Tuesday the US House of Representatives had approved a plan to expand federal backing of mortgages to help thousands of families that are in foreclosure.  This eliminates any limit to how many new loans the FHA can federally insure any given year.

The bill, which had passed the US House 348-72, would open the door for an estimated two hundred thousand  borrowers who are delinquent on their adjustable rate loans.  Also, the US Senate is considering raising FHA loan limits to $417,000 in high-value areas and to $271,000 elsewhere.  The Senate Banking Committee is expected to vote Wednesday on FHA legislation sponsored by Sen. Christopher Dodd, D-Conn. and Sen. Richard Shelby R-Alabama. 

FHA reform is expected to help many seniors access more of their home equity with a reverse mortgage.  I'm personally monitoring this FHA reform for dozens of seniors who are eagerly awaiting FHA lending limit increases so they can stop paying their mortgage and have access to more of their equity.

Also worth considering is that many reverse mortgage lenders, including reverse mortgage powerhouse Financial Freedom, are eliminating the HECM 100 program, which was only introduced only a few months ago.  Financial Freedom is the latest major mortgage lender to back down from the HECM 100. 

The HECM 100 offers a half a percent better rate over the life of the loan, compared to the similar HECM 150.  The half-of-one-percent rate discount can mean tens of thousands of dollars in accessible cash and retaining more home equity over the course of the program.  Many seniors value retaining more equity, and are taking advantage of the current opportunity to get locked into a lower rate while they still can.

Tuesday also marked the first time in four years that the Federal Reserve cut the prime rate by an aggressive half-point.

Back in May of this year, the US House Financial Services Committee passed a FHA modernization bill that would eliminate the down payment minimum for borrowers, and increase the maximum loan term from 30 to 40 years and increase the loan limit on government-backed FHA reverse mortgages from $362,790 to $417,000.

By latest estimates, the FHA insures about 3.7 million or 4 percent of existing home loans in the United States in the event of default.