The House Financial Services Committee approved two measures on Tuesday, April 27, that will alter the landscape for home mortgage insurance.
In one measure, the committee took a step to bolster the finances of the Federal Housing Administration. The committee approved a measure to strengthen the FHA's finances by giving it authority to raise annual mortgage insurance premiums. The bill would raise the cap of annual premium payments collected by the FHA from 0.50% to 1.5%.
Rep. Maxine Waters (D-California), Chairwoman of the Housing and Community Opportunity Subcommittee, drafted the FHA Reform Act of 2010 (H.R. 5072) in response to the housing crisis that caused the FHA's Capital Reserve Account to fall below the 2% level required by law. The Act will empower the FHA to improve its financial position by allowing the agency to adjust its premium structure for new borrowers.
In the other measure, the committee approved by a vote of 39-26 the Homeowners' Defense Act, legislation intended to reduce insurance premiums for homeowners around the country.
The bill, which was authored by Rep. Ron Klein (D-Florida), allows states that choose to participate to join a national catastrophe insurance pool, with the intent of driving down costs. The pool could include the risk for hurricanes in Florida, earthquakes in California, wildfires in Arizona, and more.
Klein said in a statement, "By working across party lines with Democrats, Republicans and Independents, we have passed a private-market solution to drive down premiums and make a real difference for homeowners around the country."
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