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Press Release: National Survey Confirms Low Housing Supply and Lack of Affordable Housing Among Biggest Homebuying Challenges for Minorities and Americans Overall

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2021 National Homeownership Market Survey Also Finds Most Americans Don’t Understand Availability of Low Down Payment Mortgage Options

WASHINGTON — U.S. Mortgage Insurers (USMI) today released its 2021 National Homeownership Market Survey that finds nearly 7 in 10 (69 percent) ranked lack of affordable housing and nearly 6 in 10 (57 percent) ranked low housing supply among the biggest homebuying challenges in the United States. The survey also revealed that many people continue to not understand the down payment requirements to purchase a home. Housing insecurity (66 percent) was also among the top concerns from respondents. Socioeconomic disparities – such as lower income, lack of intergenerational wealth, limited savings, and the percentage of monthly income dedicated to housing costs – were reported to make these challenges more acute. The survey also specifically looked at these responses by race to better understand minorities’ perceptions and challenges to homeownership.

“This survey underscores the need to address the nation’s undersupply of housing, and specifically affordable housing, because too many people are being left out of the market or face significant barriers to get into the housing market,” said Lindsey Johnson, President of USMI. “Our survey shows that low- to moderate-income households and underserved communities struggle to become homeowners due to several major factors including low housing supply, lack of affordable housing, and personal economic factors such as imperfect credit score or the inability to afford a 20 percent down payment.”

USMI’s survey found that when broken down by race these economic factors are even more pronounced. Seventy-four percent of African American and 65 percent of Hispanic respondents reported that in addition to the lack of affordable homes or low supply, the inability to save for a down payment (39 percent of all minorities) and imperfect credit history (37 percent of all minorities) are the biggest challenges they face when it comes to buying a home.

Housing insecurity during the pandemic was also a significant concern among survey respondents, particularly for minorities. The number one concern among African American and Hispanic respondents was falling behind on rent or mortgage payments. In fact, twice the number of African American respondents (20 percent) and more than one and half times the number of Hispanic respondents (16 percent) reported this concern compared to white respondents (10 percent).

“The survey also shows that more education is needed around the mortgage finance process, particularly to ensure more buyers understand that low down payment mortgage options are widely available,” said Johnson.

USMI’s survey found that up to 45 percent of all respondents mistakenly believe that you need a down payment of 20 percent or more to qualify for a home purchase. Another 30 percent indicated that they do not know about down payment requirements. In truth, you can qualify with a down payment as low as 3 percent. The survey also asked respondents about the role of mortgage insurance. According to survey respondents, the top reasons for MI are it “levels the playing field” and “increases lower-income families’ access to homeownership.” A majority of respondents also said it was important to have access to low down payment loans through both the conventional and government-backed markets, such as the Federal Housing Administration (FHA).

USMI members support sensible regulatory and legislative reforms to remove barriers to homeownership, and they promote an equitable and sustainable housing finance system backed by private capital. In collaboration with more than 100 organizations and individuals involved in the Black Homeownership Collaborative, USMI also supports policies that promote equity and work to increase homeownership rates among Black Americans.

ClearPath Strategies fielded USMI’s 2021 National Homeownership Market Survey of 1,000 adults in the U.S. It was commissioned online April 13-21. Quotas were set to ensure a cross sample of age, gender, race, region, and education as well as homeowners, first-time homebuyers, and prospective homebuyers. The purpose was to understand the perceptions around homeownership, the mortgage process, and the challenges people face when trying to purchase a home.

The complete findings from USMI’s national survey are available 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 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

Letters to Congress: MI Premium Deductibility Proposal

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USMI joined Mortgage Bankers Association, National Association of Home Builders, and National Association of REALTORS® in submitting letters to Chairman Richard Neal and Ranking Member Kevin Brady of the House Committee on Ways and Means as well as Chairman Ron Wyden and Ranking Member Mike Crapo of the Senate Finance Committee. The letters recommend that the mortgage insurance premium tax deduction be made permanent and the adjusted gross income (AGI) phaseout be eliminated. The current phaseout represents a burdensome eligibility criterion for American families to claim MI deduction and millions more homeowners would benefit from a permanent extension that eliminates the AGI phaseout. As affordability remains a persistent barrier to homeownership across the country, permanently making the MI premium tax deductible and eliminating the AGI phaseout would support both existing homeowners as well as prospective homebuyers.

Press Release: New Report Shows Home Loans Backed by Private Mortgage Insurance Increased 53 Percent in 2020, Allowing More Borrowers to Access Homeownership Three Times Sooner

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Texas, California, Florida, Illinois, and Michigan among top states for mortgage financing with private MI

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual report on mortgage financing supported by private MI at the national and state levels. The report finds that home loans backed by private MI increased 53 percent in 2020, a record-setting year for the nearly 65-year-old industry, with more than 2 million borrowers securing mortgage financing. Meanwhile, the report finds that saving for a 20 percent down payment could take potential homebuyers 21 years — three times the length of time it could take to save a 5 percent down payment. Texas, California, Florida, Illinois, and Michigan were the top five states for mortgage financing with private MI.

“Access to low down payment loans was more important than ever this past year as many homebuyers weighed other economic concerns during the pandemic. Mortgage insurance levels the playing field and provides lower- and middle-income households with access to mortgage credit, and the more than 2 million borrowers served this past year reached a new milestone for our industry,” said Lindsey Johnson, President of USMI.

Private MI has enabled over 35 million people access to affordable, low down payment mortgages, serving as a bridge for homebuyers to qualify for home financing despite putting less than 20 percent down. The latest USMI report examines the number of borrowers served, the percentage of borrowers who were first-time homebuyers, average loan amounts, and average FICO credit scores. USMI also calculates the number of years to save 20 percent versus 5 percent down payments for each state plus the District of Columbia.

Key findings from the report include:

  • It could take 21 years on average for a household earning the national median income of $68,703 to save for a 20 percent down payment (plus closing costs), for a $299,900 single-family home, the national median sales price.
  • The wait time decreases to seven years with a 5 percent down payment insured mortgage — a nearly 67 percent shorter wait time at the national level.
  • In 2020, the number of homeowners who qualified for a mortgage because of private MI reached over 2 million.
  • Nearly 60 percent of purchase mortgages went to first-time homebuyers, and more than 40 percent had annual incomes below $75,000. The average loan amount purchased or refinanced with private MI was $289,482.
  • The private MI industry supported $600 billion in mortgage originations in 2020. Approximately 65 percent was for new purchases while 35 percent was for refinanced loans, resulting in approximately $1.3 trillion in outstanding mortgages with active private MI coverage at year’s end.

The below table shows the top five states in which private MI was used by borrowers to purchase or refinance homes in 2020.

State Number of Borrowers Helped with Private MI First-Time Homebuyers
Texas 164,737 58 percent
California 160,103 70 percent
Florida 130,800 55 percent
Illinois 93,976 64 percent
Michigan 72,646 59 percent

Throughout 2020, the private MI industry worked closely with federal policymakers, industry groups, and consumer organizations to support homeowners experiencing financial hardships due to the COVID-19 pandemic. The industry updated its guides and processes to align with the policies of the Federal Housing Finance Agency (FHFA) and government-sponsored enterprises’ (GSEs), Fannie Mae and Freddie Mac, to implement nationwide forbearance programs.

Loans backed by private MI provide protection against mortgage credit risk and are structured to protect the GSEs in the conventional mortgage market. Private MI has proven to be a reliable method for shielding the GSEs, having paid nearly $60 billion in claims since the 2008 financial crisis and housing market downturn.

The complete report is available here, along with fact sheets for all 50 states and the District of Columbia.


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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

Letter: To The Joint Committee On Taxation To Make MI Tax Deduction Permanent & Eliminate AGI Phase Out

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On April 16, USMI sent a letter to the Joint Committee on Taxation in response to the legislative proposal to make permanent the Mortgage Insurance Premium Deduction and to eliminate the Adjusted Gross Income (AGI) phase out. In the letter, USMI discussed how two key aspects of the current deduction diminish its effectiveness: (1) its temporary nature; and (2) its relatively low AGI phase out. USMI recommends modifying current law to make the deduction permanent and to eliminate the AGI phase out. Making these changes would benefit more taxpayers who are trying to buy homes and would eliminate the only itemized deduction that is subject to an AGI phase out. See the full letter here.

Newsletter: April 2021

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We are well into Spring and there continues to be numerous developments in housing finance. April is Financial Literacy Month, so U.S. Mortgage Insurers (USMI) has been hard at work highlighting the unique role private mortgage insurance (MI) plays in the mortgage finance system and the importance of financial literacy in the homebuying process. Washington policymakers have also been busy moving forward confirmations of key administration officials as well as holding congressional hearings and introducing legislation on housing. Below are some of the key developments USMI has been following over the last month.

USMI Member Spotlight: MGIC CEO Tim Mattke Talks Financial Literacy. Earlier this month, USMI talked with MGIC CEO Tim Mattke about the company’s efforts to ensure first-time homebuyers have access to the right information and resources to be “mortgage-ready.” Mattke noted that “understanding the process” is the most difficult step, after finding the right property, among those aged 22 to 40, according to the National Association of REALTORS®. “To help overcome this challenge, MGIC has provided homebuyer education for decades,” said Mattke, adding that “[l]ast year alone, over 100,000 people took our online tests in English or Spanish. More recently we launched a consumer site, Readynest,” which serves “to demystify the homebuying journey through relatable explanations and stories of others who have gone through the process.”

Mattke also called on federal policymakers to recognize the importance of low-down payment lending, especially for minority, lower-wealth, millennial, and first-time homebuyers. He noted the need to address the shortage in supply to increase affordable housing options and encouraged policymakers to explore ways to reduce regulatory red tape for new home construction and incentivize increased remodeling and rehabilitation of distressed properties.

2020 Numbers are in: Private MI Industry Record Year in Mortgage Originations. In late March, USMI announced a record year for the private MI industry, having helped over 2 million low down payment borrowers secure mortgage financing in 2020, a 53 percent increase from the previous year. Of these, nearly 900,000 were first-time homebuyers, up 25 percent from 2019. The industry supported $600 billion in mortgage originations — approximately 65 percent of this volume was for new purchases while 35 percent was for refinanced loans. This resulted in nearly $1.3 trillion in outstanding mortgages with active private MI coverage at year’s end, underscoring the industry’s critical role in enabling American families to obtain affordable and sustainable low down payment mortgages. “Despite the unprecedented challenges presented by the COVID-19 pandemic, conventional loans backed by private MI continued to make the dream of homeownership a reality for millions of low down payment borrowers,” said Lindsey Johnson, President of USMI.

Johnson also discussed the record volume with National MI CEO Claudia Merkle, who noted two key factors that contributed to the strong production: “First, there are more and more first-time homebuyers coming into the market. They have good credit but struggle to put 20 percent down on their first house. Private MI is a great fit for them. A second factor is attributed to low interest rates, which helped fuel the strong mortgage market momentum in 2020, for both the purchase segment and also for refinances.”

House Financial Services Committee Holds Hearing on Equitable and Affordable Housing Infrastructure. On April 14, the House Financial Services Committee (HFSC) held a hearing titled, “Build Back Better: Investing in Equitable and Affordable Housing Infrastructure.” Several bills proposed by Democratic committee members on issues ranging from lead abatement to broadband infrastructure were discussed. The main proposal, presented by Chairwoman Maxine Waters (D-CA), was the “Housing is Infrastructure Act of 2021.” Chairwoman Waters introduced similar legislation in the past and the 2021 iteration incorporates several of the other proposed bills considered by the committee, including the Down Payment Toward Equity Act of 2021 that would provide for $10 billion in targeted down payment assistance (DPA) for first-generation, first-time homebuyers of up to $20,000 and $25,000 for socially and economically disadvantaged individuals. A recent analysis from the Urban Institute estimates that between 2.51 million and 5.37 million renters households could be eligible for the proposed DPA.

There was also bipartisan agreement among committee members that the persisting shortage of affordable housing is a pressing crisis, and that the nation would benefit from more robust infrastructure investments. The parties, however, differed on what constituted as “infrastructure,” the implications of spending two trillion dollars on President Biden’s infrastructure proposal, and the effect of raising taxes to cover the costs.

HUD Maintains Pricing on FHA MI Premiums. Following the Senate’s bipartisan confirmation of Marcia Fudge as the Secretary of the U.S. Department of Housing and Urban Development (HUD) on March 10, USMI said in a statement that “[i]n HUD Secretary Marcia Fudge, America gains a housing advocate with proven leadership and an accomplished record while serving in Congress and supporting investments in housing programs and community development.” In one of her first actions as HUD Secretary, Fudge announced that the agency would maintain the current pricing of MI premiums on loans backed by the Federal Housing Administration (FHA) due to the agency’s high level of serious delinquency rates and the need to continue focusing on helping the tens of millions of families impacted by the COVID-19 pandemic. USMI President Lindsey Johnson said in a statement that “USMI is encouraged by HUD’s continued support of borrowers impacted by the pandemic, and its focus to ensure an equitable recovery for FHA borrowers. FHA is a critical resource for borrowers to attain homeownership through FHA-backed loans—especially for borrowers who may not have access through the conventional market.”

What We’re Watching: National MI CEO Claudia Merkle Explains Private MI. USMI released a short video of Merkle explaining the role of private MI in the housing market, and how it helps borrowers with down payments of less than 20 percent.

What We’re Listening To: USMI President Lindsey Johnson on Housing Wire’s News Podcast. In April, Johnson was a guest on Housing Wire’s News Podcast to discuss the unique role private mortgage insurers play in helping low down payment borrowers. Johnson also discussed how the industry was well-positioned in 2020 due in part to reforms it had implemented following the 2008 financial crisis. She also highlighted the record year that the private MI industry had through 2020 in helping more than 2 million borrowers purchase or refinance their home. In responding to questions about access and affordability in today’s housing market, Johnson spoke about the challenges of affordability, largely stemming from the lack of affordable housing supply, and spoke about specific proposals that industry and policymakers can pursue together to address these market challenges.

Member Spotlight: Q&A with Tim Mattke of MGIC

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USMI’s member spotlight series focuses on how the private mortgage insurance (MI) industry works to address several critical issues within the housing finance system, including expanding access to affordable mortgage credit for first-time and minority homebuyers, protecting taxpayers from risk in the mortgage finance system, and providing recommendations on ways to reform the system to put it on a more sustainable path for the long-term.

This month we chat with Tim Mattke, CEO at MGIC. MGIC is the principal subsidiary of MGIC Investment Corporation, which founded the private MI industry in 1957 and serves lenders in the U.S., Puerto Rico, and Guam. MGIC is proud to support its lender customers and help make homeownership attainable for borrowers who have lower down payments. As USMI has advocated, it is critical for individuals to have the right information and resources to understand what it means to be “mortgage ready.” That is why financial literacy is so important.

As we commemorate Financial Literacy Month, Mattke highlights the educational programs and tools MGIC has developed and sponsored to help potential homeowners better understand their options. These include:

  • Readynest, a consumer-focused website that breaks down the homebuying process, provides tips, and showcases real-life stories to help customers “find, afford and love a home” of their own.
  • MGIC’s “buy now vs. wait calculator,” which helps homebuyers explore their financial options.
  • Down Payment Connect, in partnership with Down Payment Resource which promotes education around down payment assistance (DPA) and connects homebuyers with DPA programs.

(1) April is Financial Literacy Month. How does MGIC approach financial literacy and help first-time homebuyers get ready for the mortgage process?

The homebuying and mortgage process can seem daunting, especially to those going through it for the first time. In fact, the 2021 Home Buyers and Sellers Generational Trends Report from the National Association of REALTORS® (NAR) showed that “understanding the process” was the most difficult step, after finding the right property, among those aged 22 to 40.

To help overcome this challenge, MGIC has provided homebuyer education for decades. Last year alone, over 100,000 people took our online tests in English or Spanish. More recently we launched a consumer site, Readynest, which reached over 2 million page views in 2020. Readynest’s goal is not to sell MGIC or MI, but rather to demystify the homebuying journey through relatable explanations and stories of others who have gone through the process. The site helps aspiring homebuyers understand how to get their finances in order and includes guides on budgeting, credit, managing student loans, and mortgage insurance.

In addition, we have begun doing more direct outreach, presenting at state and local Housing Finance Agency (HFA) events to consumer audiences. This summer we are partnering with the Boys & Girls Club of Greater Milwaukee to present “The Path to Homeownership” to current college students and recent graduates.

(2) What is MGIC’s message to renters who are interested in buying a home but aren’t sure they can?

Frequently, renters self-disqualify themselves before they even begin. Many have preconceived notions about what it takes to buy a home and how much they need to put down, and too often give up without even trying. Certainly, saving for a down payment and paying bills on time are smart financial moves, but renters may not know how much they need to save. Or they don’t understand that they can have student loan debt and still qualify to buy a home. Many times, they end up waiting longer than necessary, and that could end up costing them more in the long run.

Our “buy now vs. wait calculator” helps renters compare that cost of waiting. Unlike a buy vs. rent calculator, which we also offer, this calculator allows the renter to determine for themselves when the right time to buy might be, based on their specific situation. Like Readynest, this calculator is available in English and Spanish.

(3) Do you think renters appreciate that they can buy a home with a low down payment? Why do you think the common misconception that a borrower needs a 20% down payment is still around?

The 20% down payment myth is so deeply ingrained in the media that it isn’t surprising that so many potential borrowers are held back by this false concept. Many mortgage calculators start with a default of 20% down. Even NAR’s Affordability Index reinforces this concept by using a 20% down payment as the working assumption. It is imperative that we continue to point out that there are many paths to homeownership. If a potential homebuyer believes they need 20% for a down payment, they could unnecessarily delay their first home purchase by many years. During those years they may miss out on increasing equity in the home, and they will very likely pay more for the home they eventually purchase. Just as important, they defer the improved quality of life that comes with achieving their dream of homeownership.

(4) Last year MGIC announced it was partnering with Down Payment Resource to launch “Down Payment Connect,” a program designed to help lenders match potential homebuyers to down payment assistance (DPA) programs. Can you speak to how this tool educates homebuyers on DPA and the value of these programs?

Many potential homebuyers – especially Millennial, minority, and first-time homebuyers – face barriers to saving for a down payment for a variety of reasons, including rising rents, student loan payments, and lack of intergenerational wealth. DPA programs can enable access to conventional financing and homeownership for those borrowers who may need that help.

There are more than 2,400 DPA programs across the country. Keeping up to date on the ins and outs and eligibility for all these programs is a challenge even for seasoned loan officers. So, it is no wonder that many homebuyers can be overwhelmed when beginning to search for programs for which they may qualify – assuming they know such programs exist. Down Payment Connect has been a great partnership with Down Payment Resource, enabling lenders to match borrowers with DPA programs. This assistance could be the difference between a family buying their first home and remaining renters.

(5) What are a few steps federal policymakers can take to make home ownership more accessible and affordable for first-time homebuyers?

It is important that federal policymakers recognize the importance of low-down payment lending, especially for minority, lower-wealth, Millennial, and first-time homebuyers. The expanded use of targeted DPA programs is worth exploring to enable more families to become homeowners. Rep. Maxine Waters, the chairwoman of the U.S. House Financial Services Committee, recently released a draft bill to create a program to provide first-time, first-generation homebuyers with DPA. Targeted solutions like this could play a role in narrowing the racial homeownership gap and address longstanding inequities in access to homeownership.

Access to credit is one side of the coin for homeownership and supply is the other side. In today’s environment, borrowers looking to capitalize on low interest rates are often boxed out of homeownership due to the lack of affordable housing supply. Policymakers should explore ways to reduce regulatory red tape regarding new home construction, or incentivize increased remodeling and rehabilitation of distressed properties, which are often located in central city neighborhoods. Taking measures like these could help increase affordable housing options and close the gap between demand and supply.

The shortage is especially acute in the lower end of the market where many first-time buyers are looking for “starter” homes. Housing supply is at the lowest level of this century, with just two months of supply as of February 2021 according to NAR and the Urban Institute. The lack of supply in turn has led to record year-over-year Home Price Appreciation (HPA), which was 10.8 percent last year according to the Federal Housing Finance Agency (FHFA). Strong HPA is great for current homeowners, but it creates a moving target for those looking to transition from renting to owning.

(6) Considering MGIC’s unique position as the first private MI company, in your opinion, how has private MI improved the housing finance system and homebuying process since 1957?

In many ways, private MI is the original down payment assistance program. We fundamentally changed the conversation when it came to buying a home. Prior to MGIC and the private MI industry in 1957, unless a person relied on the government and the Federal Housing Administration (FHA), the focus by lenders was to increase the amount of equity in the property to help reduce potential losses that may arise from a foreclosure. So, the question lenders would ask is “how much money do you have?” to put down when buying a home. Private MI helped remove or reduce this barrier, changing the conversation to “how much could you afford?” as it “created” the equity lenders sought.

We are able to facilitate access to affordable, low down payment mortgages by providing critical risk protection for lenders, the government sponsored enterprises (GSEs), and American taxpayers. Private MI companies work to not only get buyers into homes, but to keep them there so they may build the long-term, generational wealth that is associated with homeownership.

Since 1957, the private MI industry has helped 35 million homeowners either purchase a home or refinance an existing mortgage, including more than 2 million borrowers in 2020 alone, with nearly 60 percent of purchase loans going to first-time homebuyers.

Tim Mattke’s Biography

Timothy J. Mattke is Chief Executive Officer of MGIC Investment Corporation and MGIC. He joined the company in 2006. Prior to his appointment as CEO, he served as MGIC’s Executive Vice President and Chief Financial Officer from 2014 to 2019, and Controller from 2009 to 2014. Before then, he held other positions within the Accounting and Finance departments. Before joining MGIC in 2006, Mr. Mattke was an Audit Manager with PricewaterhouseCoopers LLP. He has a BBA from the University of Wisconsin-Madison, as well as a Master of Accountancy from that University; and he is a CPA.

Mr. Mattke currently serves as the Board Chair of Goodwill Industries of Southeastern Wisconsin, Inc., and is the Board Chair for the United Performing Arts Fund (UPAF). He also sits on the fundraising committee of SecureFutures and the Advisory Board for the Accounting Department at the University of Wisconsin-Madison.

Podcast: USMI Featured on HousingWire’s “Housing News”

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USMI President Lindsey Johnson was a guest on HousingWire’s April 12 “Housing News” podcast. Interviewed by HousingWire Editor in Chief Sarah Wheeler, Johnson explained the unique role that private mortgage insurers have played in helping low down payment borrowers, and how the industry was well-positioned in 2020 due in part to reforms the industry had implemented following the 2008 financial crisis. She also outlined four essential principles lawmakers and regulators should consider around housing finance reform, including enhancing access to mortgage finance credit while protecting taxpayers and promoting stability in the system. Listen here.

Comment Letter: CFPB on QM Compliance Delay and GSE Patch Extension

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USMI submitted a comment letter to the Consumer Financial Protection Bureau in response to its Notice of Proposed Rulemaking (NPR) to delay the mandatory compliance date of the December 2020 General Qualified Mortgage (QM) final rule and the extension of the Temporary GSE QM category (GSE Patch). In the letter, USMI discussed both the interplay between the proposed extension of the GSE Patch and the January 2021 amendments to the Preferred Stock Purchase Agreements (PSPAs) as well as the value of increased monitoring and access to mortgage underwriting data for policymakers and housing finance stakeholders. USMI urged the Bureau to work expeditiously with Treasury Secretary Janet Yellen and Federal Housing Finance Agency Director Mark Calabria to further amend the PSPAs to restore authority for the GSEs to acquire mortgages in reliance on the GSE Patch. See the full letter here.

Statement: HUD’s Decision to Maintain Current Pricing of FHA Mortgage Insurance Premiums

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WASHINGTON—Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), released the following statement on the announcement by U.S. Department of Housing and Urban Development (HUD) Secretary Marcia Fudge that the Federal Housing Administration (FHA) will maintain its current pricing of mortgage insurance premiums (MIP) due to the agency’s high level of serious delinquency rates, and the need to continue focusing on helping the tens of millions of families impacted by the COVID-19 pandemic:

“USMI is encouraged by HUD’s continued support of borrowers impacted by the pandemic, and its focus to ensure an equitable recovery for FHA borrowers. FHA is a critical resource for borrowers to attain homeownership through FHA-backed loans—especially for borrowers who may not have access through the conventional market. Despite unprecedented challenges derived by the COVID-19 pandemic, last year saw one of the largest mortgage origination volumes since 2006. Secretary Fudge’s decision to maintain the current pricing on FHA’s mortgage insurance premiums is prudent policy and means that borrowers will continue to have access to affordable mortgage credit during a time when mortgage rates are at historic lows. This enables the FHA to better manage the financial challenges that have arisen due to the pandemic and ensure taxpayers are safeguarded from unnecessary credit risk.

“The private MI industry has the capacity and the desire to help even more families become homeowners through the conventional market. It looks forward to working with Secretary Fudge and the HUD team, as well as other policymakers and stakeholders, in support of clear, consistent, and coordinated housing finance policies that best serve all home-ready consumers and protect taxpayers from exposure to mortgage-related losses.”

In early 2021, USMI sent a letter to then HUD Secretary-designate Hon. Fudge, outlining concerns with lowering the FHA premiums too quickly and aggressively. The letter also emphasized the importance of housing policies that promote affordable and sustainable access to mortgage finance credit.

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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: Private Mortgage Insurers Helped Over 2 Million Low Down Payment Borrowers in 2020

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Industry supported $600 billion in mortgage originations for new home purchases and refinance loans  

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today announced the industry helped over 2 million low down payment borrowers secure mortgage financing in 2020, a 53 percent increase from the previous year, according to data from the government sponsored enterprises (GSEs). The industry also supported $600 billion in mortgage originations, according to public filings. Approximately 65 percent of this volume was for new purchases while 35 percent was for refinanced loans. This resulted in nearly $1.3 trillion in outstanding mortgages with active private MI coverage at year’s end, underscoring the industry’s critical role as serving as the first layer of protection against credit risk in the conventional mortgage market backed by the GSEs.

“Despite the unprecedented challenges presented by the COVID-19 pandemic, conventional loans backed by private MI continued to make the dream of homeownership a reality for millions of low down payment borrowers,” said Lindsey Johnson, President of USMI. “The record-high volume in 2020 means that more families were able to become homeowners and existing homeowners were able to reduce their monthly mortgage payments by taking advantage of historically low refinance rates.”

Johnson recently discussed the record volume in the private MI market with Claudia Merkle, CEO of National MI, a USMI member. In the interview, Merkle noted two key factors that contributed to the strong production. “First, there are more and more first-time homebuyers coming into the market. They have good credit but struggle to put 20 percent down on their first house. Private MI is a great fit for them,” said Merkle. “A second factor is attributed to low interest rates, which helped fuel the strong mortgage market momentum in 2020, for both the purchase segment and also for refinances.”

USMI members worked closely with federal policymakers, industry groups, and consumer organizations to support homeowners experiencing financial hardship due to the COVID-19 pandemic. The industry updated its guides and processes to align with the Federal Housing Finance Agency (FHFA) and the GSEs’ policies to implement nationwide forbearance programs.

“The private MI industry was able to serve as a source of strength through the COVID-19 pandemic and support a record number of borrowers because of the enhancements made by the industry—including increased capital and operational requirements,” said Johnson. “All USMI members were well-capitalized prior to the pandemic and continued to raise capital in the debt and equity markets throughout 2020 in order to scale up for increased volume.” 

At the end of 2020, USMI members held more than $6.3 billion in excess of capital requirements set by the GSEs. This furthered the private MI industry’s ability to support lenders and borrowers over the past year while operating in a unique and unpredictable market.  

The MI industry has enabled more than 35 million people to access affordable, low down payment mortgages in its nearly 65-year history. In 2020, nearly 60 percent of purchase loans backed by MI went to first-time homebuyers, over 40 percent went to borrowers with incomes below $75,000, and the average loan amount with MI was approximately $290,000.  

“This data underscores the point that the private MI industry serves a key demographic of low down payment borrowers,” Johnson added. “But the COVID-19 pandemic has further highlighted the significant racial and economic disparities in the U.S. housing market, as well as the need to increase access to affordable mortgage options. We have called on regulators and lawmakers to advance policies that promote equity by ensuring that homeownership is an achievable financial goal for all Americans.” 

In early 2021, USMI sent a letter to Rep. Marcia Fudge,  then the nominee to lead the U.S. Department of Housing and Urban Development. The association also joined with several industry groups in sending letters to President Biden and congressional leadership to emphasize the importance of COVID-19 relief for homeowners and housing policies that promote affordable and sustainable access to mortgage finance credit. Further details on the role of private MI in the mortgage market 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 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.

Blog: Interview with National MI CEO Claudia Merkle on Record-Setting Year for Private MI

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The private mortgage insurance (MI) industry helped over 2 million low down payment borrowers secure mortgage financing in 2020, a 53 percent increase from the previous year. The industry also supported $600 billion in mortgage originations. USMI President Lindsey Johnson sat down with National MI CEO Claudia Merkle to discuss the record-setting year. Also, in honor of Women’s History Month in March, the two talked about ways women can seek a long, successful career in housing finance. Watch the full interview below and click here to read more about the record high private MI volume. (Please note the interview was recorded before the final volume numbers were finalized, so there are slight variations between the video and press release. The press release has the most up-to-date numbers for 2020.)  


Below is a complete transcript of the above video.  

Lindsey Johnson: We are here to talk about the private mortgage insurance industry and the industry’s performance through 2020, a year that was full of new challenges and opportunities. 2020 was a record year for the mortgage industry, and a year where the private mortgage insurers helped a new record number of borrowers achieve homeownership. To help talk us through the numbers, Claudia Merkle, CEO of National MI, is with us. Claudia has extensive experience in the mortgage insurance and mortgage banking industries. As CEO of National MI, Claudia is responsible for the company’s day-to-day management, financial performance, and long-term growth strategy. 

As we celebrate Women’s History Month, USMI wanted to highlight Claudia’s impressive experience and important contributions to the housing and mortgage industries, and we look forward to hearing some of Claudia’s thoughts on some of the most pressing issues facing the industry today. So, Claudia, thank you for being here. I did want to just start off by talking about 2020, and despite the uncertainty and the incredible challenges that were presented by the 2020 global pandemic, the real estate market was very strong this past year and the data shows record high volume. Can you peel back some of these numbers and just share your thoughts on 2020’s market, particularly for low down payment borrowers? 

Claudia Merkle: Sure, Lindsey. Great to be here. So, 2020 certainly was a year of remarkable challenge, resiliency, and reward for the housing market. Based on industry and federal agency data that has been released today, 2020 mortgage lending activity broke records. First lien originations totaled just over $4 trillion in 2020. The private mortgage insurance industry also produced record volume in 2020. As background, private mortgage insurance companies, such as National MI, enable borrowers to gain access to the housing market more quickly by allowing down payments with as little as 3 percent. The private MI industry directly serves and supports low down payment borrowers in the housing market while protecting lenders against default. The MI industry helped at least 1.75 million families either purchase a home or refinance an existing mortgage. 

I mentioned the strength of the broad origination of market in 2020, but we have seen even stronger growth in the private MI market. In 2020, private MIs supported $600 billion in originations, and that traces to several factors. First, there are more and more first-time homebuyers coming into the market. They have good credit, but struggle to put 20 percent down on their first house. Private MI is a great fit for them. Here’s some additional important statistics. Nearly 60 percent of purchase loans with MI are first-time homebuyers, and more than 40 percent of borrowers with MI mortgages have annual incomes below $75,000. This fundamentally underscores the point that MI serves a key demographic of borrowers needing a low down payment mortgage. 

A second factor attributed to this large MI market is low interest rates. Rates helped fuel the strong mortgage market momentum in 2020 for both the purchase segment and also for refinances. We have seen private MI penetration of refinancing more than double, with a 65/35 split between purchase and refinance transactions. The combination of these various factors contributed to a really strong production in 2020. 

Johnson: It’s such a great overview of some of the borrowers that we helped through 2020 and the critical role that the industry really played in helping millions of people access affordable mortgage credit when rates were really at historic lows. Can you speak to how the industry managed the COVID crisis while also meeting that incredible demand? 

Merkle: Sure. Yeah, importantly over the past year the MI industry has worked closely with federal policymakers, industry groups, and consumer organizations to support homeowners experiencing financial hardship due to the COVID-19 pandemic. Mortgage insurers have routinely updated their guides and processes to align with the GSE policies in order to implement nationwide forbearance programs. One key element of the industry’s success and ability to scale up for record volume is the industry’s transformation since the 2008 financial crisis into sophisticated managers of mortgage credit risk. 

Additionally, it’s important to note that the MI industry as a whole entered into the COVID crisis with a tremendous amount of financial strength. Today, mortgage insurers are well capitalized, and USMI members currently hold more than $6.3 billion in excess of PMIERs requirements, a sufficiency ratio of 149 percent. All USMI members were able to raise capital in the debt and equity markets throughout 2020 in order to scale up and support the increased volume. It’s terrific to see that the capital markets have shown confidence in our MI industry, which furthers our ability to pursue new business and support lenders and borrowers in the current market. 

Johnson: So, it’s really great to hear how the strength of the industry and that transformation supported that ability for the industry to really enable access for millions of borrowers and support that volume. So, we’ve talked a lot about the volume for 2020. What are your expectations for the housing market, and in particular, the low payment market for 2021? 

Merkle: Yeah, the housing market continues to be a really bright spot during the challenge of the pandemic. So, we expect home price appreciation will continue as demand continues to outstrip the supply. Forecasts indicate the 2021 originations will be approximately 3.5 trillion, which is less than the record breaking 2020 volume, but still very high based on historical trends. 

As we begin to see mortgage interest rates start to rise modestly. Fewer homeowners will be in the money to refinance. The purchase-refi breakdown could likely trend back to normal shares of the market. That split is traditionally around an 85 percent purchase and a 15 percent refinance mix. But the 2020 refi boom shifted that mix of new business to 65/35. 

We’re also closely monitoring extensions of the GSE’s single-family forbearance programs and trends concerning loan modification for homeowners with COVID-19 financial hardships. We believe that the government’s support is crucial to assist impacted homeowners by providing an adequate runway to recover from financial hardships triggered by COVID. Broadly speaking, the housing industry has been a strong economic driver in the wake of the pandemic and a way to expand access to all the benefits that homeownership provides, which include a safe environment to shelter from the virus, an ability to establish community identity, and an equitable opportunity for long-term wealth creation. 

It’s important to note that COVID has brought into sharp focus the important role that the private MI sector and industry plays in supporting a healthy and functioning housing finance system. We foresee that MI will continue to work for borrowers, lenders, and taxpayers in 2021 and beyond, across all markets cycles. 

Johnson: So, you highlighted the importance of having a place to call home, especially during this pandemic. Considering your extensive experience in the mortgage industry and the key roles you’ve played, both on the lending side and on the mortgage insurance side as well as an executive of National MI, what is your message to Washington lawmakers and regulators about how the private mortgage insurance industry can better serve low- to moderate-income borrowers? 

Merkle: Yeah, very important question. Thanks, Lindsey. So first and foremost, members of USMI commend the swift actions that Washington lawmakers have made to support borrowers during times of hardship through COVID. The first and most impactful priority has been providing continuing support to the housing market, and we were pleased to see the extension of forbearance that was announced in February. 

The MI sector understands how crucial it is to participate in policy discussions that define and shape the mortgage industry, and to ensure we are adequately serving the needs of low- to moderate-income borrowers. When thinking about affordability and serving low- to moderate-income families, it is important to consider two things: one, access to credit, and two, supply. With access to credit, the MI industry has the capacity and the desire to help even more low- and moderate-income families become homeowners and to do it in a sustainable way that sets borrowers up for success. 

Policymakers need to be mindful, however, of the impact federal regulations can have on the mortgage market with tilting the scales in favor of particular lending programs. Policymakers should ensure a level playing field to avoid a bifurcated market, such that minority borrowers are arbitrarily directed to lending programs with fewer lender and product options. These borrowers shouldn’t be left with the only option of a loan insured by the Federal Housing Administration (FHA), especially since there are nearly three times the number of HMDA (Home Mortgage Disclosure Act) reporting lenders originating conventional purchase loans compared to FHA purchase loans. 

As it relates to supply, access to credit is a critical part of our industry, but policymakers must also consider the severe lack of affordable housing supply. Housing supply is at the lowest level this century, with just 1.9 months of supply as of January 2021. The shortage is especially acute in the lower end of the market, where many first-time buyers are looking for starter homes. The lack of supply in turn has led to record year-over-year home price appreciation, which was 10.8 percent last year according to the Federal Housing Finance Agency (FHFA). Strong home price appreciation is great for current homeowners but creates a moving target for those looking to transition from renting to owning. 

Johnson: So, you touched on supply and access. From an access to mortgage credit perspective, we know that private mortgage insurance facilitates low down payment home financing in the conventional market because executives like you and others are in the market every single day, in the trenches, really making that possible. Can you elaborate on the importance of low down payment lending? 

Merkle: Sure. Yeah, with mortgage insurance we’re in the dream of homeownership business. I’m really proud of that. Low down payment mortgages are critical to enable first-time, lower wealth, and minority homebuyers achieve this dream of purchasing a home. For many borrowers, the need to accumulate a large amount of cash for down payment, usually 20 percent of the property’s value, is the biggest hurdle in the homebuying process. Eighty percent of first-time homebuyers utilizing financing do so with low down payment mortgages. Conventional mortgages with private MI have been the number one way in recent years for these borrowers to become homeowners. 

Between rising rent, student loan payments and strong home price appreciation, it could take a family on average of more than 20 years to save for a 20 percent down payment to purchase a home. There are many creditworthy borrowers who do not have 20 percent who deserve to have options to enable them to get into homes and to enjoy the benefits of homeownership. With MI, it is important that these families have access to mortgages with 3 percent, 5 percent or 10 percent down payments, so they can purchase homes sooner and begin to build the long-term wealth and pride that comes with homeownership. 

Johnson: So as with most things, there’s always a balancing act. And the conversation, especially in DC, is constantly kind of around this access to mortgage finance credit, but sustainability and making sure that you’re not exposing taxpayers to undue mortgage credit risk. So, can access to low down payment programs be expanded without increasing that risk to government or taxpayers, and if so, then how do we do that most effectively? 

Merkle: Sure. So private capital plays an essential role in a strong functioning housing market. For nearly 65 years, the private MI industry has played a critical role in facilitating access to affordable low down payment mortgages, while also protecting the GSEs, lenders, and American taxpayers from mortgage credit risk. MIs have stood in the first loss position, all while helping more than 34 million families secure low down payment mortgages and financing. 

As an industry that is fully committed to the U.S. housing finance system, and one that has never stopped writing new business, insuring loans or paying claims, private mortgage insurers are an important source of private capital. We are stronger and more resilient than ever, with well-capitalized balance sheets and the capacity to serve all borrowers that don’t have 20 percent down needed to purchase a home. 

A key development over the past several years has been the industry’s programmatic use of credit risk transfer, CRT transactions, in order to access the global capital and reinsurance markets to disperse risk. Since 2015, the industry has issued 35 insurance link notes deals, ILNs, transferring $14.3 billion of risk on nearly $1.4 trillion of insurance in force. USMI members have also executed 29 reinsurance deals since 2015, transferring nearly $34 billion of risk on approximately 700 billion of insurance in force. 

Johnson: So kind of continuing on the theme of that balance, there has been this long standing debate about the appropriate balance between government- and taxpayer-backed FHA, and then utilizing MI. In one, the government backs a 100 percent of the risk, and in the other, the industry and private capital is standing in the first loss position, as you mentioned. How should policymakers be thinking about these two markets and the important role that they each play? And as some call for an expansion of FHA, why is it important for lawmakers and regulators to take equivalent steps to ensure access to the conventional market? 

Merkle: Yeah, an important topic. So conventional loans with MI and mortgages insured by the FHA are the two primary methods for American families to attain homeownership with down payments of less than 20 percent. Policymakers should consider that both private MI and FHA have a critical place in a functioning housing finance system, critical that there be a coordinated federal housing policy to ensure that the FHA and conventional mortgage markets complement one another rather than purely compete against each other. 

There is an appropriate balance between the two entities and the role that they each serve. We need to stress the importance of private capital in the housing industry and the need to lessen the current burden placed on FHA, which is directly connected to taxpayers. Plus for some borrowers, conventional execution with private MI is much more attractive than an FHA loan. 

It’s also important that policymakers calibrate housing finance regulations, including the qualified mortgage standards and GSE capital requirements, to make sure borrowers aren’t arbitrarily driven to a specific program. FHFA should revisit loan level price adjustments (LLPAs), and either eliminate across the board, or at a minimum, exempt mortgages with MI since low down payment borrowers, many of them who are minority, lower-income and/or first-time homebuyers, are double charged for risk protection. 

Additionally, home ready borrowers should have access to a wide variety of mortgage lenders and products across the conventional and FHA markets. I’d also comment that FHA should focus on its core mission of supporting borrowers who do not have access to traditional financing and have policies in place to ensure it can play its designed countercyclical role. The conventional market, including the private mortgage insurance industry, is backed by private capital and is well positioned to play a larger role in facilitating access to affordable credit. So, we should strive to secure the appropriate balance between the private and public sectors. 

Johnson: Claudia, this has been fantastic. I would be completely remiss if I did not acknowledge that it is Women’s History Month, and as the mortgage industry generally has been historically led by men, I think it’s important to appreciate perspective, experience, and the expertise that women can bring to the table. What’s your message for young ladies in the industry who seek a long and successful career? 

Merkle: Yeah, and congratulations to you as well for Women’s History Month, Lindsey. Yeah. One of my passions is finding ways to help other women in the mortgage insurance, mortgage industry in general succeed. And that includes mentoring and giving advice and certainly leading by example. Women bring a diverse skill set to the table, and while there are many messages to share with young women in our industry, I’d offer out two important messages. One, I’d say, take the initiative. Take the risk. Raise your hand for that project and lead it. Don’t wait. Don’t be too polite. Two, I’d say maintain a high organizational awareness. Who are the leaders you need to connect with? What’s happening throughout your company, and how do you lock arms with those leaders to move the organization forward? 

And I’ll leave you with one final thought, Lindsey. As women, we have the unique ability to know how things are shifting, whether it’s good or bad. We were born empathetic leaders. If you have a sense that something is shifting in your organization, think about what you need to do to either change the course or further the course; then set the pace by taking action. 

Johnson: That is fantastic advice. And I just want to thank you again, Claudia, for the updates on the private mortgage insurance industry and how it’s really aided the efforts and supported the efforts of the GSEs, of lenders and policymakers, through COVID-19. But also how the industry has facilitated homeownership for a record number of borrowers this year, and it continues to do so while shielding the government and taxpayers from risk. We are super grateful for your leadership and also just your insights as we had this conversation today. Thank you. 

Merkle: Thank you so much, Lindsey. It was great to be here. Really appreciate it.