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Two FHA Premium Changes, An End to MI Requirement?

June 13, 2019
by admin

The House Financial Services Committee (FSC) passed a clutch of bills this week, several of which will assist homebuyers and homeowners. Two directly affect the cost of an FHA loan.

The FHA Loan Affordability Act (H.R. 3141), introduced by Dean Phillips (D-MN) would repeal the requirement that borrowers with FHA loans pay premiums on FHA mortgage insurance for the life of their loan. The bill would reinstate the previous policy which allowed borrowers to drop the insurance when the outstanding balance of their loan is reduced to 78 percent of the original value of the home. The wording of the bill appears to specifically disallow consideration of equity accrued through home price appreciation. The bill passed the committee 34 to 25.

Another FHA related bill, The Housing Financial Literacy Act (H.R. 2162), would require the Department of Housing and Urban Development (HUD) to provide a 25-basis-point discount on the FHA upfront insurance premium for first-time homebuyers who complete a HUD-approved housing counseling program. This bill was introduced by Rep. Joyce Beatty (D-OH) and passed out of the committee by a vote of 53 to 6.

A third home purchase related bill, H.R. 3154, The Homeownership for DREAMers Act clarifies that recipients of the Deferred Action for Childhood Arrivals (DACA) program (i.e. Dreamers) cannot be denied mortgage loans backed by FHA, Fannie Mae, Freddie Mac or the U.S. Department of Agriculture (USDA) solely on the basis of their DACA status. The bill, introduced by Juan Vargas (D-CA), passed by a bipartisan vote of 33 to 25.

The committee also took up the perennial issue of flood insurance. The National Flood Insurance Program (NFIP) has been reauthorized a number of times since its inception in 1968, but only for short terms. It is nearing the end of a two-week extension of the current authorization.

The committee passed H.R. 3167, which would reauthorize NFIP for yet another five years, unanimously. A press release from the FSC says the current bill also includes several reforms to increase affordability, improve mapping, enhance mitigation, and modernize the program. The reauthorization was sponsored by FSC Chair Maxine Waters (D-CA). H.R.

The other bills passed by the committee this week were two bills that would block proposed HUD rules. H.R. 2763 would prevent HUD from terminating housing benefits for families with mixed immigration status and H.R. 3018 invalidates a rule that would allow homeless shelters to deny equal access to transgender and gender non-conforming persons.

The committee also passed H.R. 2513, The Corporate Transparency Act which requires corporations to disclose their beneficial owners to the Financial Crimes Enforcement Network. This would ostensibly end criminals’ ability to use anonymous shell companies to hide their money and illicit activities.

All these bills now move on to the full house for consideration.

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