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Statement: FHA’s Annual Report to Congress

Posted on November 15, 2016February 25, 2022 by dcadmin

For Immediate Release

Media Contact: Dan Knight

202-777-3544

USMI Statement on FHA’s Annual Report to Congress

WASHINGTON — Today, the Federal Housing Administration (FHA) released its “Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund (MMIF) Fiscal Year 2016.” The following statement can be attributed to Lindsey Johnson, USMI President and Executive Director:

“Consistent with improvement in the overall mortgage credit market, we welcome the news that FHA’s single-family forward program and the home equity conversion mortgage (HECM) program are combined above the statutory required 2 percent capital ratio. Now that FHA’s single-family fund has climbed its way back, this moment presents an opportunity for the new Administration and lawmakers to consider a coordinated housing policy to ensure broad access to low downpayment lending while reducing the government’s footprint in housing and protecting taxpayers.

“FHA serves an important countercyclical role in the mortgage finance system. Following the financial crisis, FHA’s insured market share grew nearly 300 percent from its pre-crisis market and remains at elevated levels today — and it has taken nearly a decade for the MMIF to recover from serving this countercyclical role. Now that FHA is back to meeting the 2 percent ratio requirement, there is also an opportunity to focus on strengthening FHA’s capital standard, which is dramatically less than what is required of FHA’s private market counterparts, to make the agency more financially resilient going forward. Changes in market conditions, or changes in the very volatile HECM program, could easily push the FHA back into the red.

“Further, this is also the time to refocus the FHA back to its core mission. Fortunately, today there is a healthy low downpayment GSE mortgage market — backed by private mortgage insurance — available to borrowers so FHA no longer needs to play an oversized role in our housing market. Private mortgage insurers put their own capital at risk to mitigate mortgage credit risk, provided over $50 billion in credit risk protection since the financial crisis to the GSEs, and did not take any taxpayer bailout. And this market has been strengthened since the financial crisis as all MIs have all implemented significant new capital requirements, or the Private Mortgage Insurer Eligibility Requirements (PMIERs), which are stress-tested financial and capital requirements established by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency, enhancing MI’s ability to assume mortgage credit risk in the future.

“The MI industry and FHA should serve complementary roles to promote broad and sustainable homeownership. To accomplish this, FHA needs to not only become more financially resilient, in line with the rest of the financial system, but also remain focused on its core mission of serving underserved communities. USMI stands ready to work with the new Administration and Congress to enhance a mortgage finance system that meets the needs of low downpayment borrowers while protecting taxpayers.”

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U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org.

Press Release: Comments on FHFA’s Single-Family Credit Risk Transfer Request for Input

Posted on October 11, 2016February 25, 2022 by dcadmin

For Immediate Release

October 11, 2016

Media Contact: Dan Knight

(202) 777-3547

dknight@clsstrategies.com

USMI Submits Comments on FHFA’s Single-Family Credit Risk Transfer Request for Input
Mortgage insurers outline industry’s role in shifting greater risk away from taxpayers in an equitable way for all lenders while expanding access to homeownership

WASHINGTON — U.S. Mortgage Insurers (USMI) submitted comments to the Federal Housing Finance Agency (FHFA) today regarding its Single-Family Credit Risk Transfer (CRT) Request for Input (RFI) and steps to further shield the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as well as American taxpayers, from losses from mortgage-related risks. In its comments, USMI highlights the distinct advantages of front-end CRT done through expanded use of mortgage insurance (MI) that can address existing shortcomings in the GSEs’ credit risk transfer transactions and that can offer substantial benefits for taxpayers, lenders of all sizes, and borrowers.

USMI notes in its comments that “increasing the proportion of front-end CRT in the Enterprises’ CRT strategy will advance four key objectives of a well-functioning housing finance system by ensuring that: (1) a substantial of private capital loss protection is available in bad times as well as good; (2) such private capital absorbs and deepens protection against first losses before the government and taxpayer; (3) all sizes and types of financial institutions have equitable access to CRT; and (4) CRT costs are transparent, thereby enhancing borrower access to affordable mortgage credit.”

“By design, and as evidenced by the more than $50 billion in claims our industry paid during and since the financial crisis, mortgage insurance provides significant first-loss risk protection for the government and taxpayers against losses on low-down payment loans,” said Lindsey Johnson, President and Executive Director of USMI. “As the government explores ways to further reduce mortgage-related risk while also ensuring that Americans continue to have access to affordable home financing, experience shows that mortgage insurance is the answer, particularly when you consider mortgage insurance protection is at work before the risk even reaches the GSEs’ balance sheets.”

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While USMI commends FHFA in its comment letter for establishing principles and risks to evaluate front-end CRT structures, which will enable the GSEs and other market participants to analyze the virtues and shortcomings of each form of CRT using an analytical framework, it urges that “the RFI principles should apply to both existing and proposed CRT activities.”

Among other questions, the RFI inquired about benefits of front-end CRT for small lenders. USMI explains in its letter that “small lenders derive optimal benefits from CRT programs that are familiar, have minimal implementation costs, and are based on lender selection among several market participants. Accordingly, MI works very well for small lenders (and deeper-cover MI similarly would work very well for small lenders) because it is already part of their current credit origination processes, is available with transparent pricing, and is available to lenders of all sizes. On the other hand, small lenders have no access to and derive no direct benefits from back-end forms of CRT.”

“In addition to the specific goal of shifting more risk from Fannie Mae and Freddie Mac, and unlike back-end CRT, mortgage insurance plays a direct role in helping families who have good credit but can’t afford large down payments to qualify for a mortgage. For nearly sixty years, mortgage insurers have been leaders in helping millions of Americans, particularly first-time homebuyers, purchase homes in an affordable way,” Johnson said.

Johnson added, “MI is one of the best forms of time-tested credit risk protection for our nation’s mortgage finance system. Mortgage insurers have taken steps to enhance both their claims paying ability—by increased capital and operational standards—and their claims paying process through updated Master Policy Agreements. MI is private capital directly tied to housing. Unlike some other forms of CRT structures, MI is dedicated to a housing finance system in good and bad economic times. By using more MI to provide deeper front-end risk sharing on loans the GSEs guaranty, the GSEs and taxpayers will be at a much more remote risk of losses. Promoting greater front-end risk sharing with MI is a way to help build a strong, stable housing finance system, provide prudent access to affordable mortgage credit, protect taxpayers, and help facilitate the homeownership aspirations for Americans for years to come. ”

USMI’s full comments to FHFA can be found here. A fact sheet on USMI’s comments can be found here.

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Statement: New GSE Credit Insurance Pilot Program

Posted on September 27, 2016February 25, 2022 by dcadmin

For Immediate Release

September 27, 2016

Media Contact: Dan Knight

(202) 777-3547

dknight@clsstrategies.com

USMI Statement on New GSE Credit Insurance Pilot Program

WASHINGTON — Lindsey Johnson, President and Executive Director of U.S. Mortgage Insurers (USMI), said the following today upon the announcement from Freddie Mac about a new pilot program involving mortgage insurers:

“For the past four years, Freddie Mac and Fannie Mae have been experimenting with a number of structures to shift risk away from the GSEs to the private markets. The program announced yesterday for an offering with affiliates of private mortgage insurers is the latest addition to this effort. While it is good to see the GSEs continue to explore ways to reduce the government’s mortgage credit risk exposure, this new offering is effectively a form of credit insurance that Freddie Mac stated builds on its Agency Credit Insurance Structure (ACIS), which is a back-end credit insurance program. While some mortgage insurers are exploring and may ultimately participate in this new credit insurance program, we believe it is important to note that this new structure should not be confused with the deep cover, true mortgage insurance front-end credit risk transfer proposal that we and others have been advocating for.

As the FHFA seeks comment through the RFI process on additional ways to do greater front-end risk sharing, USMI continues to believe that MI is one of the best, time-tested forms of credit risk protection for our nation’s mortgage finance system. We also believe that using more traditional deep cover MI would be a key component to a sound housing policy in the future. Specifically, our industry proposes expanding the current risk protection provided by MI, which today guards up to 35 percent of a loan’s value, as a means of front-end credit risk transfer. This will significantly protect taxpayers while also ensuring borrower access to low down payment mortgages. Having the GSEs increase that protection coverage would put more private capital at risk—precisely what taxpayers and the economy need. Such an entity-based program would make greater use of private capital, put the GSEs and taxpayers in a more remote loss position, allow lenders of all sizes and types to participate, and, importantly, help ensure access to affordable homeownership. As it has been for the past sixty years, private MI can be provided consistently through all economic cycles. We look forward to continuing that dialogue with FHFA, Fannie Mae and Freddie Mac, policymakers, and other stakeholders.”

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Letter: USMI Welcomes Effort to Increase Reliance on Private Capital In Housing Finance

Posted on September 7, 2016February 25, 2022 by dcadmin

USMI delivered the following letter to members of the Senate Banking Committee last night:

May 20, 2015

The Honorable Richard Shelby

Chairman
U.S. Senate Committee on Banking, Housing, and Urban Affairs
534 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Shelby:

U.S. Mortgage Insurers (“USMI”) welcomes the effort to make progress on increasing the reliance on private capital in housing finance as part of consideration by the Senate Banking Committee of the Financial Regulatory Improvement Act of 2015.

Specifically, USMI supports Section 706, which calls on the Government Sponsored Enterprises (“GSEs”) to engage in front-end risk sharing transactions. This directive would make greater use of private capital to “de-risk” the GSEs, lower the exposure and costs for the enterprises and taxpayers and should lower costs to borrowers. USMI supports this effort, and will continue to work with the Committee during the legislative process on clarifications to ensure the legislation has the intended effect of being “transaction neutral” to permit a variety of methods of up front risk sharing, with all risk sharing counterparties held to equivalent standards.

Promotion of greater up front risk sharing will help build a strong, stable housing finance system that provides access to sustainable and affordable mortgage credit while protecting taxpayers. We look forward to favorable action on this important effort.

Sincerely,

U.S. Mortgage Insurers

cc: The Honorable Sherrod Brown, Ranking Member

All members of the Senate Banking Committee

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Press Release: USMI Names Patrick Sinks Chairman

Posted on July 25, 2016February 25, 2022 by dcadmin

For Immediate Release

June 30, 2016

Media Contacts

Laura Capicotto (202) 777-3536 (lcapicotto@clsstrategies.com)

USMI Names Patrick Sinks Chairman

New Leadership Marks a New Chapter for the Mortgage Industry

WASHINGTON — U.S. Mortgage Insurers (USMI) today announced Patrick Sinks will serve as the organization’s new chairman. Sinks is MGIC Investment Corporation’s Chief Executive Officer (CEO) and succeeds USMI Chairman Rohit Gupta, President and CEO of Genworth Mortgage Insurance (MI). Sinks’ appointment marks a new chapter for USMI since its formation in March 2014.

“Restoring stability in the housing economy and setting a long-term course for the mortgage finance system remains a top priority among regulators, lawmakers and industry stakeholders in Washington. I am pleased to serve as USMI chairman as these issues take form given the critical role mortgage insurance plays in facilitating homeownership and protecting taxpayers from government exposure to mortgage risk,” said Sinks.

Sinks previously served as USMI’s Vice Chair. He has served as MGIC’s CEO since March 2015 and brings over three decades of experience in the mortgage insurance industry to USMI’s chairmanship. He began his career with MGIC at its primary subsidiary Mortgage Guaranty Insurance Corporation (MGIC) in 1978 as a member of the accounting team. He served in numerous roles at MGIC, including President and Chief Operating Officer of both MGIC Investment Corporation (MTG) and MGIC prior to being named CEO.

“Patrick’s wealth of experience and proven leadership are tremendous assets to our industry association and I look forward to continuing our work,” said Lindsey Johnson, President and Executive Director of USMI. “I want to also offer my gratitude to Rohit for his dedication to USMI as one of the association’s first chairmen. We are very appreciative of the time and devotion he has given to the organization and value his continued role on our board of directors.”

Bradley M. Shuster, who is the Chairman of the Board and Chief Executive Officer for NMI Holdings, Inc., will take over as Vice Chair for USMI.

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Statement: FHFA Credit Risk Transfer Progress Report and RFI

Posted on June 30, 2016February 28, 2022 by dcadmin

For Immediate Release

June 30, 2016

Media Contacts

Laura Capicotto (202) 777-3536 (lcapicotto@clsstrategies.com)

USMI Statement on FHFA Credit Risk Transfer Progress Report and RFI

The Federal Housing Finance Agency (FHFA) has released a Progress Report and Request for Input (RFI) on Single-Family Credit Risk Transfers as a follow-up to the release of the 2016 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. U.S. Mortgage Insurers (USMI) welcomes the opportunity to work with FHFA and the government sponsored enterprises (GSEs) on specific steps the GSEs need to take to increase the amount and levels of credit risk transferred. Front-end risk sharing with deeper coverage using private mortgage insurance (MI) will address existing shortcomings in the GSEs’ credit risk transfer efforts and offers substantial benefits for taxpayers and borrowers.

“The MI industry has taken substantial steps to be well positioned to provide more private capital in front of the GSEs’ risk exposure with increased and enhanced capital and reliability standards. MIs are well positioned to do more right now to protect taxpayers and help borrowers,” said Lindsey Johnson, President and Executive Director of USMI. “In the absence of comprehensive reform, we should explore many options in the credit risk share market, with greater balance among them. With three years of largely back-end risk sharing transactions, the potential benefits of front-end risk sharing have not been realized. Unfortunately, the RFI inadequately portrays the role private mortgage insurers (MIs) play in assuming credit risk and the steps MIs have taken to strengthen capital and counterparty standards (click here for MI reliability fact sheet). The RFI discusses many risks but neither provides quantitative analysis of the size and relative importance of those risks, nor proposes or requests proposals for ways to quantify those risks. A strong case exists for expanding mortgage insurance coverage down to 50 percent of the value of the loan and doing it on the front-end, before the risk ever reaches the GSEs’ balance sheets, as part of the next phase of experimentation.”

USMI looks forward to commenting on the following issues as part of the RFI process:

The need for a balance of methods to offload the mortgage risk concentrated at the GSEs and to enhance housing finance reform possibilities;
The need for equivalency of standards to be consistently applied to all sources of housing finance and credit enhancement to ensure there is no regulatory arbitrage;
The need to address pricing and modeling transparency;
The need to ensure that a broad set of lenders have equitable access to the system; and
The need to have risk sharing partners that will stay in the market in good times and bad, including during another market downturn when the housing finance system is under stress.

Front-end risk sharing via deeper cover MI transfers credit risk to MIs at the time the loan is originated, which reduces risk before it ever gets to the GSEs and provides real time price transparency so that any savings can be passed on to borrowers.

“While we understand the Enterprises’ consideration of exposure to all counterparties, we think increased private capital by strong counterparties further reduces taxpayer risk and should be encouraged. The MI industry is ready and prepared to do more,” said Johnson. “MIs have raised $9 billion in new capital since the financial crisis, and are well positioned to raise additional capital to meet demand.”

MIs covered roughly $50 billion in claims to the GSEs since conservatorship. Throughout the financial crisis, USMI members never stopped paying claims, never received any bailout money from the Federal government, and continued to write new insurance. In fact, since the crisis, MIs have paid all valid claims, with 96 percent paid in cash and the remainder due over time. MIs have materially increased their claims paying ability in both good and bad economic times due to new higher capital standards under the Private Mortgage Insurance Eligibility Requirements (PMIERs). All MIs have met or exceeded PMIERs requirements as of December 31, 2015.

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Letter: USMI Joins Call for Reduction in Unnecessary GSE Fees on Borrowers

Posted on June 22, 2016April 18, 2022 by dcadmin

For Immediate Release

June 22, 2016

Media Contacts

Laura Capicotto (202) 777-3536 (lcapicotto@clsstrategies.com)

USMI Joins Call for Reduction in Unnecessary GSE Fees on Borrowers

Consumer and Industry Groups United for Lower LLPAs

(June 22, 2016) – Today, U.S. Mortgage Insurers (USMI) joined 25 financial services and residential real estate trade associations and consumer groups, including the National Association of Realtors, Mortgage Bankers Association, National Association of Home Builders, Credit Union National Association, as well as the Center for Responsible Lending and Consumer Federation of America, in a letter to Federal Housing Finance Agency (FHFA) Director Mel Watt calling for Fannie Mae or Freddie Mac (the government sponsored enterprises, or “GSEs”) to reduce or eliminate loan level price adjustments (LLPAs) charged by the GSEs.

“Housing credit remains too tight and too many qualified borrowers are unable to get access to affordable mortgage credit, in large part because the GSEs are still charging LLPAs eight years after the financial crisis,” said Lindsey Johnson, USMI President and Executive Director. “Low down-payment borrowers are being double charged for the risk being assumed by private mortgage insurance (MI). These additional fees are particularly burdensome for low- and moderate-income and first-time homebuyers. It’s time borrowers get the full benefit of the credit risk transferred away from the GSEs to private capital in the form of MI.”

For a copy of the joint letter, click here.

Guaranty fees (or “G-fees”) are fees charged by the GSEs on individual loans they purchase to cover any losses in the event of a default. LLPAs are additional fees first introduced by the GSEs in 2008, during the financial crisis. Borrowers often pay LLPAs in the form of higher mortgage rates. LLPAs continue to be charged nearly eight years later despite significant improvement in the credit quality of GSE-backed loans and strengthened participants in the mortgage finance industry, including lenders and private mortgage insurers. In fact, GSE fees, including LLPAs, are currently two and half times higher than during the mortgage crisis, while the cumulative default rate has decreased from 13.7 percent to near zero.

Low down-payment loans purchased by the GSEs are already covered by MI, which provides the GSEs with substantial protection against first losses on these loans, reducing GSE and taxpayer risk exposure. Mortgage Insurers (MIs) covered more than $50 billion in claims to the GSEs since conservatorship, resulting in substantial savings to taxpayers. MIs have raised $9 billion in new capital since the financial crisis and implemented the Private Mortgage Insurers Eligibility Requirements (PMIERs), a new, rigorous set of capital standards established by the GSEs. The MI industry covers first loss mortgage credit risk ahead of the taxpayers and is ready to do more. Accordingly, FHFA should ensure that the GSEs price credit risk in a manner that is transparent and that reduces arbitrary or unnecessary borrower costs.

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Press Release: USMI Announces New Housing Finance Reform Principles

Posted on June 3, 2016July 15, 2024 by dcadmin

USMI Announces New Housing Finance Reform Principles

Calls for Private Capital to Absorb All Expected Credit Losses & Protect Taxpayers

(June 6, 2016) – U.S. Mortgage Insurers (USMI) today announced a new set of housing finance reform principles to help evaluate and shape reform efforts aimed at ensuring that American consumers have access to mortgage credit while better shielding taxpayers from housing-related risks.

“These principles set forth a sensible roadmap for much needed reform to put the housing finance system on a more sustainable path. Policymakers should keep the features that work well while reducing risks at the GSEs as much as possible,” stated Lindsey Johnson, USMI President and Executive Director.

USMI announced the following principles for reform:

Protect Taxpayers. Private mortgage insurance (MI) and other forms of private capital should absorb all credit losses in front of any government guaranty.
Promote Stability. A goal of the reformed system should be to promote stability in housing finance.
Ensure Accessibility. A reformed system should ensure broad access to mortgage finance for creditworthy borrowers and participation by lenders of all sizes and types.
Foster Transparency. There should be a consistent, transparent, and coordinated approach to the federal government’s housing policy among all government agencies and entities.

New polling also shows strong public support for housing finance reform efforts that rely on private capital to assume more of the risk currently borne by the GSEs. Among the findings:

Half of respondents (49%) believe the government is not doing enough to reduce the risks of another housing-related taxpayer bailout;
Most (48%) believe the private sector should bear the responsibility for the risk of losses on bad loans;
The majority (54%) would support a law requiring more private capital – such as additional mortgage insurance – to reduce the amount that taxpayers have to pay if borrowers default on their mortgage; and
71% are concerned about the return of loans with features (including interest only or zero down) that independent government reports and third-party analysts have noted contributed to the mortgage crisis.

A complete description of the USMI housing finance reform principles can be found here and a summary of the polling administered by Morning Consult on behalf of USMI between October 8-12, 2015 and April 7-9, 2016, can be found here.

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U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance (MI) offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org.

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Press Release: Private Mortgage Insurance Helped More Americans Become Homeowners in 2015

Posted on June 1, 2016March 1, 2022 by dcadmin

For Immediate Release

June 1, 2016

Media Contacts

Laura Capicotto 202-777-3536 (lcapicotto@clsstrategies.com)

Private Mortgage Insurance Helped More Americans Become Homeowners in 2015

USMI Data Highlights Consumer Benefits During National Homeownership Month

(June 1, 2016) – Private mortgage insurance (MI) helped approximately 740,000 homeowners in 2015, a more than 18 percent increase over 2014, U.S. Mortgage Insurers (USMI) today announced in conjunction with National Homeownership Month. This growth mirrors the positive national trend showing total mortgage borrowing reaching a four-year high.

“As we celebrate Homeownership Month, USMI is proud that private mortgage insurance is an essential part of the mortgage finance system that helped even more borrowers become homeowners last year” said Lindsey Johnson, USMI President and Executive Director. “MI is a great option to help borrowers address high down payment requirements, which can be one of the biggest hurdles to homeownership. Consumers should know about all the options, including the benefits of MI, before making one of the most significant financial decisions of their lives.”

MI Makes Homeownership Affordable

MI has helped millions become homeowners by enhancing their ability to obtain a mortgage in an affordable way.

There are a number of consumer benefits from MI:

MI Provides Savings to Borrowers – Borrowers with above average credit scores can save as much as $8,000 over five years with private MI compared to FHA insurance, according to WalletHub’s 2016 Mortgage Insurance Report.

MI Helps First-Time Homebuyers – Nearly 50 percent of loans covered by MI in 2015 were for first-time homebuyers and more than 40 percent were borrowers with incomes below $75,000. In 2015, MI helped approximately 740,000 homeowners purchase or refinance a mortgage. For more data, visit the USMI data-snapshot.

MI is Cancelable – Private MI paid for by the borrower can be cancelled when the borrower pays down the mortgage to 78 percent of the home value. Because borrowers can stop paying private MI premiums at a certain point, this can lead to real savings over the life of their loan. With home value appreciation, a borrower may be able to cancel MI even sooner. For more information on MI cancelability, visit our comparison of private mortgage insurance and FHA insurance.

MI is Tax Deductible – MI premiums are treated as “mortgage interest” and are tax deductible for many borrowers. According to the IRS, 4.7 million taxpayers benefited from deductions for MI in 2013, with an average deduction of $1,387. For more data, visit the USMI data-snapshot.

MI Protects Taxpayers from Another Bailout – Because private MI is backed by private capital, if the borrower defaults, MI covers the first losses thus reducing the risk to government – and ultimately taxpayers – of another bailout. Independent polling shows Americans support reducing taxpayer exposure through greater reliance on private capital.

“Homeownership remains an important goal for most Americans, creating long-term value for individuals and their communities. USMI members are proud to help millions of Americans become homeowners,” said Johnson. “A strong and vibrant private Mortgage Insurance industry plays an important role in facilitating homeownership for millions of Americans, and MI is prepared to do more.”

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U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance (MI) offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org.

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Article: Private Mortgage Insurers Make Their Mark on the Industry

Posted on March 31, 2016March 2, 2022 by dcadmin

Private mortgage insurance companies, although few in number, play an important role in the housing finance system by creating sustainable homeownership for borrowers and taking on GSE credit risk.

Lindsey Johnson, President and Executive Director of U.S. Mortgage Insurers (USMI) offered MReport an inside view into the world of private mortgage insurers and how they are completely changing the mortgage game.

MReport: How has the private mortgage insurance (PMI) industry changed and evolved within the housing space?

Johnson: When I think about how our industry is evolving, two key words that come to mind are: reliability and relevance. As with every other financial services industry player, private mortgage insurance has increased capital levels, enhanced counterparty standards, and changed our master policy agreements to give better clarity and certainty of coverage when our claims are paid. Wehave also had new entrants into the system. During the crisis, we had three new mortgage insurers enter into the market and are competitive players along with the three members who were formerly in the industry. We also continue to operate in the affordability space by allowing borrowers who otherwise might not be able to attain the home they want because they are unable to meet the down payment requirements. We continue to increase our reliability because we have enhanced our capital, enhanced the master policy agreement, and we are positioned to provide greater risk protection to the GSEs and lenders in the future.

As the marketplace continues to evolve, there seems to be broad consensus that the GSEs need to maintain and grow their credit risk transfer programs. They continue to explore ways that they are going to shed risk. Mortgage insurers are adapting to be well-positioned to take additional credit risk away from the GSEs. Mortgage insurers continue to be one of the few sources out there that the GSEs can shift risk to today and are also one of the few counterparties with staying power. We are going to be there to take credit risk away from the GSEs in the good and bad economic times. In that sense, mortgage insurers continue to prove that we are as relevant today as ever.

MReport: What are some the biggest issues that PMIs face in the mortgage industry today?

Johnson: Today, some of our greatest challenges as mortgage insurers stem from the effect of government programs, including FHA and even the GSEs, where certain policies responding to the crisis, such as FHA’s expansion into the conventional market and the GSEs addition of LLPAs, have not been retracted even after eight years post-crisis. Mortgage insurers continue to be the most competitive option in many circumstances in the conventional market. We are competing with government, oftentimes when our regulatory requirements and standards were increased almost uniformly across the board, while many government programs have not had those standards enhanced or even updated. That creates challenges for all private market players.

MReport: What are some of the largest successes private mortgage insurers are experiencing?

Johnson: We continue to do our primary business very well. In the past year, mortgage insurers expanded consumer access to mortgage finance credit to more than 725,000 new homeowners. Half of those that were served by mortgage insurers were first-time homebuyers and nearly 40 percent of those were borrowers with incomes below $75,000. That is significant and something that mortgage insurers are very proud of. These are borrowers that would most likely not be able to make a typical, substantial down payment of 20 percent that is required. They are appraised by lenders as having that higher credit risk without a down payment and we know that typically borrowers are far less likely to default on their mortgage when there is a down payment. Coming up with that down payment can be a huge hurdle for homeownership. We did the calculation to determine that if mortgage insurance wasn’t an option, how long would it take for borrowers to save for that 20 percent down payment, and we found that it could take about 20 years for the average firefighter or school teacher to save for a down payment.

MReport: How can PMIs attract borrowers that cannot afford a down payment and get them into homes? What benefit do PMIs offer?

Johnson: It begins with education. A point that often gets missed is that unlike FHA or other options that require a higher interest rate or more fees for the entire life of the loan, private mortgage insurance is paid by the borrower and is cancelable once there is a certain amount of equity built up in the home. It’s also important to understand that we continue to be in the marketplace, we continue to be very competitive with the other options out there, and we continue to be one of the safest options for individuals to get into homes where we create sustainability in the marketplace. For the GSEs, we continue to be one of the most reliable counterparties.

MReport: What piece of advice can you offer other PMIs in the industry?

Johnson: This industry has a great story to tell. It’s one of making homeownership possible for many people that would otherwise be unable to obtain the home they want. We continue to be extremely relevant in today’s housing finance system. So many of the issues that we face today we have faced in the past, and mortgage insurers have been a tested means to serve as a credit enhancement for borrowers to get into these homes. The housing finance system will continue to evolve, and mortgage insurance is going to be a key component and a very important credit enhancement option. Mortgage insurers are dedicated to the housing finance system and are there in both good and bad economic times. As an industry, we have to continue to tell that story.

To read the entire MReport, click here.

Press Release: USMI Supports Affordable Housing Principles and Calls for Transparency in FHFA Duty to Serve Plans

Posted on March 22, 2016March 1, 2022 by dcadmin

USMI Supports Affordable Housing Principles and Calls for Transparency in FHFA Duty to Serve Plans

USMI submitted comments on the Federal Housing Finance Agency’s (FHFA’s) proposal for how the government sponsored housing enterprises Fannie Mae and Freddie Mac should serve underserved markets. USMI supports both principles of facilitating the financing of affordable housing for low-to-moderate income families consistent with the Enterprises’ overall public purposes while maintaining a strong financial condition and reasonable economic return. To that end, among other things USMI calls for full transparency into the economics of the Plans to ensure policy aims are met in the most efficient way available. USMI looks forward to working with MI customers, FHFA, the Enterprises, and other market stakeholders to help the Enterprises meet their “Duty to Serve” obligations. The text of the USMI comment letter can be found here.

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Brendan Kihn, Government Relations Director

Posted on March 17, 2016September 30, 2021 by dcadmin

Brendan Kihn currently serves as the Government Relations Director of USMI. USMI is the nation’s leading private mortgage insurance association, comprised of five of the six U.S. mortgage insurance companies in the country.

Brendan previously worked at Falcon Capital Advisors LLC where he served as a Policy Analyst, providing research and analysis on regulatory compliance and business operations issues impacting the housing finance system. Prior to that, Kihn served as an Interim Director and Legislative Analyst at the Financial Services Roundtable, where he managed the Advocates for Insurance Modernization organization and tracked regulatory and legislative developments affecting the property and casualty insurance industry.

Brendan is a graduate of Quinnipiac University School of Law and the University of Michigan.

Statement: FHA’s Annual Report to Congress

Author: dcadmin

Statement: FHA’s Annual Report to Congress

Press Release: Comments on FHFA’s Single-Family Credit Risk Transfer Request for Input

Statement: New GSE Credit Insurance Pilot Program

Letter: USMI Welcomes Effort to Increase Reliance on Private Capital In Housing Finance

Press Release: USMI Names Patrick Sinks Chairman

Statement: FHFA Credit Risk Transfer Progress Report and RFI

Letter: USMI Joins Call for Reduction in Unnecessary GSE Fees on Borrowers

Press Release: USMI Announces New Housing Finance Reform Principles

Press Release: Private Mortgage Insurance Helped More Americans Become Homeowners in 2015

Article: Private Mortgage Insurers Make Their Mark on the Industry

Press Release: USMI Supports Affordable Housing Principles and Calls for Transparency in FHFA Duty to Serve Plans

Brendan Kihn, Government Relations Director

Policy Priorities

Tax Deductibility

Taxpayer Protection

Advocacy

Access & Affordability

Housing Finance Reform