Rep. Gregory W. Meeks Introduces “The Mortgage Insurance Freedom Act”
WASHINGTON, D.C. – Today, U.S. Rep. Gregory W. Meeks (D-NY-05) introduced The Mortgage Insurance Freedom Act, with U.S. Rep. Pete Sessions (R-TX-17).
This bill is designed to allow borrowers to stop paying Federal Housing Administration (FHA) mortgage insurance premiums (MIP) once they have built up a certain amount of equity in their home. Whereas private mortgage insurance premiums are automatically eliminated once the homeowner’s loan-to-value (LTV) ratio reaches 78%, that is not the case for FHA borrowers, who are required to pay mortgage insurance premiums for the entire life of their loan. This ends up disproportionately impacting lower-income households and minority borrowers.
“This legislation is designed to help Americans keep more of their hard-earned money in their pocket and make home ownership more affordable,” Congressman Meeks said. “The Mortgage Insurance Freedom Act will empower first-time buyers and young families to get ahead by reducing monthly payments and encourage faster equity accumulation. FHA borrowers will save hundreds of dollars annually which will allow them to allocate these funds towards savings, investments, and everyday expenses.”
“The Mortgage Insurance Freedom Act takes a practical approach to deliver meaningful relief to homeowners by eliminating unnecessary mortgage insurance premiums once they've built significant equity,” Congressman Sessions said. “I’m proud to co-lead this effort to promote fairness and allow American families to retain their hard-earned money. By addressing a key inequity in the FHA system, this bill rewards financial responsibility and empowers homeowners across the country.”
FHA’s mortgage insurance premium policy directly impacts first-time homeowners, as they make up more the 82% of FHA home purchase borrowers. The Mortgage Insurance Freedom Act comes at a critical time when we are focused on making homeownership more attainable and affordable for working Americans.
“FHA financing has provided millions of families with financing to buy a home," said Patrice Willoughby, NAACP Chief of Policy and Legislative Affairs. "Unfortunately, the FHA Mortgage Interest Premium has imposed unnecessary costs to borrowers who do not pose a risk. Lifting the MIP so it mirrors commercial lending practices will help millions of families save money and support homeownership as a foundation of economic stability.”
“Countless homeowners are paying hundreds of dollars every single month in PMI premiums when they have so much home equity that there is no actual risk of loss through foreclosure,” said Brendan McKay, Chief Advocacy Officer, Broker Action Coalition. “FHA is currently holding 473% more in reserves than mandated, and it's time to turn off the faucet. Thank you to Congressmen Gregory Meeks and Pete Sessions for introducing this common-sense legislation that addresses this very issue.”
“The Mortgage Insurance Freedom Act would remove an extra expense from the shoulders of many homeowners with FHA loans, putting money back in their pockets and making it easier to build wealth,” said Anneliese Lederer, Senior Policy Counsel at the Center for Responsible Lending.
To read the full bill text visit, here.
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