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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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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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.

For Immediate Release

February 17, 2016

Media Contacts

Robert Schwartz 202-207-3665 (rschwartz@rasky.com)

USMI Announces 2016 Policy Priorities

Outlines Solutions to Protect Taxpayers and Enable Homeownership

(February 17, 2016) U.S. Mortgage Insurers (USMI) today announced its 2016 public policy priorities, aimed at helping ensure broader access to sustainable homeownership while reducing taxpayer risk.

“As policymakers look for more ways to increase the role of private capital to the make housing finance system less risky and more sustainable, USMI is well positioned to be an active voice in promoting the proven benefits and reliability of MI for taxpayers and borrowers,” stated Lindsey Johnson, USMI President and Executive Director.  “The initiatives we are announcing today offer real solutions to further the important goals of housing finance reform.”

USMI announced the following proposed policy actions to expand access to affordable credit and reduce taxpayer risk through the use of MI, including:

• Setting and Using GSE Fees;
• Extending and Preserving Tax Deductibility of MI;
• Protecting Taxpayers by Expanding Use of Deeper MI in GSE Risk-Sharing;
• Strengthening the Role of MI in Comprehensive Reform Legislation;
• Striking the Right Balance for Taxpayers in Establishing Complementary Roles for FHA and MI; and
• Strengthening State Regulation of MI.

A complete description of the policy initiatives can be found here.

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