House To Vote on MI Reform

The House is set to vote on a private mortgage insurance reform bill July 14.Lawmakers have resolved several sticking points that had previously endangered the bill. Once voted on in the House it will move to the Senate, where mortgage industry lobbyists are predicting easy passage. "The bill provides a happy medium for both servicers and borrowers," said Karen Kapen, a lobbyist for the Mortgage Bankers Association of America, which supports the legislation. The bill, also backed by the Mortgage Insurance Companies of America, calls for automatic cancellation of private MI once a borrower's equity reaches 22%, although creditworthy borrowers can cancel at 20% equity. Servicers will notify borrowers once these equity levels have been attained. The proposed legislation provides a federal preemption, except for those states that already have private MI laws, including California, Connecticut, Maryland, Minnesota, Missouri, New York, and Texas. There is no federal regulator under the proposed MI reform bill, which means the courts will have to resolve any consumer or lender complaints.