[Congressional Record Volume 146, Number 65 (Tuesday, May 23, 2000)]
[House]
[Pages H3578-H3581]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 PRIVATE MORTGAGE INSURANCE TECHNICAL CORRECTIONS AND CLARIFICATION ACT

  Mrs. ROUKEMA. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 3637) to amend the Homeowners Protection Act of 1998 to make 
certain technical corrections.
  The Clerk read as follows:

                               H.R. 3637

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Private Mortgage Insurance 
     Technical Corrections and Clarification Act''.

     SEC. 2. CHANGES IN AMORTIZATION SCHEDULE.

       (a) Treatment of Adjustable Rate Mortgages.--The Homeowners 
     Protection Act of 1998 (12 U.S.C. 4901 et seq.) is amended--
       (1) in section 2--
       (A) in paragraph (2)(B)(i), by striking ``amortization 
     schedules'' and inserting ``the amortization schedule then in 
     effect'';
       (B) in paragraph (16)(B), by striking ``amortization 
     schedules'' and inserting ``the amortization schedule then in 
     effect'';
       (C) by redesignating paragraphs (6) through (16) (as 
     amended by the preceding provisions of this paragraph) as 
     paragraphs (8) through (18), respectively; and
       (D) by inserting after paragraph (5) the following new 
     paragraph:
       ``(6) Amortization schedule then in effect.--The term 
     `amortization schedule then in effect' means, with respect to 
     an adjustable rate mortgage, a schedule established at the 
     time at which the residential mortgage transaction is 
     consummated or, if such schedule has been changed or 
     recalculated, is the most recent schedule under the terms of 
     the note or mortgage, which shows--
       ``(A) the amount of principal and interest that is due at 
     regular intervals to retire the principal balance and accrued 
     interest over the remaining amortization period of the loan; 
     and
       ``(B) the unpaid balance of the loan after each such 
     scheduled payment is made.''; and
       (2) in section 3(f)(1)(B)(ii), by striking ``amortization 
     schedules'' and inserting ``the amortization schedule then in 
     effect''.
       (b) Treatment of Balloon Mortgages.--Paragraph (1) of 
     section 2 of the Homeowners Protection Act of 1998 (12 U.S.C. 
     4901(1)) is amended by adding at the end the following new 
     sentence: ``A residential mortgage that (A) does not fully 
     amortize over the term of the obligation, and (B) contains a 
     conditional right to refinance or modify the unamortized 
     principal at the maturity date of the term, shall be 
     considered to be an adjustable rate mortgage for purposes of 
     this Act.''.
       (c) Treatment of Loan Modifications.--
       (1) In general.--Section 3 of the Homeowners Protection Act 
     of 1998 (12 U.S.C. 4902) is amended--
       (A) by redesignating subsections (d) through (f) as 
     subsections (e) through (g), respectively; and
       (B) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Treatment of Loan Modifications.--If a mortgagor and 
     mortgagee (or holder of the mortgage) agree to a modification 
     of the terms or conditions of a loan pursuant to a 
     residential mortgage transaction, the cancellation date, 
     termination date, or final termination shall be recalculated 
     to reflect the modified terms and conditions of such loan.''.
       (2) Conforming amendments.--Section 4(a) of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4903(a)) is amended--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``section 3(f)(1)'' and inserting ``section 3(g)(1)'';
       (ii) in subparagraph (A)(ii)(IV), by striking ``section 
     3(f)'' and inserting ``section 3(g)''; and
       (iii) in subparagraph (B)(iii), by striking ``section 
     3(f)'' and inserting ``section 3(g)''; and
       (B) in paragraph (2), by striking ``section 3(f)(1)'' and 
     inserting ``section 3(g)(1)''.

     SEC. 3. DELETION OF AMBIGUOUS REFERENCES TO RESIDENTIAL 
                   MORTGAGES.

       (a) Termination of Private Mortgage Insurance.--Section 3 
     of the Homeowners Protection Act of 1998 (12 U.S.C. 4902) is 
     amended--
       (1) in subsection (c), by inserting ``on residential 
     mortgage transactions'' after ``imposed''; and
       (2) in subsection (g) (as so redesignated by section 
     2(c)(1)(A) of this Act)--
       (A) in paragraph (1), in the matter preceding subparagraph 
     (A), by striking ``mortgage or'';
       (B) in paragraph (2), by striking ``mortgage or''; and
       (C) in paragraph (3), by striking ``mortgage or'' and 
     inserting ``residential mortgage or residential''.
       (b) Disclosure Requirements.--Section 4 of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4903(a)) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) by striking ``mortgage or'' the first place it appears; 
     and
       (ii) by striking ``mortgage or'' the second place it 
     appears and inserting ``residential''; and
       (B) in paragraph (2), by striking ``mortgage or'' and 
     inserting ``residential'';
       (2) in subsection (c), by striking ``paragraphs (1)(B) and 
     (3) of subsection (a)'' and inserting ``subsection (a)(3)''; 
     and
       (3) in subsection (d), by inserting before the period at 
     the end the following: ``, which disclosures shall relate to 
     the mortgagor's rights under this Act''.
       (c) Disclosure Requirements for Lender-Paid Mortgage 
     Insurance.--Section 6 of the Homeowners Protection Act of 
     1998 (12 U.S.C. 4905) is amended--
       (1) in subsection (c)--
       (A) in the matter preceding paragraph (1), by striking ``a 
     residential mortgage or''; and
       (B) in paragraph (2), by inserting ``transaction'' after 
     ``residential mortgage''; and
       (2) in subsection (d), by inserting ``transaction'' after 
     ``residential mortgage''.

     SEC. 4. CANCELLATION RIGHTS AFTER CANCELLATION DATE.

       Section 3 of the Homeowners Protection Act of 1998 (12 
     U.S.C. 4902) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1), by inserting 
     after ``cancellation date'' the following: ``or any later 
     date that the mortgagor fulfills all of the requirements 
     under paragraphs (1) through (4)'';
       (B) in paragraph (2), by striking ``and'' at the end;
       (C) by redesignating paragraph (3) as paragraph (4); and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) is current on the payments required by the terms of 
     the residential mortgage transaction; and''; and
       (2) in subsection (e)(1)(B) (as so redesignated by section 
     2(c)(1)(A) of this Act), by striking ``subsection ``(a)(3)'' 
     and inserting ``subsection (a)(4)''.

     SEC. 5. CLARIFICATION OF CANCELLATION AND TERMINATION ISSUES 
                   AND LENDER PAID MORTGAGE INSURANCE DISCLOSURE 
                   REQUIREMENTS.

       (a) Good Payment History.--Section 2(4) of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4901(4)) is amended--
       (1) in subparagraph (A)--
       (A) by inserting ``the later of (i)'' before ``the date''; 
     and
       (ii) by inserting ``, or (ii) the date that the mortgagor 
     submits a request for cancellation under section 3(a)(1)'' 
     before the semicolon; and

[[Page H3579]]

       (B) in subparagraph (B)--
       (i) by inserting ``the later of (i)'' before ``the date''; 
     and
       (ii) by inserting ``, or (ii) the date that the mortgagor 
     submits a request for cancellation under section 3(a)(1)'' 
     before the period at the end.
       (b) Automatic Termination.--Paragraph (2) of section 3(b) 
     of the Homeowners Protection Act of 1998 (12 U.S.C. 
     4902(b)(2)) is amended to read as follows:
       ``(2) if the mortgagor is not current on the termination 
     date, on the first day of the first month beginning after the 
     date that the mortgagor becomes current on the payments 
     required by the terms of the residential mortgage 
     transaction.''
       (c) Premium Payments.--Section 3 of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4902) is amended by adding 
     at the end the following new subsection:
       ``(h) Accrued Obligation for Premium Payments.--The 
     cancellation or termination under this section of the private 
     mortgage insurance of a mortgagor shall not affect the rights 
     of any mortgagee, servicer, or mortgage insurer to enforce 
     any obligation of such mortgagor for premium payments accrued 
     prior to the date on which such cancellation or termination 
     occurred.''.

     SEC. 6. DEFINITIONS.

       (a) Refinanced.--Section 6(c)(1)(B)(ii) of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4905(c)(1)(B)(ii)) is 
     amended by inserting after ``refinanced'' the following: 
     ``(under the meaning given such term in the regulations 
     issued by the Board of Governors of the Federal Reserve 
     System to carry out the Truth in Lending Act (15 U.S.C. 1601 
     et seq.))''.
       (b) Midpoint of the Amortization Period.--Section 2 of the 
     Homeowners Protection Act of 1998 (12 U.S.C. 4901) is amended 
     by inserting after paragraph (6) (as added by section 
     2(a)(1)(D) of this Act) the following new paragraph:
       ``(7) Midpoint of the amortization period.--The term 
     ``midpoint of the amortization period'' means, with respect 
     to a residential mortgage transaction, the point in time that 
     is halfway through the period that begins upon the first day 
     of the amortization period established at the time a 
     residential mortgage transaction is consummated and ends upon 
     the completion of the entire period over which the mortgage 
     is scheduled to be amortized.''.
       (c) Original Value.--Section 2(12) of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4901(10)) (as so 
     redesignated by section 2(a)(1)(C) of this Act) is amended--
       (1) by inserting ``transaction'' after ``a residential 
     mortgage''; and
       (2) by adding at the end the following new sentence: ``In 
     the case of a residential mortgage transaction for 
     refinancing the principal residence of the mortgagor, such 
     term means only the appraised value relied upon by the 
     mortgagee to approve the refinance transaction.''.
       (d) Principal Residence.--Section 2 of the Homeowners 
     Protection Act of 1998 (12 U.S.C. 4901) is amended--
       (1) in paragraph (14) (as so redesignated by section 
     2(a)(1)(C) of this Act) by striking ``primary'' and inserting 
     ``principal''; and
       (2) in paragraph (15) (as so redesignated by section 
     2(a)(1)(C) of this Act) by striking ``primary'' and inserting 
     ``principal'';

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New Jersey (Mrs. Roukema) and the gentleman from New York (Mr. LaFalce) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from New Jersey (Mrs. Roukema).


                             General Leave

  Mrs. ROUKEMA. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 3637.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New Jersey?
  There was no objection.
  Mrs. ROUKEMA. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 3637, the Private 
Mortgage Insurance Technical Corrections and Clarification Act.
  This Act is a very important bill because it will eliminate the 
confusion that has resulted from implementation of the Homeowners 
Protection Act of 1998.
  In this bill, we will clarify the cancellation and termination issues 
to ensure that homeowners will be able to cancel private mortgage 
insurance as Congress intended in the original bill of 1998.
  I want to thank the gentleman from Ohio (Mr. Leach), chairman of the 
Committee on Banking, who is a cosponsor of this bill, and certainly 
the ranking member, the gentleman from New York (Mr. LaFalce), for 
their contributions and their support as cosponsors.
  I also wish to thank the gentleman from Minnesota (Mr. Vento), the 
ranking member of the Subcommittee on Financial Institutions, who is a 
cosponsor of this bill and with whom I have worked closely on this and 
many other issues.
  Mr. Speaker, I also want to especially thank the gentleman from Utah 
(Mr. Hansen) for his support as an original cosponsor of this bill and 
for his strong leadership in this area.
  The bipartisan support of this bill, along with the support of both 
industry as well as consumer groups, reflects the importance and the 
need for the corrections and clarifications of H.R. 3637.
  Mr. Speaker, the Homeowners Protection Act of 1998 included important 
provisions regarding consumers' ability to cancel PMI. Most of the 
reforms incorporated in that law have worked very well. However, the 
law has created some uncertainty relating to the cancellation and 
termination of PMI for adjustable mortgage rates, or ARMs as they are 
known, balloon mortgages, and loans whose terms or rates are modified 
over the life of the loan.
  To address these ambiguities and the problems that have arisen, I, 
along with the distinguished group of cosponsors that I have just 
mentioned, introduced this bill on February 10 of this year. It ensures 
that the terms of the cancellation of PMI on these types of variable 
rate mortgage products will be unambiguous.
  The bill describes in greater detail the original intent of the 1998 
law that the amortization schedule upon which the cancellation and 
termination dates are determined should be prepared in accordance with 
the actual note.

                              {time}  1345

  The effect is to conform the requirements of cancellation and 
termination to the uniform methodology used in the industry to 
calculate ARM amortization schedules.
  The bill also ensures that ``defined terms'' such as ``adjustable 
rate mortgage'' and ``balloon mortgages'' are used consistently and 
appropriately. The bill also defines several terms, such as 
``refinanced,'' ``midpoint of the amortization period,'' and ``original 
value.'' These and other terms are used in the law but were not defined 
and, therefore, could be subject to different interpretations. I also 
want to note that the bill solves some of the operational difficulties 
that have surfaced since the 1998 law related to measuring a borrower's 
payment history and determining his right to cancel. Additionally, the 
bill clarifies the rights of lenders to enforce collection of PMI 
premiums that were owed by the borrower prior to the time that the 
mortgage insurance was canceled.
  In summary, H.R. 3637 specifically addresses the problems that have 
occurred since implementation of the Homeowners Protection Act to make 
sure that no one continues to pay for PMI because of ambiguities in the 
current law.
  I would also like to note that the provisions of the bill were 
included in title IX of H.R. 1776, the American Homeownership and 
Economic Opportunity Act of 2000. We passed that bill in April of this 
year with a resounding vote, 417-8; but at this point in time, there 
seems to be no Senate action contemplated. I do want to recognize the 
leadership that the gentleman from New York (Mr. Lazio) gave as 
chairman of the Subcommittee on Housing at that time and for his 
continuing support for PMI issues in particular.
  Mr. Speaker, we all remain strong in our support of not only H.R. 
1776 and want to see that enacted, but in the meantime we must deal 
with the issues in this suspension.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, I rise as a primary cosponsor in support of 
H.R. 3637, the Private Mortgage Insurance Technical Corrections and 
Clarification Act. I specifically commend the gentlewoman from New 
Jersey for her excellent leadership and work on this technical 
corrections bill.
  Two years ago, we enacted, on a bipartisan basis, the Homeowners 
Protection Act of 1998. That legislation set out reasonable provisions 
giving homeowners who utilize private mortgage insurance, frequently 
called PMI, the right to cancel their PMI insurance

[[Page H3580]]

and stop paying monthly PMI premiums once they have paid their mortgage 
loan down to levels where private mortgage insurance is no longer 
needed. The concept is relatively simple. PMI is only required on loans 
where the loan-to-value, or LTV, exceeds 80 percent. Therefore, once a 
borrower pays down a mortgage loan to the point where the LTV is less 
than 80 percent, there is no need for the borrower to continue to pay 
for PMI. The bill from last Congress sets out terms and conditions 
under which borrowers have the legal right to cancel PMI. As a result, 
the borrower now has the right to cancel PMI and stop making payments 
once the loan balance has fallen below certain LTV ratios, generally 
either 80 percent or 78 percent. This will save consumers in this 
position hundreds or even thousands of dollars.
  However, as is often the case with efforts to conference different 
House and Senate versions of the same bill very late in a session, the 
final bill could have been drafted better from a technical point of 
view. The PMI bill that was signed into law did include some 
ambiguities, some inconsistencies, some omissions. The bill we are 
considering today cleans up these technical problems. At the same time, 
I want to make it very clear that is all we are doing. We are not 
changing policy or adding new provisions but only conforming language 
to preserve or, in most instances really, clarify the bill's original 
intent. I believe it is important to pass this legislation this year 
for the benefit of consumers, for the millions of Americans who will 
take out loans in the next few years. Without such action, there are 
ambiguities which could be invoked unfairly to the detriment of 
borrowers.
  For example, section 3 of the PMI act gives consumers the right to 
cancel PMI insurance and stop making payments once their loan falls 
below 80 percent of value. However, as drafted, the act technically 
permits cancellation only on the date that 80 percent threshold is 
first reached but not later. Thus, unless the borrower submits a 
request for cancellation on or before that date and meets certain other 
requirements on that date, the borrower could technically lose that 
cancellation right forever. We cure that potential difficulty, because 
that clearly was not the intent of the bill. Therefore, the bill before 
us today explicitly confers cancellation rights on the date when the 
loan first reaches 80 percent LTV or any later date that the borrower 
meets the conditions required for cancellation.
  The bill also includes language to allow borrowers without a good 
payment history on the cancellation date itself to cancel at a later 
date once they obtain a good payment history. This is what we intended, 
but technically the act was not clear on that. Our bill today also 
clarifies other ambiguities that could subvert the intent of the 
original act to the detriment of consumers. For example, the act 
requires PMI termination once a mortgage reaches a ``midpoint,'' an 
undefined term. The act's clear intent is the halfway point between the 
first date of the loan and the last day of the period over which the 
loan is scheduled to be amortized. However, with adjustable rate or 
balloon loans, without this definition the midpoint could unfairly 
continue to be moved back simply by a resetting of the amortization 
schedules. And so this bill clarifies that for loans for the purpose of 
refinancing when establishing LTV ratios, the value will be determined 
at the time of the refinance, not at the original time of home 
purchase. This avoids unfairly penalizing the borrower when the home 
has risen in value.
  Finally, the legislation before us today includes a number of 
provisions that address ambiguities and correct other problems. Most 
notably, our bill clarifies that in the case of adjustable rate 
mortgages, balloon mortgages, or loan modifications, LTV calculations 
are made based on the most recent amortization schedule, not based on 
an outdated schedule. This was the original intent of the legislation. 
And while the original act did not provide that clarity, today's bill 
provides that clarity.
  Finally, the bill before us today corrects drafting relating to terms 
like ``refinanced,'' ``primary residence,'' ``residential mortgages,'' 
et cetera. The bill clarifies common sense interpretations of the act, 
for example, that cancellation or termination does not eliminate the 
borrower's obligation to make PMI payments legally incurred prior to 
the date at which the borrower is entitled to cancel PMI.
  In short, this is a good, common sense bill, and I would urge its 
adoption.
  Mr. Speaker, I yield such time as he may consume to the distinguished 
gentleman from Minnesota (Mr. Vento), ranking member of the 
Subcommittee on Financial Institutions and Consumer Credit, who really 
did the bulk of the work on this issue.
  (Mr. VENTO asked and was given permission to revise and extend his 
remarks.)
  Mr. VENTO. I thank the gentleman for yielding me this time.
  Mr. Speaker, I concur in the ranking member's remarks and the 
subcommittee chairman's remarks concerning this bill. In return, I want 
to just thank her for her leadership on this issue. It is a very 
important matter.
  Frankly, private mortgages insurance is a major basis to provide for 
lower interest rates and affordable housing for many, many homeowners 
that otherwise would not be able to acquire the loan they need to 
purchase a home. And so keeping this particular product in place is 
enormously important. But also we need to be vigilant to make certain 
that the individual homeowner that has such a loan with private 
mortgage insurance is in fact being treated fairly in terms of this 
insurance and given the right to cancellation and to exercise the 
option to drop such insurance once the loan-to-value ratio of down 
payment and equity has been exceeded. That is exactly what the basic 
law did that was enacted. In fact, it was brought to our attention by, 
as has been pointed out, the gentleman from Utah (Mr. Hansen), who has 
had an active interest in this as a consumer and as a Representative 
from Utah. What we have before us today, of course, is the technical 
corrections.
  I know that the Members of Congress would be surprised to learn that 
we do not write perfect laws, that from time to time we have to go back 
and make some modifications to clarify intent and to eliminate 
ambiguity. That is really what has happened in this case with Congress, 
coming back to this law which we passed a couple of years ago to try 
and clear up some of the misunderstandings. This is really Congress at 
its best or this House at its best, trying to deal with those 
ambiguities or dealing with some of the issues. This has been done in 
such a way as to provide for a common sense policy path that will in 
fact ensure that the rights to exercise and cancel this insurance, and 
I might comment to my colleagues that these payments could be anywhere 
from $50 to $100 difference a month in terms of what the homeowner 
actually pays in terms of mortgage insurance. This is no small matter 
for those that might be canceling such insurance to have the benefit of 
making this savings. This permits them to repair their credit, it 
permits them at midpoint to avoid this type of insurance when it is not 
necessary, and we all know that translates into homeownership; it 
translates into more Americans being able to take advantage of the 
American dream of homeownership.
  Really, I think that our committee has prided itself in terms of 
obtaining and being part of the goal that had been enunciated by this 
administration and for others for many years and, that is, obtaining 
one of the highest rates of homeownership in our history. Today, of 
course, we are in the high-60 range in terms of homeownership. Some 
States because of lower costs are doing much better, such as my State 
of Minnesota. Others are challenged because of the high cost of housing 
and homeownership in those States. But, nevertheless, this bill will 
help maintain and provide the stability, provide the predictability, 
and provide the cheaper mortgage insurance and these important tools 
which are making it possible to obtain the dream of homeownership in 
this country.
  I commend this bill to my colleagues.
  Mr. Speaker, I rise in support of H.R. 3637, the PMI Technical 
Corrections and Clarification Act. As one of the architects of the 
recent law that affords people the right to stop paying for costly 
private mortgage insurance when

[[Page H3581]]

they no longer need it, I am pleased that we are finally moving this 
technical corrections bill that will benefit consumers and the 
industry.
  I joined my colleagues in cosponsoring this needed Private Mortgage 
Insurance Technical Corrections and Clarification Act so that we can 
clarify some meanings and make corrections to terms, rights for 
consumers and responsibilities for mortgage lenders under the 
Homeowners' Protection Act of 1998. We worked together then, as we did 
today, with interested consumer and mortgage industry groups to come up 
with a bill that worked to the benefit of all parties.
  Unfortunately, when we passed the Homeowner's Protection Act, we were 
unable to prevail on one issue, and that was to actually have a 
regulator to work out some of the details of the statute and the 
underlying policy. That has left us with the need to clarify some 
smaller points in the statute, as is being proposed in this bill before 
the House of Representatives today. This point in highlighted by 
provisions such as those in Section 6, where we are coming back to 
define what the term ``refinanced'' means. That clearly is a definition 
that the Federal Reserve Board or the Department of Housing and Urban 
Development could have handled without further Congressional action. 
There are more meaningful and key clarifications contained in H.R. 
3637.
  For example, the bill, H.R. 3637, will clarify that PMI cancellation 
rights exist not only on the cancellation date, but on any later date 
as well, so long as the borrower meets all the other cancellation 
requirements (including being current on loan payments). This was 
clearly our intent and is a needed fix resolved in this measure. H.R. 
3637 also will make clear that a good payment history should be 
calculated on the later of the cancellation date or the date the 
borrower requests cancellation. In this way, the borrower cannot be 
frozen in a category of not having a good payment history at the first 
cancellation date, and therefore never eligible for cancellation--even 
if he or she had repaired and improved their payment history.
  The bill eases lenders' burdens by assuring a timely, yet sensible 
termination time of the first day of the following month after a 
borrower become current. This change eliminates the need for a lender 
to check and cancel PMI every day of the month following a consumer's 
potential eligibility. It also clarifies that cancellation/termination 
rights are based on most recent amortization schedule for Adjustable 
Rate Mortgages and other products where the amortization schedule may 
change over the course of a loan's life.
  Two other important technical corrections include assuring that the 
goal post cannot continually be shifted by changing a currently 
undefined ``midpoint.'' H.R. 3637 will clarify that the midpoint is the 
halfway point between the first date of the loan and the last day of 
the period over which the loan is scheduled to be amortized. Finally, 
our bill also makes clear that the appraised value at the time of the 
refinancing, and not the value at original purchase, should be is used 
to determine the loan to value ratio and cancellation/termination 
rights.
  Mr. Speaker, I want to express my thanks to my Democratic and 
Republican colleagues who have all worked together to bring this 
technical corrections bill before the House today and I urge other 
Members to support this necessary legislation.
  Mrs. ROUKEMA. Mr. Speaker, I yield myself such time as I may consume.
  We have worked closely with the gentleman from New York (Mr. LaFalce) 
and the gentleman from Minnesota (Mr. Vento) on a fine bipartisan 
basis. I deeply appreciate their contribution and their work. But I 
also want to acknowledge again with more specificity the leadership of 
the gentleman from Utah (Mr. Hansen), who was the first to identify and 
act upon the issue. I think it is very important that he brought it to 
the forefront and to our attention and the need for the changes here.
  Fundamentally, I do want to underscore, in conclusion, that not only 
do we have bipartisan support here; but we have real action about real 
money on a monthly basis for Americans to recognize and take part in 
the American dream, which has always been fundamental to our American 
democracy, namely, homeownership, a home of their own. I am pleased to 
have accepted the strong support on a bipartisan basis.
  Mr. BENTSEN. Mr. Speaker, as a member of the House Banking Committee, 
I rise in strong support of H.R. 3637, legislation that will make 
technical corrections and clarifications to the Homeowners Protection 
Act. This law ensures that homeowners have the right to cancel their 
Private Mortgage Insurance (PMI) on their home mortgages once the 
homeowner attains a certain level of equity in the home (usually 22%, 
but in some cases 20%). Provisions included in this legislation were 
also included in H.R. 1776 which was approved by the House, with my 
support, on April 3.
  This legislation clarifies that PMI cancellation rights for 
adjustable rate mortgages (ARMs) are based on the amortization schedule 
that is currently in affect. This will ensure that consumers get full 
benefit of any adjustments that have been made based upon recent 
calculations. In addition, this legislation ensures that balloon 
mortgages are also treated as ARMs so that consumers will receive the 
full benefit of any interest changes that are favorable to them.
  This bill ensures that consumers with a ``good payment history'' have 
the right to cancel their PMI. In the past, there has been some 
confusion about what this term means. This legislation would make 
technical corrections so there is less ambiguity about this term. This 
measure includes a proviso that clarifies that these PMI cancellation 
rights only apply to mortgages originated after the 1998 law's 
enactment date. Finally, this bill ensures that consumers can cancel 
their PMI after the cancellation date as long as they have paid all of 
their PMI charges. The original law did not provide their consumer 
protection provision. As a result, consumers had only one opportunity 
to cancel their PMI.
  I strongly urge my colleague to support this corrective legislation 
that will protect consumers and improve the Homeowners Protection Act.

                              {time}  1400

  Mr. LaFALCE. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mrs. ROUKEMA. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Kuykendall). The question is on the 
motion offered by the gentlewoman from New Jersey (Mrs. Roukema) that 
the House suspend the rules and pass the bill, H.R. 3637.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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