WALNUT CREEK, Calif., Oct. 4 /PRNewswire-FirstCall/ — The PMI Group, Inc. (NYSE: PMI) applauds Thursday's overwhelming vote in the House of Representatives to pass H.R. 3648, which, among other things, extends the tax provision enabling low- to moderate-income homebuyers to deduct the cost of mortgage insurance premiums from their federal income tax returns until 2014. Similar legislation, S. 1416, was introduced in the Senate in July.
“An extension of the 2006 legislation that made mortgage insurance premiums tax deductible would be excellent news for homeowners and potential new buyers, as well as the mortgage market as a whole,” Steve Smith, Chief Executive Officer of The PMI Group, Inc. and PMI Mortgage Insurance Co., commented today. Smith also expressed optimism that the Senate would take up similar legislation in the near future.
“We applaud this vote to support tax deductibility for mortgage insurance because it should help low- and moderate-income Americans secure sustainable mortgages that keep them in their homes and keep their communities strong,” Smith said. “The median home price in the United States today is about $224,000, which means borrowers would need to save nearly $45,000 in order to make a traditional down payment of 20 percent. In today's market, where credit is hard to come by and home price appreciation is flat or declining, insured loans provide buyers with a simple, safe, and smart way to get into a home and start building equity.”
David Katkov, President and Chief Operating Officer of PMI Mortgage Insurance Co., explained, “We looked at our portfolio of newly insured mortgages in 2007 and found that in the first six months of 2007 nearly 65,000 new homebuyers with mortgage insurance from PMI should qualify for the deduction. Nearly 90 percent of these new homeowners should qualify for a 100 percent deduction on their 2007 returns. Bankrate.com estimated that a family with a $180,000 mortgage would save $381 this year with this deduction. This is another good reason for buyers without a 20 percent down payment to finance a home purchase with mortgage insurance instead of a second mortgage. In the current market environment it is important to help buyers find ways to take advantage of the stability of fixed monthly premiums that don't change. Furthermore, these premiums can be cancelled once they've built up enough equity in their home, which will further reduce their monthly payments.”
The United States Congress made the cost of mortgage insurance for transactions closed in 2007 tax deductible for the first time in December of 2006. Borrowers with adjusted gross incomes below $100,000 may deduct 100 percent of their mortgage insurance premiums paid between January 1 and December 31, 2007. Deductions are phased out at 10 percent increments for borrowers with adjusted gross incomes between $100,000 and $109,000.
PMI Mortgage Insurance Co.
PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc., provides residential mortgage insurance to mortgage lenders, capital market participants, and investors throughout the United States. PMI US is incorporated in Arizona, headquartered in Walnut Creek, CA, and licensed in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. By mitigating default risk, residential mortgage insurance expands home ownership opportunities and assists financial institutions in reducing the capital they are required to hold against low down payment mortgages. PMI US is rated AA by Standard and Poor's, Aa2 by Moody's, and AA by Fitch. For more information: http://www.pmi-us.com.
Statements in this news release that are not historical facts or that relate to future plans, events or performance are “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause PMI's actual results to differ materially from those expressed or implied in this release. Risks and uncertainties related to PMI's business are discussed in PMI's SEC filings, including its Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended June 30, 2007. There can be no assurance that HR 3648 or a variation thereof will be enacted into law. We undertake no obligation to update forward-looking statements.
SOURCE The PMI Group, Inc.
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