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Committee advances bill to raise cap on FAME loan insurance reserves to $65 million
Summary
Sen. Trip Curry presented LD 1208 to raise the statutory cap on FAME’s combined loan insurance reserve and mortgage insurance fund from $50 million to $65 million and to allow up to $1 million in surplus-year transfers until that new cap is reached.
Senator Trip Curry introduced LD 1208 to raise the cap on the Finance Authority of Maine’s (FAME) combined loan insurance reserve and mortgage insurance fund from $50,000,000 to $65,000,000. The bill would allow a transfer of up to $1,000,000 from the general fund in years with a surplus until the new cap is reached.
Carlos Mello, chief executive officer of the Finance Authority of Maine, testified that increasing reserves would help FAME back larger or more capital-intensive loans by sharing more risk with private lenders. He said the state has invested roughly $41,000,000 in the program since inception and that those funds and program operations have supported approximately $1.6 billion in lending and about 103,000 Maine jobs — figures Mello presented as a cumulative program impact.
Mello told the committee the reserve balance at the time of testimony was about $52,000,000, of which roughly $20,000,000 supports existing loans and the remainder could support new lending. He described program mechanics: each additional $1,000,000 in reserve capacity can be used to expose roughly $5,000,000 in lending and increases the potential loan amount per borrower by about $250,000.
Committee members asked about risk management and program performance. Mello said the state’s cumulative claims paid were well below the total capitalization provided historically and that the program charges fees to participating lenders to support the self‑insuring reserves. He described the authority’s loss targets and underwriting standards.
Following the public hearing, a motion to report LD 1208 “ought to pass” was made by Senator Bennett, seconded by Representative Eder, and the committee took a roll-call vote. The motion carried unanimously among the members present. The clerk recorded a unanimous vote of those present with five members absent. The committee moved LD 1208 into a work session immediately and recorded an “ought to pass” recommendation.
