I have written various articles over the years comparing the advantages and disadvantages between private mortgage insurance (PMI) and the double loan, "piggy-back" alternative. My conclusions have been static -- the piggy-back scenario is better than PMI.

For those who are unfamiliar, PMI is a monthly premium attached to a mortgage payment for folks whose down payment is less than 20 percent. The logic is simple: The larger the down payment, the bigger spread between the value of the collateral and the loan size. Borrowers are less likely to default on their mortgage and ultimately lose their home if they have 20 percent (or more) equity at stake.

For folks who put less than a 20 percent down payment, the PMI premium insures a percentage of the equity, reducing the risk to lenders. The premium is equal to about .5 percent of the loan amount for a 90 percent loan, and up to one percent or more for folks looking for 95 or 100 percent financing.

On a 100 percent financed, $200,000 home, for example, the monthly PMI premium might fall in the range of $2,000 annually, or $167 per month.

As an alternative, lenders will allow financing of up to 100 percent without PMI if the amount financed is split in to two loans. As long as the first trust remains at 80 percent or lower, PMI is not required. The borrower would obtain a second trust to finance the balance, usually at a higher rate than what is available for first trust money.

The bottom line is that in most cases borrowers are better off financing the home with two loans and no PMI than with one PMI-infected loan.

One of the reasons making the piggy-back scenario a better deal is the tax deductibility of mortgage interest on the 2nd trust. PMI premiums weren't deductible.

Enter the Mortgage Insurance Fairness Act. All homes financed through a purchase or refinance that carry PMI in 2007, as a trial period, will allow the total PMI premium to be deductible, just like mortgage interest, on the federal tax returns.

While this is certainly a step in the right direction that might convince me to endorse a PMI loan, Congress, in its infinite wisdom, complicated the issue. Two wrinkles in the law left me scratching my head muttering, "Why?"

• The legislation is only good for loan closings in 2007. Congress is supposed to evaluate the law at the end of the year for a possible extension.

• The PMI premium is 100 percent deductible only if household adjusted gross income is $100,000 or less. The deductibility decreases by ten percent for every $1,000 in annual income that exceeds 100K. This means that household incomes greater than $109,000 receive zero PMI deductibility.

Okay. First, why the trial period? In my 20 plus years in the mortgage business, one thing is certain: conventional piggy-back loans have virtually taken the place of single loan, PMI deals. Over the last five or ten years, my company has written hundreds and hundreds of financing plans with a total loan-to-value that exceeded 80 percent -- all with a first and 2nd trust combo. The number of conventional single loans written with PMI can probably be counted on one hand. When the numbers are crunched, the combo is a better deal.

It seems to me that making PMI premiums permanently tax deductibility would finally enable these products to compete with the piggy back deals without one hand tied behind its back. Congress should implement the law and move on to other things.

Second, why limit the deductibility to households with incomes less than $109,000? The interest on 2nd trusts, which usually carry a higher rate, is 100 percent tax deductible in most cases. What's up with the discrimination?

The law is typical of Congress behavior: Let's complicate things for no apparent or important reason. Maybe a reader can enlighten me with some reasonable explanation as to the restrictions in the law. If so, I welcome an e-mail.

The biggest advantage of the law will be for folks who take out the government sponsored, Federal Housing Administration (FHA) loans. While the conventional mortgage market contains many programs that compete effectively with an FHA loan, folks who find an FHA loan to be best suited for them will receive a good tax deduction from the so-called FHA Mortgage Insurance Premium (MIP).

Ironically, the law reminds me of the ridiculous Homeowners' Protection Act, passed in 1999. Basically, the law required lenders to drop PMI when the loan amount fell to 78 percent of the original purchase price. The key words are "original purchase price." The law does not take into consideration any natural appreciation of property values.

Let's say someone took out a 95 percent loan with a five percent down payment to purchase a home. Making regular payments on a 30 year amortized loan, it would take about ten years, maybe more, before the loan balance reaches to the point equal to 78 percent of the purchase price.

Even in the worst of markets, real estate is likely to increase in value by some reasonable measure over a ten year period, yet the Homeowner Protection Act ignores the true market value. And seeing as the vast majority of homeowners don't hold a mortgage for ten years, all that hot wind on Capitol Hill blown around to pass the HPA, was just that -- hot wind. It's a useless law.

I don't think the Mortgage Insurance Fairness Act isn't much better.