides agreed that this emergency step is needed because of the huge debt the program has racked up so far. Rep. Denny Heck (D-Wash.), one of the bill's lead sponsors, said FHA backs every reverse mortgage in the country.

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A reverse mortgage allows homeowners to access equity in their home through a loan that yields them regular monthly payments. But Heck said that while 7 percent of FHA's loan portfolio is comprised of reverse mortgages, these mortgages account for 17 percent of FHA's "underwater" mortgages.

Members said this puts these FHA loans at risk of not being repaid. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Congress needs to pass this bill and others that give FHA the option of quickly taking action to improve its financial position.

"In its current form, FHA is most definitely an impediment to a sustainable and competitive housing finance system," Hensarling said. "There is one thing that we know for certain about FHA — it is not just broke, regrettably it is bail-out broke."

Among other things, Heck said the bill would immediately allow FHA to undergo reforms in its reverse mortgage program. One of these, he said, could be requiring financial assessments of borrowers and possibly reducing loan amounts to borrowers who are on shaky financial ground.

House passage sends the bill to the Senate.