Thank you Mr. Chairman.
At the outset, let me welcome some folks from North Carolina who are here with us today. Mr. Greg Barmore, Chairman of GE Capital Mortgage in Raleigh, one of the largest private mortgage insurers in the country. I'd like to thank Mr. Barmore and others for coming to hear examination of this important issue.
Those of us here today already know what PMI is - but what appears to be part of the thrust of the Chairman's bill is that many homeowners who are paying PMI every month do not and yet, they continue to pay for it well into the life of the loan.
The argument for the existence of PMI is without controversy. PMI allows a significant number of Americans to obtain home mortgages that would not have been able to put down the required 20% of a home's purchase price.
The problems the Chairman's bill attempts to correct are how to give homeowners notice of what is in the PMI contract obtained at their closing and who is to pay for that notice mechanism.
Let me state for the record that I support disclosure of a home owner's right to terminate mortgage insurance, and I support that home owner's ability to cancel the mortgage insurance once it has been determined that the insurance is no longer needed.
I realize there are some cases where there is no question that mortgage insurance could and should have been cancelable but for whatever reason was not. We should not let anecdotal stories rush us toward solutions which may have hidden pitfalls.
But what I am concerned about is that we go beyond ensuring that disclosure is made and start intervening into legal contracts made between the home buyer and lender.
There is no doubt PMI is a contract between private corporations and individual homeowners and should be canceled as the contract calls for. Private mortgage insurance companies carry big risks and when there are economic downturns like in the 1980's there are a huge number of foreclosures.
I understand the Chairman's reasons for introducing legislation but I believe it is unfortunate that government sees the need to step into this debate just as the industry participants seem to be close to resolving this dilemma.
Congress should move carefully into this area and weigh and examine the issues before we rush to impose requirements. I don't know if a broad policy can be applied. I would suspect each individual loan must be taken into consideration.
I have many questions and concerns and I look forward
the testimony of our distinguished guests.
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