[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.
____________________