Statement: Introduction of The Middle Class Mortgage Insurance Premium Act of 2021
WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), released the following statement on the introduction of The Middle Class Mortgage Insurance Premium Act of 2021 sponsored by Reps. Ron Kind (D-WI) and Vern Buchanan (R-FL):
“Making permanent the ability of homeowners to deduct mortgage insurance (MI) premiums from federal income taxes and doing so in a way that makes this important tax deduction available to more hard-working middle class families, is smart public policy that benefits potentially millions of existing homeowners. Affordability remains a persistent barrier to homeownership across the country, particularly for first-time homebuyers. MI helps to sustainably bridge the down payment gap by helping families secure financing when they are unable to put 20 percent down. Low down payment mortgages, including conventional loans with private MI, have proven critical for millions of low- and moderate-income, first-time, and minority borrowers to buy a home sooner, secure financial stability, and build intergenerational wealth.
“Since 2007, the ability to deduct the cost of MI premiums has helped to put extra dollars back into the hands of millions of families each year and we strongly support legislation to make the tax deduction permanent. We are grateful to Congressmen Kind and Buchanan for their leadership on this critical legislation, and we encourage swift passage by both congressional chambers.”
In April 2021, USMI sent a letter to the Joint Committee on Taxation outlining how two key aspects of the current deduction diminish its effectiveness: (1) its temporary nature; and (2) its relatively low adjusted gross income (AGI) phase out. Congress first enacted legislation allowing the MI premiums tax deduction in 2006 and limited it to those making less than $100,000. In June, USMI then joined other housing industry groups, including the Mortgage Bankers Association, National Association of Home Builders, National Association of REALTORS®, and National Housing Conference, in sending a letter to the House Ways and Means Committee and Senate Finance Committee urging congressional tax writers to make this important deduction permanent.
The tax provision on MI premiums has always been temporary, with extensions made every couple of years. Nearly 2.3 million Americans claimed the deduction in 2017 (the latest data available) with almost 60 percent of those taxpayers having less than $75,000 AGI and 90 percent with less than $100,000. In 2020, approximately 4.8 million families obtained mortgages with some form of MI, including conventional loans with private MI (over 2 million) and loans guaranteed though the Federal Housing Administration (nearly 1.4 million) and U.S. Department of Veteran Affairs (nearly 1.4 million).
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U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org.
