Just last week, Congress did not include a bill allowing mortgage insurance premiums to be tax deductible in its massive, eleventh-hour tax legislation. Technically, Congress did not reject mortgage insurance deductibility, but it did not include it in a conference committee bill meant to compromise differences between separate Senate-passed and House-passed tax bills. This will probably foreclose any chance that Congress will take up deductibility again before the election, and before a new Congress comes to Capitol Hill next year.

The deductibility concept would have allowed as many as 12 million-plus American homeowners to take tax write-offs they are currently denied. An estimated 5.5 million homeowners pay PMI (private mortgage insurance) premiums and 7 million-plus pay FHA (Federal Housing Administration) premiums as part of their monthly mortgage bills. The legislation would have also extended deductibility to Veterans and Rural Housing Service-guaranteed loans.

Mortgage insurance is an important tool for many moderate income and minority households to purchase a first home. Mortgage insurance is virtually always required when a buyer puts less than 20 percent as the downpayment on a home. Some higher-income purchasers use PMI to enable them to buy bigger properties with relatively small downpayments. PMI covered over half of all new loans to African-American and Latino homebuyers in 2001. First time and minority purchasers also heavily use FHA mortgage insurance.

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