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110TH CONGRESS 

1ST SESSION H. R. 2475 

To amend title 38, United States Code, to authorize the Secretary of Veterans 

Affairs to guarantee home equity conversion mortgages for elderly veteran homeowners. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 24, 2007 

Mr. MICHAUD (for himself and Ms. GINNY BROWN-WAITE of Florida) introduced the following bill; which was referred to the Committee on Veterans’ Affairs, and in addition to the Committee on Financial Services, 

for a period to be subsequently determined by the Speaker, in each case 

for consideration of such provisions as fall within the jurisdiction of the 

committee concerned 

A BILL 

To amend title 38, United States Code, to authorize the 

Secretary of Veterans Affairs to guarantee home equity 

conversion mortgages for elderly veteran homeowners. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Veteran Home Equity 

5 Conversion Mortgage Act of 2007’’. 


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1 SEC. 2. DEPARTMENT OF VETERANS AFFAIRS GUARANTEE 

2 OF HOME EQUITY CONVERSION MORTGAGES 

3 FOR ELDERLY VETERAN HOMEOWNERS. 

4 (a) LOAN GUARANTEE AUTHORIZED.—Subchapter II 

5 of chapter 37 of title 38, United States Code, is amended 

6 by adding at the end the following new section: 

7 ‘‘§ 3715. Guarantee of home equity conversion mort8 gages for elderly veteran homeowners 

9 ‘‘(a) LOAN GUARANTEE.—Upon receiving an applica10 tion by a covered mortgagee and under such terms and 

11 conditions as the Secretary may prescribe, the Secretary 

12 may guarantee any home equity conversion mortgage that 

13 is made to an elderly veteran homeowner pursuant to the 

14 provisions of this section and conforms with all applicable 

15 provisions of this title. 

16 ‘‘(b) STANDARDS FOR COMMITMENT.—The Secretary 

17 shall establish standards under which the Secretary will 

18 commit to guarantee such home equity conversion mort19 gage made to an elderly veteran homeowner before the 

20 date on which the mortgage is executed, if the Secretary 

21 determines that the mortgage— 

22 ‘‘(1) is likely to improve the financial situation 

23 or otherwise meet the special needs of the elderly 

24 veteran homeowner; 


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1 ‘‘(2) will include appropriate safeguards for the 

2 elderly veteran homeowner to offset the special risks 

3 associated with the mortgage; and 

4 ‘‘(3) has such terms as the Secretary may es5 tablish to ensure that it is accepted in the secondary 

6 mortgage market. 

7 ‘‘(c) MORTGAGE ELIGIBILITY.—A home equity con8 version mortgage may be guaranteed under this section 

9 if it— 

10 ‘‘(1) is secured by a dwelling, farm residence, 

11 one-family residential unit in a condominium hous12 ing development or project, or manufactured home 

13 permanently affixed to a lot, that is owned and occu14 pied by the eligible elderly veteran homeowner; 

15 ‘‘(2) has been executed by an elderly veteran 

16 homeowner who— 

17 ‘‘(A) has discussed with a loan counselor 

18 approved by the Secretary— 

19 ‘‘(i) options other than a home equity 

20 conversion mortgage that are available to 

21 the homeowner, including other housing, 

22 social service, health, and financial options; 

23 ‘‘(ii) other home equity conversion op24 tions that are or may become available to 

25 the homeowner, such as sale-leaseback fiVerDate Aug 31 2005 01:58 Sep 06, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2475.IH H2475

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1 nancing, deferred payment loans, and 

2 property tax deferral; and 

3 ‘‘(iii) the financial implications of en4 tering into a home equity conversion mort5 gage; and 

6 ‘‘(iv) any other information that the 

7 Secretary may require; 

8 ‘‘(B) has received a disclosure that a home 

9 equity conversion mortgage may have tax con10 sequences, affect eligibility for assistance under 

11 Federal and State programs, and have an im12 pact on the heirs and estate of the homeowner; 

13 ‘‘(C) has received the full disclosure de14 scribed in subsection (e)(1); and 

15 ‘‘(D) meets any additional requirements 

16 prescribed by the Secretary; 

17 ‘‘(3) provides that prepayment, in whole or in 

18 part, may be made at any time during the period of 

19 the mortgage, without penalty; 

20 ‘‘(4) provides for a fixed or variable interest 

21 rate or future sharing between the veteran and the 

22 covered mortgagee of the appreciation in the value 

23 of the property, as agreed upon by the veteran and 

24 the mortgagee; 


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1 ‘‘(5) provides for the satisfaction of the obliga2 tion in a manner satisfactory to the Secretary; 

3 ‘‘(6) provides that the eligible elderly veteran 

4 homeowner is not liable for any difference between 

5 the net amount of remaining indebtedness under the 

6 mortgage and the amount recovered by the covered 

7 mortgagee from the net sales proceeds from the 

8 dwelling that is subject to the mortgage (based upon 

9 the amount of the accumulated equity selected by 

10 the veteran to be subject to the mortgage, as agreed 

11 upon by the veteran and the mortgagee); 

12 ‘‘(7) contains such terms and provisions with 

13 respect to insurance, repairs, alterations, payment of 

14 taxes, default reserve, delinquency charges, fore15 closure proceedings, anticipation of maturity, addi16 tional and secondary liens, and other matters as the 

17 Secretary may prescribe; 

18 ‘‘(8) provides for future payments to the vet19 eran, based on accumulated equity (minus any appli20 cable fees and charges), that are calculated accord21 ing one of the following methods chosen by the 

22 homeowner: 

23 ‘‘(A) payment based upon a line of credit; 

24 ‘‘(B) payment on a monthly basis over a 

25 term specified by the homeowner; 


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1 ‘‘(C) payment on a monthly basis over a 

2 term specified by the homeowner and based 

3 upon a line of credit; 

4 ‘‘(D) payment on a monthly basis over the 

5 tenure of the homeowner; 

6 ‘‘(E) payment on a monthly basis over the 

7 tenure of the homeowner and based upon a line 

8 of credit; or 

9 ‘‘(F) payment on any other basis that the 

10 Secretary considers appropriate; 

11 ‘‘(9) provides that the homeowner may convert 

12 the method of payment chosen under paragraph (8) 

13 to any other method under such paragraph during 

14 the term of the loan, except that in the case of a 

15 fixed-rate home equity conversion mortgage, the Sec16 retary may, by regulation, limit such convertibility; 

17 ‘‘(10) contains such restrictions as the Sec18 retary may determine are appropriate to ensure that 

19 the homeowner does not fund any unnecessary or ex20 cessive costs for obtaining the mortgage, including 

21 any costs of estate planning, financial advice, or 

22 other related services; and 

23 ‘‘(11) satisfies any other requirements pre24 scribed by the Secretary. 


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1 ‘‘(d) CONDITIONS OF GUARANTEE.—(1) The Sec2 retary shall require the covered mortgagee of a home eq3 uity conversion mortgage guaranteed under this section to 

4 make available to the elderly veteran homeowner— 

5 ‘‘(A) at the time of the application for the loan 

6 in connection with the mortgage, a written list of the 

7 names and addresses of third-party information 

8 sources who are approved by the Secretary as re9 sponsible and able to provide the information re10 quired by subsection (e); 

11 ‘‘(B) by not later than 10 days before closing 

12 on the loan, a statement informing the elderly vet13 eran homeowner of such homeowner’s limited liabil14 ity under the mortgage, as well as the homeowner’s 

15 rights, obligations, and remedies with respect to 

16 temporary absences from the home, late payments, 

17 and payment default by the lender, along with any 

18 conditions requiring satisfaction of the loan obliga19 tion and any other information that the Secretary 

20 may require; 

21 ‘‘(C) by not later than January 31 of each year, 

22 an annual statement summarizing for the preceding 

23 calendar year the total principal amount paid to the 

24 homeowner under the loan secured by the home eq25 uity conversion mortgage, the total amount of deVerDate Aug 31 2005 01:58 Sep 06, 2007 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2475.IH H2475

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1 ferred interest added to the principal, and the out2 standing loan balance at the end of that year; and 

3 ‘‘(D) before closing on the loan, a statement of 

4 the projected total cost of the mortgage to the vet5 eran homeowner based upon the projected total fu6 ture loan balance (such cost expressed as a single 

7 average annual interest rate for at least two dif8 ferent appreciation rates for the term of the mort9 gage) for not less than two projected loan terms, as 

10 determined by the Secretary, which shall include— 

11 ‘‘(i) the cost for a short-term home equity 

12 conversion mortgage; and 

13 ‘‘(ii) the cost for a loan term equaling the 

14 actuarial life expectancy of the veteran. 

15 ‘‘(2) The Secretary may not guarantee a home equity 

16 conversion mortgage under this section unless such mort17 gage provides that the elderly veteran homeowner’s re18 sponsibility to satisfy the loan obligation is deferred until 

19 the homeowners death, the sale of the home, or the occur20 rence of certain other events specified in regulations by 

21 the Secretary. 

22 ‘‘(e) INFORMATION PROVIDED TO HOMEOWNER.— 

23 (1) The Secretary shall provide or arrange, before exe24 cuting on a home equity conversion mortgage under this 

25 section, for a third-party to provide to the elderly veteran 


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1 homeowner under the mortgage a full disclosure that 

2 clearly states— 

3 ‘‘(A) all of the costs charged to the homeowner, 

4 including the costs of estate planning, financial ad5 vice, and other services that are related to the mort6 gage but are not required to obtain the mortgage; 

7 and 

8 ‘‘(B) which of the costs under subparagraph 

9 (A) are required to obtain the mortgage and which 

10 are not required to obtain the mortgage; and 

11 ‘‘(2) The Secretary may, in lieu of carrying out para12 graph (1), adopt an alternative approach to educating an 

13 elderly veteran homeowner, but only if such alternative ap14 proach provides to the homeowner all of the information 

15 specified such paragraphs. For the purpose of carrying out 

16 the preceding sentence, the Secretary shall consult with 

17 industry representatives, consumer groups, representatives 

18 of counseling organizations, and other interested parties 

19 to identify alternative approaches to providing to the el20 derly veteran homeowner the information required under 

21 this subsection that may be feasible and desirable for 

22 home equity conversion mortgages guaranteed under this 

23 section. 

24 ‘‘(f) LIMITATION ON AMOUNT OF BENEFITS.—In no 

25 case may the benefit from a guarantee of a mortgage 


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1 under this section exceed the maximum guarantee amount 

2 under section 3703 of this title. 

3 ‘‘(g) ADDITIONAL AUTHORITY.—(1) To further the 

4 purposes of this section, the Secretary shall take any ac5 tion necessary— 

6 ‘‘(A) to provide any elderly veteran homeowner 

7 with funds to which the homeowner is entitled under 

8 a mortgage guaranteed under this section, but that 

9 the homeowner has not received because of the de10 fault of the party responsible for payment; 

11 ‘‘(B) to obtain repayment from any source of 

12 any amount provided to a homeowner under sub13 paragraph (A); and 

14 ‘‘(C) to provide a covered mortgagee with funds 

15 to which the mortgagee is entitled under the terms 

16 of a mortgage guaranteed under this section. 

17 ‘‘(2) Actions under paragraph (1) may include— 

18 ‘‘(A) disbursing funds to the elderly veteran 

19 homeowner or covered mortgagee from the Veterans 

20 Housing Benefit Program Fund; 

21 ‘‘(B) accepting an assignment of the guaran22 teed mortgage, notwithstanding that the homeowner 

23 is not in default under the terms of the mortgage, 

24 and calculating the amount and making the payment 

25 of a claim on such assigned mortgage; 


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1 ‘‘(C) requiring a subordinate mortgage from the 

2 homeowner at any time in order to secure repay3 ments of any funds previously advanced or to be ad4 vanced to the homeowner; 

5 ‘‘(D) requiring a subrogation to the Secretary 

6 of the rights of any parties to the transaction 

7 against any defaulting parties; and 

8 ‘‘(E) imposing premium charges. 

9 ‘‘(h) EXEMPTION FROM CERTAIN PROVISIONS OF

10 LAW.—Section 137(b) of the Truth in Lending Act (15 

11 U.S.C. 1647(b)) and any implementing regulations issued 

12 by the Board of Governors of the Federal Reserve System 

13 shall not apply to a mortgage guaranteed under this sec14 tion. 

15 ‘‘(i) AUTHORITY TO GUARANTEE MORTGAGES FOR

16 REFINANCING.—(1) The Secretary may, upon application 

17 by a covered mortgagee, guarantee any mortgage given to 

18 refinance an existing home equity conversion mortgage 

19 guaranteed under this section. 

20 ‘‘(2) As a condition of guaranteeing a mortgage 

21 under this subsection, the Secretary shall require that the 

22 covered mortgagee of a home equity conversion mortgage 

23 guaranteed under this subsection provide to the elderly 

24 veteran homeowner, within an appropriate period of time 

25 and in a manner, a good faith estimate of— 


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1 ‘‘(A) the total cost of the refinancing; and 

2 ‘‘(B) the increase in the homeowner’s principal 

3 limit as measured by the estimated initial principal 

4 limit on the mortgage to be guaranteed under this 

5 subsection, less the current principal limit on the 

6 home equity conversion mortgage that is being refi7 nanced and guaranteed under this subsection. 

8 ‘‘(3) The amount of the loan fee for a mortgage refi9 nanced under this subsection shall be determined by the 

10 Secretary under section 3729 of this title. 

11 ‘‘(4) In the case of an elderly veteran homeowner who 

12 applies for refinancing under this subsection, the Sec13 retary may waive the requirement that the homeowner re14 ceive information under subsection (e), but only if— 

15 ‘‘(A) the increase in the principal limit exceeds 

16 the amount of the total cost of refinancing by an 

17 amount to be determined by the Secretary; and 

18 ‘‘(B) the time between the closing of the origi19 nal home equity conversion mortgage being refi20 nanced through the mortgage guaranteed under this 

21 subsection and the application for a refinancing 

22 mortgage guaranteed under this subsection does not 

23 exceed five years. 

24 ‘‘(j) ORIGINATION FEE.—The Secretary may estab25 lish a limit on the origination fee that may be charged 


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1 to an elderly veteran homeowner for a mortgage guaran2 teed under this section, except that such limitation shall 

3 provide that the origination fee may be fully financed with 

4 the mortgage and shall include any fees paid to cor5 respondent mortgagees approved by the Secretary. 

6 ‘‘(k) FEE WAIVER.—(1) Notwithstanding section 

7 3729 of this title, in the case of a mortgage guaranteed 

8 under this section for which the total amount (except as 

9 provided under paragraph (2)) of all future payments de10 scribed in subsection (l)(4)(B) are to be used only to fund 

11 the cost of a qualified long-term care insurance contract 

12 that covers the elderly veteran homeowner or a member 

13 of the homeowner’s household residing in the property 

14 subject to the mortgage, the Secretary may not charge or 

15 collect the loan fee otherwise required under subparagraph 

16 (a) of such section. 

17 ‘‘(2) A mortgage described in paragraph (1) may pro18 vide for financing of any amount used to satisfy out19 standing mortgage obligations (in accordance with such 

20 limitations as the Secretary shall prescribe) and any 

21 amount used for initial service charges, appraisal, inspec22 tion, and other fees (as approved by the Secretary) in con23 nection with such mortgage, and the amount of future 

24 payments shall be reduced accordingly. 


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1 ‘‘(3) For purposes of this subsection, the term ‘quali2 fied long-term care insurance contract’ has the meaning 

3 given such term in section 7702B of the Internal Revenue 

4 Code of 1986 (26 U.S.C. 7702B), except that such con5 tract shall also meet the requirements of— 

6 ‘‘(A) sections 9 (relating to disclosure), 24 (re7 lating to suitability), and 26 (relating to contingent 

8 nonforfeiture) of the long-term care insurance model 

9 regulation promulgated by the National Association 

10 of Insurance Commissioners (as adopted as of Sep11 tember 2000); and 

12 ‘‘(B) section 8 (relating to contingent nonfor13 feiture) of the long-term care insurance model Act 

14 promulgated by the National Association of Insur15 ance Commissioners (as adopted as of September 

16 2000). 

17 ‘‘(l) DEFINITIONS.—For the purposes this section: 

18 ‘‘(1) The term ‘elderly veteran homeowner’ 

19 means any homeowner who is, or whose spouse is, 

20 a veteran who is eligible for housing loan benefits 

21 under this title and who is at least 62 years of age 

22 or such higher age as the Secretary may prescribe. 

23 ‘‘(2) The term ‘mortgage’ means a first mort24 gage or first lien— 

25 ‘‘(A) on real estate, in fee simple; 


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1 ‘‘(B) on all stock allocated to a dwelling in 

2 a residential cooperative housing corporation; or 

3 ‘‘(C) on a leasehold that is— 

4 ‘‘(i) under a lease for not less than 99 

5 years that is renewable; or 

6 ‘‘(ii) under a lease having a period of 

7 not less than 10 years to run beyond the 

8 maturity date of the mortgage. 

9 ‘‘(3) The term ‘first mortgage’ means a first 

10 lien that is given to secure an advance on, or the un11 paid purchase price of, real estate or all stock allo12 cated to a dwelling unit in a residential cooperative 

13 housing corporation, under the laws of the State in 

14 which the real estate or dwelling unit is located, to15 gether with any credit instruments secured for such 

16 purpose. 

17 ‘‘(4) The term ‘home equity conversion mort18 gage’ means a housing loan, as defined in section 

19 3701 of this chapter that— 

20 ‘‘(A) is secured by a first mortgage; 

21 ‘‘(B) provides for future payments to the 

22 homeowner based on accumulated equity; and 

23 ‘‘(C) is made by— 

24 ‘‘(i) a Federal land bank, National 

25 bank, State bank, private bank, building 


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1 and loan association, insurance company, 

2 credit union, or mortgage and loan com3 pany, that is subject to examination and 

4 supervision by an agency of the United 

5 States or of any State; or 

6 ‘‘(ii) a State; or 

7 ‘‘(iii) a lender or mortgage broker ap8 proved by the Secretary pursuant to stand9 ards established by the Secretary.’’. 

10 (b) CONFORMING AMENDMENT.—Section 3701(a) of 

11 such title is amended by striking ‘‘sections 3710(a) and 

12 3712(a)(1)’’ and inserting ‘‘sections 3710(a), 3712(a)(1), 

13 and 3715’’. 

14 (c) CLERICAL AMENDMENT.—The table of sections 

15 at the beginning of such chapter is amended by inserting 

16 after the items relating to subchapter II the following new 

17 item: 

‘‘3715. Guarantee of home equity conversion mortgages for elderly veteran 

homeowners.’’. 

Æ 


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