Category: News

Blog: 2021 National Homeownership Market Survey

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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 survey finds that 7 in 10 say lack of affordable housing is the biggest homebuying challenge in the United States, while many do not understand down payment requirements. Housing insecurity (66 percent) and low supply (57 percent) closely followed. 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.  

“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 members continue to help millions of borrowers bridge the down payment gap. USMI supports sensible regulatory and legislative reforms to further address barriers to homeownership and 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.  

Full survey results can be found here. Press release on the survey can be found here.  

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.

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.

Newsletter: March 2021

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It’s hard to believe there’s only 15 days until the first day of Spring 2021—a time that marks, for most years, the start of the busiest homebuying season. As the Biden Administration has filled more of its key positions, policymakers and industry leaders continue to focus on top priorities, including COVID-19 and its impact on many borrowers and the housing market, as well as ways to address racial and economic disparities in mortgage lending to ensure homeownership is an achievable goal for all Americans through thoughtful rulemakings and targeted polices. Below are some of the key developments U.S. Mortgage Insurers (USMI) has been following over the last month.

USMI Highlights Industry Leaders in Honor of Black History Month
USMI Member Spotlight: Radian
COVID Stimulus Bill Provides Housing Support
CFPB Delays QM Rule Implementation
Senate Banking Committee Holds Hearing on CFPB Director Nominee
Government Agencies Extend Forbearance & Foreclosure Protections
USMI Submits Comments to FHFA on Appraisal Policies
What We’re Listening To: Natixis Podcast 
What We’re Reading: Brookings on GSE Reform

  • USMI Highlights Industry Leaders in Honor of Black History Month. In February, USMI reached out to prominent leaders in the housing finance industry to discuss their work and perspectives on the goal of increasing Black homeownership in America. USMI spoke with Congressman Emanuel Cleaver (D-MO), chair of the House Committee on Financial Services’ Subcommittee on Housing, Community Development, and Insurance; Phyllis Caldwell, former Chief of the Homeownership Preservation Office at the U.S. Department of the Treasury; Lisa Rice, President and CEO of the National Fair Housing Alliance; and Alanna McCargo, Senior Advisor for Housing Finance at the U.S. Department of Housing and Development (HUD). Each of these leaders offered insights on the housing industry and how policymakers can work to help close the racial homeownership gap. USMI is grateful for their leadership and looks forward to continuing to work with them to expand Black homeownership and build wealth.
  • USMI Member Spotlight: Radian. In February, USMI began a new blog series to spotlight its members every couple of months and highlight how the industry is working to address critical issues within the housing finance system. Topics include expanding access to affordable and sustainable homeownership opportunities, ensuring taxpayer protection through increased capacity for risk sharing with mortgage insurance (MI), and providing recommendations for a coordinated federal housing policy. USMI kicked off the series with Derek Brummer, President of Radian’s Mortgage Business and Chairman of USMI’s Board. In the interview, Brummer emphasized Radian’s commitment to “the American dream of homeownership responsibly and sustainably through products and services that span the mortgage and real estate spectrum.” He noted the key role MI plays in bridging the down payment gap, and the benefits borrowers receive from having access to low down payment mortgages in the conventional market backed by private MI rather than being limited to mortgages backed by the Federal Housing Administration (FHA). “Optionality is a key component of affordability and accessibility,” he remarked. 

    He also discussed the future of housing policy, touching on President Biden’s executive order to address racial equity through housing, the nomination of Marcia Fudge to serve as the next HUD Secretary, and the opportunities for policymakers to increase Black homeownership and access to affordable mortgage credit. Brummer said, “Policymakers and the housing industry have the opportunity to correct inequities and sustainably increase minority homeownership.” Read the full interview here.
  • COVID Stimulus Bill Provides Housing Support. In the early hours of February 27, the House passed H.R. 1319, the American Rescue Plan Act of 2021, in a 219-212 vote. The $1.9 trillion aid package includes a significant amount of housing aid—$30 billion in emergency rental assistance, $10 billion for a Homeowner Assistance Fund, $100 million for housing counseling services, $20 million for fair housing initiatives, and several programs for the homeless. The bill is now in the Senate where it has already been subject to numerous modifications, including the elimination of the minimum wage increase due to the “Byrd Rule,” and more targeted direct payments to Americans. Earlier this year, USMI joined with several consumer and industry groups in sending letters to President Biden and congressional leadership urging them to include direct homeowner assistance in a COVID-19 relief bill to help families who are at risk of losing their homes due to the economic fallout from the pandemic. Click here to read more about USMI’s policy priorities to expand access and affordability in housing.
  • CFPB Delays QM Rule Implementation. On March 3, the Consumer Financial Protection Bureau (CFPB) released a notice of proposed rulemaking (NPRM) to delay the planned July 1 mandatory compliance date for the December 2020 General Qualified Mortgage (QM) Final Rule by 15 months to October 1, 2022. The CFPB is accepting comments until April 5. If finalized, the NPRM would allow for mortgages whose applications were received by lenders prior to October 1, 2022 to receive QM status using any of the following three standards: (1) the 2013 General QM definition that relied on a debt-to-income (DTI) cutoff; (2) the 2020 price-based General QM definition; (3) or the government sponsored enterprises (GSEs) Patch (so long as the GSEs remain in conservatorship). The CFPB noted it “believes that an extension of the mandatory compliance date may help to ensure stability and access to affordable, responsible credit in the mortgage market.”

    The CFPB previously announced on February 23 that it is considering whether to revisit the December 2020 General QM and Seasoned QM Final Rules. The first replaced the 43 percent DTI ratio QM standard with a price-based definition and the second created a new QM category based on loan seasoning. Should the CFPB reevaluate aspects of the General QM definition, it could decide to modify the thresholds for Safe Harbor (Average Prime Offer Rate, or APOR, + 150 basis points, or bps) and Rebuttable Presumption (APOR + 225 bps). USMI, along with consumer groups and other industry organizations, has repeatedly urged the CFPB to increase the Safe Harbor threshold to APOR + 200 bps to best level the playing field across the mortgage market and ensure minority, low-income, and first-time homebuyers continue to have access to affordable and safe conventional mortgages.
  • Senate Banking Committee Holds Hearing On CFPB Director Nominee. On March 2, Rohit Chopra, President Biden’s nominee for CFPB Director, testified before the Senate Banking Committee. In his written testimony, Chopra highlighted the ongoing challenges facing Americans in the housing sector due to the impacts of COVID-19 and suggested opportunities for reform in the mortgage market. He said that “fair and effective oversight” in the market could promote a “resilient and competitive financial sector,” while also addressing the systemic inequities faced by families of color. He also said, “administration of consumer protection laws can help families navigate their options to save their homes.”

    In response to questions from Senator Jon Tester (D-MT), Chopra stated that “the CFPB is not here to dictate housing finance policy, it’s to make sure that the prohibitions when it comes to our mortgage laws are adhered to. And when it comes to QM it is important that we balance the consumer protections that Congress has put into place with access to mortgages.”
  • Government Agencies Extend Forbearance & Foreclosure Protections. On February 16, President Biden announced the extension of COVID-19 forbearance and foreclosure protections for homeowners with government-backed mortgages through June 30. This included expanding COVID-19 forbearance to allow for up to 2-3 month extensions for homeowners who requested a forbearance on or before June 30. The administration outlined its priorities to extend protections as providing immediate relief to homeowners across America, supporting hard-hit communities of color, and providing a centralized resource for housing assistance.

    The Federal Housing Finance Agency (FHFA) followed suit February 25 and announced extensions of COVID-19 relief for single-family mortgages guaranteed by the GSEs, Fannie Mae and Freddie Mac. This included extending the moratorium on foreclosures and real estate owned evictions through June 30 and expanding the maximum forbearance period to 18 months for borrowers with active COVID-19 forbearance plans as of February 28. FHFA Director Mark Calabria stated that “[f]rom the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible. Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”
  • USMI Submits Comments to FHFA on Appraisal Policies. On February 26, USMI submitted a comment letter to FHFA providing feedback on initiatives to modernize appraisal processes and answer specific questions in the agency’s Request for Information (RFI) on Appraisal-Related Policies, Practices, and Processes. USMI wrote that “FHFA should implement rules designed to ensure that innovations around the appraisal process are done when there is demonstrable benefit to the broader housing finance system, including greater transparency, efficiency, accuracy of property valuations, and lower costs for borrowers and market participants.” USMI also emphasized that attention should be given to the expansion of appraisal waivers, particularly for the 80 percent loan-to-value (LTV) market, where “appraisal waivers can materially impact LTV ratios, the pricing and risk assessments associated with the GSEs’ guarantee fees, MI premiums, and loan-level capital requirements.” USMI noted that these considerations are “more acute for higher LTV loans since the margin of error is slim for these mortgages and could expose the GSEs and the housing finance system to greater credit risk.”
  • What We’re Listening To: Natixis Podcast. USMI President Lindsey Johnson spoke with Natixis Investment Managers’ Vice President of Government Relations Susan R. Olson on the Natixis Insights podcast. They discussed housing finance reform and possible changes under the Biden administration.
  • What We’re Reading: Brookings on GSE Reform. The Brookings Institution published a new report titled, “Government-sponsored enterprises at the crossroads: The value of the Treasury’s interest in the GSEs should be used to increase affordable housing and advance racial equity, and the GSEs should be regulated as utilities.” Authored by Michael Calhoun, President of the Center for Responsible Lending, and Lewis Ranieri, Chairman and CEO of Ranieri Solutions, who assert that “[a] utility structure should be implemented permanently in order to secure the GSEs as an emergency backstop during a crisis, enhance operation of the GSEs in regular times, and advance the GSEs’ public mission.”

Blog: Celebrating Black History Month – Q&A with Alanna McCargo, Senior Advisor at HUD

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To conclude our series celebrating Black History Month, USMI caught up with Alanna McCargo, Senior Advisor for Housing Finance at the Department of Housing and Urban Development (HUD). McCargo discusses her work and perspectives on the goal of increasing Black homeownership in America and other key topics in housing finance.

While homeownership has risen over the past few years, so has the growing recognition of the significant racial and economic disparities in mortgage lending and access to affordable mortgage credit, especially in the wake of the COVID-19 pandemic. Of the 2.6 million homeowners that are currently past due on their mortgages, as reported by the Mortgage Bankers Association, over half of them are people of color, according to Census Bureau Household Pulse Survey data from January 20 to February 1, 2021. This situation presents an opportunity for policymakers to correct inequities and better support minority homebuyers.

For more than 60 years, the private mortgage insurance (MI) industry has enabled more than 33 million low- and moderate-income Americans to attain affordable and sustainable homeownership in the conventional market. In the past year alone, nearly 60 percent of borrowers who purchased their home using private MI were first-time homebuyers, and more than 40 percent had incomes of $75,000 or less. It is a goal of the MI industry to work with regulators and lawmakers to increase minority lending within the conventional mortgage market, and Black History Month is a perfect time to advance this conversation.

(1) How does Black History Month intersect with the issue of homeownership?

Black history is American history and deepening the collective knowledge of the nation about the truths of our history shapes who we are as a nation, demonstrates our resilience, strengthens our democracy, and reminds us of the work still ahead. The nation is in the midst of three major national tragedies — a public health crisis, an economic recession with deep unemployment, and a reckoning with racism — all of which have caused disproportionate harm to households and communities of color. Many of these disparities can be directly traced to a long history of racial discrimination that America still reckons with today. When we examine the persistent income inequality and racial wealth gap, and reflect on the legacy of federal, state, and local policies and practices like redlining, exclusionary zoning, and the segregated, disinvested, and devalued communities we have across the country, we are reminded of the hard work that still needs to be done at the intersection of race and housing. Homeownership is a central part of a painful history that has thwarted Black economic progress and we continue to have a racial homeownership gap today that is larger now than it was over 50 years ago at the passage of the Fair Housing Act in 1968. We must continue to work toward strengthening Fair Housing and Fair Lending laws, dismantling discriminatory practices, and building toward better outcomes that recognize the history of inequity and works to restore opportunities to build wealth through homeownership.

(2) What are the top two or three 2021 priorities that lawmakers and the new Administration should focus on related to housing finance?

We began 2021 in a housing crisis that has been exacerbated by the pandemic. In addition to unprecedented illness and loss of life, millions of Americans are experiencing long-term financial hardship and loss of income and are at risk of losing their homes through no fault of their own. In response, the top priority for the federal government is to get relief to homeowners and renters, including housing assistance, forbearance, and foreclosure prevention measures until the effects of the pandemic subside and recovery can begin. Just last week, the Biden Administration announced coordinated policy actions for homeowners with government insured loans to provide forbearance and foreclosure relief. These actions will provide homeowners with urgently needed relief and address the disproportionate impact Black households face from the pandemic. Other priorities for the Administration are the production and preservation of affordable housing to help renters who want to be homeowners find housing inventory that they can afford to buy and expanding access to credit by removing structural barriers that historically disadvantage Blacks when it comes to fully participating in the housing finance system. Foundational to all these 2021 priorities are the goals of improving equity, dismantling discriminatory practices, and reducing the racial homeownership gap.

(3) Can greater homeownership racial equity be achieved in the next 5 to 10 years in America, and what must happen to increase the rate of Black homeownership?

Yes, with intentional policy choices and focus, there can be progress made in increasing the rate of Black homeownership and closing the Black/white homeownership gap. At a minimum, the following three things are important:

  • remove the barriers to homeownership that keep creditworthy Black households from becoming first time home buyers – supporting down payment and savings, reforming and expanding credit.
  • promote new construction and production of affordable housing types for homeownership (condo’s, townhomes, factory-built, etc.) and repair of existing affordable housing to support the next generation of buyers.
  • prioritize homeowner sustainability and ensure existing homeowners know their options for keeping their homes and their equity and where to get help during the coronavirus national emergency.

During the last housing crisis, Black homeownership saw enormous losses and Black households did not recover as rapidly as other racial/ethnic groups. We cannot let this devastating history repeat itself.

To accomplish this, we’ll need enhanced mechanisms to support down payment for households that do not have generational wealth to rely on. In addition, steps that move toward reducing costs of ownership, rationalizing pricing, enforcing fair housing, removing bias from credit scoring and appraisal systems, and ensuring Black households have equitable access to mortgages, housing counseling, and related services that help to create sustainable homeownership opportunities that build wealth.

Alanna McCargo’s Biography

Alanna McCargo recently joined the Biden Administration as Senior Advisor for Housing Finance to the Secretary of U.S. Department of Housing and Urban Development. She was previously Vice President for the Housing Finance Policy Center at the Urban Institute, where she led development of research programming and strategy with a focus on reducing racial homeownership gaps, removing barriers to homeownership, and building wealth equity. She held previous leadership roles with JP Morgan Chase, CoreLogic Government Solutions, and Fannie Mae and worked alongside the U.S. Treasury Department to implement housing recovery programs and policy during the Great Recession. She has a BA in communications from the University of Houston and an MBA from the University of Maryland.