The BAC won’t be alone in this legislative fight, as the National Association of Mortgage Brokers (NAMB) has announced it will be lobbying for changes in these rules as well. The Mortgage Insurance Freedom Act, or HR 5508, was introduced by Democratic Rep. Gregory Meeks and Republican Rep. Pete Sessions, but hasn’t moved any further yet.
Kimber White (pictured top), president of NAMB, is hopeful that Congress will take up this issue and make long-overdue changes.
“It takes Congress to make that change,” White told Mortgage Professional America. “And I don’t know if they have an appetite for it. I would love to see it. I think the rules make no sense at all. Conventional does it, so it makes no sense why FHA would not get rid of it at 78% LTV.”
An additional penalty
FHA loans help borrowers of all financial situations, but are especially helpful for lower-income and first-time homebuyers. By requiring them to pay mortgage insurance for the life of the loan, White said they’re being penalized too harshly.
“I call it an additional penalty, but they’re claiming that it’s risk mitigation,” White said. “They’re claiming that it’s going to protect the fund. Honestly, it doesn’t make sense. By the time someone’s reached 78%, there’s equity in the property. They’ve paid on time. What risk is there that they’re having? The fund is secure and statutory.”
