[Congressional Record Volume 146, Number 118 (Thursday, September 28, 2000)]
[Extensions of Remarks]
[Page E1619]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  PROTECTION OF THE AMERICAN DREAM ACT

                                 ______
                                 

                          HON. JAMES V. HANSEN

                                of utah

                    in the house of representatives

                      Thursday, September 28, 2000

  Mr. HANSEN. Mr. Speaker, for far too long, the Federal Government has 
required FHA loan holders to pay millions in mortgage insurance even 
after the risk of loss to the the government had passed. The reason I 
introduced the Protection of the American Dream act is that insuring 
people for a risk they do not have is just wrong.''
  Since the passage of the Home Owners Protection Act two years ago, 
which provided for the cancellation of private mortgage insurance once 
a conventional loan reached an 80% loan to value, many FHA borrowers 
began to ask why this law did not apply to their loans. After looking 
into the matter, I came to agree with these Americans, that like 
private lenders, there is no reason for FHA to charge mortgage 
insurance for the entire life of that loan. One of the reasons for this 
is that according to a Price Waterhouse Actuarial Review, less than one 
percent of consumers who reach an 80% loan to value default on their 
loan. Moreover, when a consumer with an 80% loan to value does default, 
in most cases no loss is incurred by the FHA or any other home loan 
lender.
  The Protection of the American Dream Act is a pretty basic bill. I 
merely amends the Homeowners Protection Act to include loans made by 
HUD for single family homes. By doing this, FHA borrowers would not 
only be able to cancel their Mutual Mortgage Insurance once they reach 
an 80% loan to value, but HUD would also be required to disclose what 
mutual mortgage insurance was and whom it insures.
  Mr. Speaker, insurance should only be required when the risk warrants 
its purchase. in the case of the FHA's Mutual Mortgage Insurance 
Program, FHA is forcing the people who can least afford it, to pay for 
insurance when there is almost no risk. The only thing we are risking 
is keeping people from grasping the American dream of home ownership.

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