You likely didn't see it in the news, but Congress renewed a key piece of legislation that could help to add some ballast to the already unstable mortgage markets.
The legislation, similar to a bill first passed in 2007, gives home buyers an itemized deduction for the mortgage insurance paid in conjunction with their mortgage. 
For 2008, mortgage insurance premiums will be fully deductible for borrowers with incomes up to $100,000, and will be partially deductible for borrowers with incomes between $100,000 and $109,000.
Many supporters of the legislation cite the proliferation, and the inherit market risks, of 80/20 loans- as one of the primary reason to make mortgage insurance a deductible item. These loans allowed lenders to bypass the need for mortgage insurance, since the first mortgage was only for 80% of the home value, with another 2nd mortgage being written for the remaining 20%. So called piggy back loans have been popular in recent years as rates were low, and the interest on the 2nd mortgage was deductible.
A key difference in this years bill, over the 2007 version, extends the deduction to new policies written through 2010. The 2007 bill had only applied to policies written in that calender year. Unfortunately, neither bill applies to MI policies issued prior to 2007.
One important benefit of mortgage insurance is that is can be cancelled, typically when a borrower has reached 75% to 80% loan to value, thereby reducting a buyers payment in future years.
The net result is a lower overall cost to borrowers, and the potential to add a little stability to the mortgage markets in 2008! Thanks congress!
Brian Wentz & Beth Ernst
Burnett Realty,
Des Moines, Iowa Real Estate
www.BrianWentzRealtor.com
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