Washington, D.C.--A-Homeowners with private mortgage insurance (PMI) in Oklahoma and across the nation may be paying $240 to $1,200 annually unnecessarily. The U.S. House of Representatives put a stop to that expensive oversight last week by passing the "Homeowner Protection Act." U.S. Sixth District Congressman Frank Lucas, a supporter of the legislation, was able to assist in moving the bill to the House floor by voting earlier this year to pass the bill out of the House Banking Committee, of which he is a member. The Senate has also passed this legislation.

"Homeowners, especially new, young homeowners, face enough financial constraints on a daily basis as it is," Lucas said. "That extra $1,000 a year in overpayments would make an incredible difference in many households, not to mention that it's plain frustrating to find out you're throwing money out the window."

Currently, no federal law requires lenders of insurance to notify borrowers of their rights to cancel mortgage insurance. As a result, many borrowers have not been aware of their right to cancel their PMI and discontinue paying premiums.

"Now, PMI plays an important role in the mortgage industry by allowing low-income borrowers with little cash greater access to home ownership," Lucas said. "We just needed to straighten out some of the kinks."

PMI enables homeowners to purchase homes with as little as a 3% to 5% down payment by insuring the mortgage lender or investor against default. For conventional mortgages, PMI is normally required whenever borrowers do not have 20% down payments.

The bill automatically terminates PMI after a homeowner attains a certain equity level in his or her home. The bill outlines three different automatic cancellation levels, depending on the size and risk of the mortgage. It also requires the appropriate financial institutions and lenders to provide homeowners with the terms and conditions of PMI and how it may be canceled voluntarily and by law.