The federal government’s “premiums and taxes” rule for insurance companies could be an obstacle for some homeowners who are looking to buy their own homes, according to a new report from the Center for Responsible Lending.
The rule requires that all property owners be eligible for federal and state premium and tax credits for a home, and that the companies provide them with access to tax credits to help them buy insurance on their own.
That could make it more difficult for many of the most vulnerable homeowners in Iowa and other states who can’t afford to buy themselves a home.
If a home owner does not qualify for a tax credit, the homeowners are required to pay the government a premium tax credit equal to 20 percent of the assessed value of their home.
If the homeowner does not pay the premium tax credits, the government will take the entire premium and deduct it from their mortgage.
The report says the rule is meant to be flexible so that homeowners can choose to buy insurance based on their needs.
“There is no guarantee that the government would only consider homeowners with an adequate credit history and credit history history that has been documented by the lender,” the report states.
“Additionally, if the homeowner has been the subject of an involuntary foreclosure, the IRS has not required the homeowner to purchase a mortgage loan or a credit card for the homeowner, so there is no need to include these documents in a credit application.”
In other words, the report says, “no matter what the financial circumstances, a homeowner who cannot pay the premiums or the tax credits is still eligible for a mortgage.”
It is unclear whether the Obama administration has made any changes to the rule since it was last updated in April 2018.