House Joint Resolution No. 396 of the 1991 Virginia General Assembly strongly encourages the Virginia Housing Development Authority, with the assistance of the Virginia Department for the Aging, to actively promote private lender involvement in the making of home equity conversion mortgages through HUD's Home Equity Conversion Mortgage(HECM) Demonstration Program. Over the past year, the Authority and the Department have taken numerous steps to do so. Lenders have been informed about the program and invited to participate. The Authority has offered several participation options to lenders that enable them to originate HECM loans on the Authority's behalf without having to fund the loans directly or incur most program startup costs. Training has also been made available to lenders. Finally, the Authority and the Department have taken numerous steps to expand and improve the pre-application counseling required by HUD to be provided by nonprofit, third-party, HUD-approved counseling agencies.

To date, four lenders have agreed to originate HECM loans; two in Northern Virginia, one in Tidewater, and one on a statewide basis. At present, HECM counseling is available in the Northern Virginia, Richmond, Tidewater, Charlottesville and Roanoke metropolitan areas. Elsewhere, counseling agencies are being recruited.

The primary barriers to further lender involvement are continuing concerns on the part of some lenders regarding the profitability of HECM lending and the lack of funding to support new and existing HECM counseling activities. While it appears that HUD may take steps to address the former concern, the problem of funding housing counseling is more intractable and will require concerned agencies and organizations to continue working toward cooperative and innovative solutions.