BUSINESS BRIEFING / REAL ESTATE
Falling home prices have forced the government to ask Congress for a $798-million taxpayer subsidy to prop up a program that lets senior citizens tap the equity in their homes.
The government said the Federal Housing Administration needs the money to support a program that lets homeowners older than 62 obtain reverse mortgages, which allow borrowers to convert equity to cash without making payments until they die or sell their home. Interest is then due.
But with the housing market in a slump, participating lenders may not be able to collect the full loan amount from some borrowers. The government, which insures participating lenders, is on the hook if the house is sold for less than the total loan amount.
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