(November 10, 2015) In a letter to conferees on the pending highway bill, USMI joined a broad coalition of 27 housing organizations in urging conferees to draw funds from the Federal Reserve’s surplus, rather than using GSE G-fees, to pay for the extension of the Highway Trust Fund.
The full text of the letter can be found here
For Immediate Release
October 19, 2015
Media Contact
Robert Schwartz 202-207-3665 (rschwartz@prismpublicaffairs.com)
New Analysis Demonstrates How Greater Front End Risk Sharing with MI Reduces GSE and Taxpayer Exposure, Benefits Borrowers
U.S. Mortgage Insurers (USMI®) today released a new study demonstrating how housing finance risks can be significantly reduced for the housing finance Government Sponsored Enterprises (GSEs) and taxpayers, while maintaining access to homeownership with improved borrower economics, through greater use of private Mortgage Insurance (MI).
Among the key findings of “Analysis of Deep Coverage Mortgage Insurance,” prepared by Milliman, Inc., covering additional mortgage credit risk with MI:
USMI commissioned Milliman, Inc., an independent consulting and actuarial firm, to conduct a third-party proof-of-concept of a proposal to deepen MI coverage down to 50% of the value of the home, using publicly available GSE information.
The Milliman report comes as policymakers are considering proposals to de-risk the GSEs through greater reliance on private capital, such as expanded up-front risk sharing using private MI. Up-front risk sharing with MI shifts the risks away from taxpayers right at the time individual loans are made and before the risk gets to the GSEs. MI is a first layer of credit protection for investors and a time tested method of risk sharing that has been used on low down payment loans for more than 50 years.
“As the GSEs enter the seventh year under conservatorship, taxpayers still face significant exposure to losses from another housing downturn,” said Rohit Gupta, President and CEO of Genworth Mortgage Insurance and Chair of USMI. “The housing finance system needs to be put on a more sustainable footing, with the private sector bearing more of the risks of another housing downturn so the taxpayers don’t have to, and Americans continue to have access to prudent and affordable mortgage credit.”
“Promotion of greater front end risk sharing with MI is a way to help build a stronger and more sustainable housing finance system, while ensuring the homeownership aspirations of Americans for years to come. In light of the Milliman analysis, USMI will be working with interested parties to encourage concrete steps to expand front end risk sharing with MI. The time is right to move forward to expand front end risk sharing with MI, and USMI members are ready to do more,” said Gupta.
“This analysis shows risk exposure to the GSEs can be reduced with deep coverage MI,” said Ken Bjurstrom, Principal at Milliman and author of the study. “It also documents the potential for savings to borrowers by substituting a portion of the current G-Fee requirements with premiums from deep MI coverage.”
MIs are reliable counterparties to bear housing finance risks, covering more than $50 billion in GSE claims since conservatorship, resulting in substantial savings to taxpayers. New master policies provide better clarity on claims, and new financial requirements (Private Mortgage Insurer Eligibility Requirements, or PMIERs) ensure that MIs have adequate liquidity and claims-paying capacity during periods of stress. MIs have also attracted billions in new capital from diverse sources.
The full Milliman report is available at https://www.usmi.org/wp-content/uploads/2015/10/Milliman-Report-Analysis-of-Deep-Coverage-MI-FINAL.pdf
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About USMI
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.
Lindsey Johnson currently serves as President 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. As President of USMI, Lindsey works with member companies to advance the value of private mortgage insurance (MI) to borrowers and taxpayers and to promote a sustainable housing finance system backed by private capital.
Lindsey previously served as a Director on PwC’s public policy team. Prior to joining PwC, Lindsey was a former member of the Senate Banking Committee staff as the Republican Staff Director for the Senate Banking Committee’s National Security and International Trade and Finance (NSITF) Subcommittee, and as a Senior Policy Advisor to Senator Mark Kirk (R-Illinois), focusing on noteworthy banking, housing finance reform, and insurance legislation.
Lindsey also served as Director for the Federal Home Loan Bank of Atlanta for seven years, representing the Bank in D.C. at the highest levels of government during several key legislative reforms that impacted the Bank including the Housing and Economic Recovery Act of 2008 and Dodd-Frank Act.
Lindsey began her career in D.C. working with former House Republican Conference Chair J.C. Watts in the private sector. She received an MBA from Georgetown University. Lindsey also serves as a Director on the Board, and immediate past-president of Women in Housing and Finance (www.whfdc.org), is a Director on the Board for Habitat for Humanity Northern Virginia, and an Advisory Board Member for the Georgetown University McDonough School of Business Advisory Committee.
(September 17, 2015) This week, in a joint letter to the bipartisan Congressional leadership, USMI and a diverse coalition of thirty-two housing organizations reiterated their opposition to using the mortgage credit risk guarantee fees (g-fees) charged by the housing finance enterprises, Fannie Mae and Freddie Mac, as a source to finance extension of federal highway programs. The letter states: “increasing g-fees for other purposes… imposes an unjustified burden on the housing finance system.” “Adding an additional fee to mortgages for unrelated expenses would only increase the hurdles these families already face in achieving the American dream of homeownership”, it continues.
The full text of the letter can be found here
(September 10, 2015) According to new data released by the Internal Revenue Service (IRS), approximately 4.7 million taxpayers benefited from a deduction for private Mortgage Insurance (MI) in 2013, up from 4.1 million in 2012. Of the taxpayers that took the deduction for private MI, 82% of them had adjusted gross incomes between $30,000 and $100,000 and the average amount per return rose to $1,387 in 2013, up from $1,304 in 2012. The total estimated net tax benefit topped $900 million, up from approximately $750 million in 2012.
“Mortgage insurance is helping millions of middle income families achieve homeownership,” said Rohit Gupta, President and CEO of Genworth Mortgage Insurance and Chair of U.S. Mortgage Insurers (USMI). “Congress has recognized that MI premiums are the economic equivalent of mortgage interest and should be deductible from federal income taxes in a similar manner. We urge Congress to ensure this important provision of the tax code is extended.”
On December 17, 2014 Congress passed a one year extension of vital homeowner tax relief that included the tax-deductible treatment of mortgage insurance premiums for low and moderate income borrowers, after it had expired at the end of 2013. On July 21, 2015 The Senate Finance Committee approved legislation with a two year tax extension of MI deductibility, and the House Ways & Means Committee is expected to consider similar legislation in September. USMI believes that the ability of borrowers to deduct MI premiums from federal income taxes should be made permanent.
The IRS data for 2013 is available at http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Returns-Publication-1304-%28Complete-Report%29
In case you missed it, this week the CFPB issued guidance to mortgage loan servicers confirming the requirements on the cancelability of private mortgage insurance (MI) when the borrower pays down the loan to specified levels. This is one of the advantages of private MI over loans insured by government programs like FHA that must be paid for the entire life of the loan, cannot be cancelled, and thus add significant additional costs to the borrower. Loans with private MI offer borrowers an option that is not only highly competitive in terms of pricing, but also cancelable, thus providing substantial savings to borrowers.
For more information on the differences between PMI and FHA MI visit – https://www.usmi.org/wp-content/uploads/2015/11/FINAL-FHA-Factsheet1.pdf
(July 23, 2015) This week, USMI joined a broad coalition of nine other housing groups to send a letter to Senate leadership opposing the use of the credit risk guarantee fees (g-fees) charged by the housing finance enterprises, Fannie Mae and Freddie Mac, as a source of funding for the extension of federal transportation programs. The letter states: “whenever Congress has considered using g-fees to cover the cost of programs unrelated to housing, our members have united to emphatically let Congress know that homeownership cannot, and must not, be used as the nation’s piggybank.”
The full text of the letter can be found here.
(June 10, 2015) A group of Senate Banking Committee members sent a letter today to FHFA urging them to expand and better define the development of the credit risk transfer programs at the GSEs.
The letter and press release can be found here.
USMI delivered the following letter to members of the Senate Banking Committee last night:
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
For Immediate Release
April 17, 2015
Media Contacts
Robert Schwartz 202-207-3665 (rschwartz@prismpublicaffairs.com)
Michael Timberlake 202-207-3637 (mtimberlake@prismpublicaffairs.com)
USMI Statement on Final Mortgage Insurer Eligibility Requirements (PMIERs)
Today, the Federal Housing Finance Administration (FHFA) published final revised Private Mortgage Insurer Eligibility Requirements (“PMIERs”), which set the requirements that private Mortgage Insurers (MIs) must meet to be eligible to insure loans acquired by Fannie Mae and Freddie Mac (the “GSEs”). The PMIERs include new risk-based financial requirements for MIs. USMI appreciates the efforts of FHFA and the GSEs to work with all interested parties to finalize the updates to the PMIERs.
USMI member companies are united in support of this important effort, and are committed to fully comply with PMIERs. Finalizing the PMIERs is an important milestone for the MI industry. Lenders, investors and other mortgage market participants can now have even more confidence in the value and financial strength of MI. USMI member companies encourage FHFA to apply these standards to all providers of credit enhancement to the GSEs to ensure our housing system remains strong and stable.
With PMIERs finalized, the industry is positioned to be in the forefront of efforts to meet the important goal of putting more private capital at risk ahead of taxpayers, including by providing upfront risk sharing and deeper MI coverage for the GSEs. USMI member companies stand ready to work with the GSEs, lenders and regulators on improving access to credit and homeownership for consumers.
The MI industry has recapitalized, attracted new entrants, and finalized new master policies that provide greater clarity and transparency regarding when and how MIs pay claims. Since the GSEs entered conservatorship, MI has covered over $44 billion in claims to the GSEs alone, resulting in a substantial savings to taxpayers.
USMI members are also continuing to work closely with the National Association of Insurance Commissioners’ Mortgage Guaranty Insurance Working Group as it updates the Mortgage Guaranty Insurance Model Act (“Model Act”) to update state regulation of MI. USMI members are committed to sound prudential regulation and requirements that work in a complementary manner to enable a stable and well-functioning housing finance market.
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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.
For Immediate Release
March 31, 2015
Media Contacts
Robert Schwartz 202-207-3665 (rschwartz@prismpublicaffairs.com)
Michael Timberlake 202-207-3637 (mtimberlake@prismpublicaffairs.com)
USMI Responds to Basel Committee Credit Risk Proposal
U.S. Mortgage Insurers (USMI) submitted a response to the Basel Committee on Banking Supervision’s proposal, Revisions to the Standardised Approach for credit risk, which would, among other things, revise the calculation of banks’ risk weights for exposures secured by residential real estate under the Standardized Approach for calculating credit risk under the Basel capital framework.
USMI raised two primary areas of concern with the proposal: it does not appear to recognize the risk-reducing effect of private mortgage insurance in the calculation of residential mortgage risk weights, nor does it appear to recognize the risk-increasing effect of simultaneous second lien mortgages on primary residential mortgage exposures.
To address these concerns, USMI urged the Basel Committee to recognize the risk-reducing effect of mortgage insurance in the calculation of residential mortgage risk weights, pointing out several key benefits of mortgage insurance:
Additionally, USMI urged the Committee to use a combined loan-to-value ratio that gives effect to simultaneous second liens for residential mortgage risk weighting, rather than the first lien loan-to-value ratio. As written, the proposal ignores the significant risks inherent in loans with junior second liens originated at the same time on the same residence as the primary mortgage, also known as “simultaneous seconds” readily observed during the financial crisis.
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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.
