Official: FHA to seek $800M from Congress

WASHINGTON, May 8 (UPI) -- The U.S. Federal Housing Administration will ask Congress for nearly $800 million to prop up a mortgage program for seniors, an official says.

Housing and Urban Development Secretary Shaun Donovan said the federal agency is planning on seeking taxpayer funds to cover projected losses on reverse mortgages, The Washington Post said Friday.

Reverse mortgages allow senior citizens to borrow against the equity in their homes without having to pay it back until the home is sold or the owner dies.

Guy Cecala, publisher of Inside Mortgage Finance, said the mortgages have FHA officials concerned due to the expected losses associated with such loan efforts.

"Imagine a situation where a senior took out a loan for $200,000, but they die 10 years later and the house is only worth $150,000," Cecala said. "That means the lender can only recoup $150,000 even though it insured a $200,000 loan. That's what they're worried about."

Donovan said the agency is seeking congressional approval of the funds rather than force seniors to face increased charges for reverse mortgages, the Post reported.