Advisor News, June 10, 2019: Rep. Phillips announces bill to make federal home loans more affordable
WASHINGTON, June 10 — Rep. Dean Phillips, D-Minnesota, issued the following news release:
Today, Rep. Dean Phillips (MN-03) announced that he has introduced legislation to make home loans from the Federal Housing Administration (FHA) more affordable by ending the requirement that borrowers pay mortgage insurance premiums for the life of their loans. Unlike the FHA, private mortgage insurers are required to cancel premiums when the outstanding balance reaches 78% of the original home value. Before June 3, 2013, the FHA had this same requirement, which the bill would reinstate. This would level the playing field for FHA borrowers, who are more likely to be low-income, people of color or first-time home buyers.
“Minnesotans who choose the FHA to achieve their dream of homeownership are unfairly punished by outdated rules,” said Phillips. “Once equity thresholds have been met, FHA borrowers should be treated the same as private borrowers. That’s why I’m proud to introduce this bill, which would help homeowners save for the future.”
As a result of this “life of loan” policy, FHA borrowers often pay far more in mortgage insurance premiums over the loan term than non-FHA borrowers. This practice disproportionately affects low- and moderate-income borrowers, first-time homebuyers and minority buyers.
The bill has also been endorsed by the National Association of Real Estate Brokers, the Community Home Lenders Association, the National Housing Conference, the National Community Reinvestment Coalition, the National Association of Hispanic Real Estate Professionals and the National Consumer Law Center on behalf of its low-income clients.
