Category: Announcements & Statements

Statement: Introduction of The Middle Class Mortgage Insurance Premium Act of 2021

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), released the following statement on the introduction of The Middle Class Mortgage Insurance Premium Act of 2021 sponsored by Reps. Ron Kind (D-WI) and Vern Buchanan (R-FL):

“Making permanent the ability of homeowners to deduct mortgage insurance (MI) premiums from federal income taxes and doing so in a way that makes this important tax deduction available to more hard-working middle class families, is smart public policy that benefits potentially millions of existing homeowners. Affordability remains a persistent barrier to homeownership across the country, particularly for first-time homebuyers. MI helps to sustainably bridge the down payment gap by helping families secure financing when they are unable to put 20 percent down. Low down payment mortgages, including conventional loans with private MI, have proven critical for millions of low- and moderate-income, first-time, and minority borrowers to buy a home sooner, secure financial stability, and build intergenerational wealth.

“Since 2007, the ability to deduct the cost of MI premiums has helped to put extra dollars back into the hands of millions of families each year and we strongly support legislation to make the tax deduction permanent. We are grateful to Congressmen Kind and Buchanan for their leadership on this critical legislation, and we encourage swift passage by both congressional chambers.”

In April 2021, USMI sent a letter to the Joint Committee on Taxation outlining how two key aspects of the current deduction diminish its effectiveness: (1) its temporary nature; and (2) its relatively low adjusted gross income (AGI) phase out. Congress first enacted legislation allowing the MI premiums tax deduction in 2006 and limited it to those making less than $100,000. In June, USMI then joined other housing industry groups, including the Mortgage Bankers Association, National Association of Home Builders, National Association of REALTORS®, and National Housing Conference, in sending a letter to the House Ways and Means Committee and Senate Finance Committee urging congressional tax writers to make this important deduction permanent. 

The tax provision on MI premiums has always been temporary, with extensions made every couple of years. Nearly 2.3 million Americans claimed the deduction in 2017 (the latest data available) with almost 60 percent of those taxpayers having less than $75,000 AGI and 90 percent with less than $100,000. In 2020, approximately 4.8 million families obtained mortgages with some form of MI, including conventional loans with private MI (over 2 million) and loans guaranteed though the Federal Housing Administration (nearly 1.4 million) and U.S. Department of Veteran Affairs (nearly 1.4 million).

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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: Comment Letter on FHFA’s NPR on “Amendments to the Enterprise Regulatory Capital Framework Rule”

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WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today submitted a comment letter to the Federal Housing Finance Agency (FHFA) on its Notice of Proposed Rulemaking (NPR) on “Amendments to the Enterprise Regulatory Capital Framework (ERCF) Rule – Prescribed Leverage Buffer Amount and Credit Risk Transfer.” In its letter, USMI emphasizes the importance of setting appropriate, balanced, and analytically justified requirements for the government-sponsored enterprises (Enterprises), Fannie Mae and Freddie Mac, to simultaneously ensure their financial strength and borrowers’ continued access to affordable mortgage finance credit in the conventional market.

“We appreciate the work FHFA has undertaken to date to provide for minimum capital requirements for the Enterprises, including the December 2020 final rule to establish a post-conservatorship capital framework,” said Lindsey Johnson, President of USMI. “While a robust framework is necessary to ensure the stability of the housing finance system, overly stringent requirements or ones that inaccurately reflect the risks of the assets held by the Enterprises can be disruptive. It is critical FHFA creates a capital framework that strikes an appropriate balance between maintaining borrowers’ access to affordable mortgage credit and ensuring the Enterprises and taxpayers are protected from risk.”

In its comments, USMI writes the final rule ensures the Enterprises have sufficient levels of capital to withstand a steep economic downturn but recommends the following to FHFA:

  • Adjust credit risk transfer (CRT) minimum risk weight floor to lower than 5 percent. USMI writes that any CRT floor should be designed to consider whether it will have the unintended consequences of discouraging the use of CRT or motivate CRT structures in which the Enterprises retain credit risk simply to justify the arbitrary capital floor. It urges FHFA to consider adjusting the CRT minimum risk weight floor lower than its proposed 5 percent change to a level closer to the statistically determined risk in a retained position to better align the CRT decisioning with the underlying economics and risks posed by the transaction. USMI also recommends FHFA establish and make public the model used to assess the CRT capital benefit, the statistical basis for any floor, and an analysis of the CRT capital treatment impact on the statutory goals of the Enterprises.
  • Consider alternative methods to determine the Prescribed Leverage Buffer Amount (PLBA). USMI agrees that the PLBA needs to be adjusted, and that 1.5 percent is excessive, but it recommends FHFA consider alternative methods of determining the amount of the PLBA that more closely relate to risk than the Stability Capital Buffer. USMI writes that it emphatically agrees that the PLBA should not be the usual binding constraint on the Enterprises. However, the NPR does not explain why 50 percent of the Stability Capital Buffer is the appropriate standard. The Stability Capital Buffer itself is a subjectively determined capital requirement and no rationale has been provided for why 5 basis points times market share over 5 percent is chosen, how it is related to the risk, or why the threat to the national housing finance system is not adequately dealt with through the other elements of the ERCF.
  • Reduce the single-family risk weight floor to 10 percent or less. USMI recommends the minimum 20 percent risk weight floor for single-family mortgages be reduced to 10 percent or less to more accurately account for the improvements in mortgage lending since the 2008 financial crisis, and to reflect and allow for credit enhancement, while also still requiring the Enterprises to hold an amount of capital against remote credit risk exposure more accurately. Reducing the single-family risk weight floor to 10 percent or less better achieves this outcome.
  • Make changes to the Countercyclical Adjustment. While FHFA does not discuss in the NPR, USMI does comment on the Countercyclical Adjustment impact within the 2020 ERCF final rule. Significant home price appreciation (HPA), such as what occurred over the last two years, under the Countercyclical Adjustment, will require the Enterprises to hold more capital against higher mark-to-market loan-to-value (MTMLTV) loans, likely resulting in increased pricing of these loans. Specifically, USMI urges FHFA to:
    • Reconsider and recalibrate the Countercyclical Adjustment. USMI recommends this to ensure the outcome of this adjustment meet FHFA’s policy objectives and considers real-world scenarios where there is significant home price appreciation above or below an inflation adjusted long-term trend. 
    • Report on whether significant HPA is based on market fundamentals or something else. While FHFA notes in the final rule it does not have discretion around the Countercyclical Adjustment, this should be re-evaluated. Based on market data, including FHFA’s own Housing Price Index, the agency should determine and report on why home prices are escalating. It may be appropriate for FHFA to have discretion to cap capital increases to up to 20 percent when HPA exceeds a certain threshold, rather than allowing for a 40-50 percent increase as would be applicable in today’s market with today’s market HPA. 
    • Consider recalibrating the Countercyclical Adjustment based on the reassessment. To address the significant impact that the current approach can have on the required capital, and thus the pricing of certain loans, FHFA should consider the different recommendations made in the 2020 NPR responses, including using asymmetric MTMLTV collars, and/or allowing for wider collars (perhaps 7.5 or 10 percent) during increased HPA versus when home prices are declining, or capping the capital increases to up to 20 percent when HPA exceeds a certain threshold.
    • Simplify the language and formula for the Countercyclical Adjustment. The Countercyclical Adjustment element of the ERCF is extremely complex and difficult to analyze.  It would benefit all stakeholders if FHFA took a more direct and simpler to read and analyze approach to this section.

An executive summary of USMI’s comments can be found here. USMI’s 2020 full comments can be found here and an executive summary can be found here. USMI’s comments on the FHFA’s 2018 proposed Enterprise capital framework 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.

Statement: FHA’s 2021 Annual Financial Report to Congress

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WASHINGTON— Lindsey Johnson, President of the U.S. Mortgage Insurers (USMI), released the following statement on the Federal Housing Administration’s (FHA) release of its Fiscal Year 2021 Annual Report to Congress on the Financial Status of the Mutual Mortgage Insurance Fund [hud.gov] (MMIF). This year’s report shows that the MMIF’s combined capital ratio stands at 8.03 percent, up from 6.10 percent for Fiscal Year 2020, an increase of 1.93 percent. The single-family forward mortgage portfolio capital ratio stood at 7.99 percent and the reverse mortgage program stood at 6.08 percent:

“We applaud the FHA’s continued efforts and commitment to sustain the fiscal health of the MMIF. The FHA is a vital part of the housing finance system and a critical resource for borrowers who may not have access to homeownership through the conventional market. We appreciate the FHA’s continued focus on assisting borrowers who were impacted by the COVID-19 pandemic. While the seriously delinquent rate remains high at 8.81 percent, it continues to improve from a high of 11.9 percent in November 2020. The mortgage market welcomes this improvement and USMI encourages the FHA to remain focused on assisting these borrowers. USMI urges the FHA to maintain its current disciplined approach to policies and pricing to ensure that the long-term financial health of the MMIF best serves future homebuyers and is prepared for an increase in potential foreclosures as the COVID-19 forbearance period ends.

“USMI and our member companies look forward to continuing to work with the FHA, the Administration, and Congress to promote a coordinated and consistent housing market to meet the needs of low-down payment borrowers while protecting taxpayers.”

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

Press Release: USMI Submits Comment Letter on FHFA’s Request for Input on Enterprise Equitable Housing Finance Plans

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WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, submitted a comment letter to the Federal Housing Finance Agency (FHFA) on its Request for Input (RFI) on “Enterprise Equitable Housing Finance Plans” (the Plans), which articulates a framework by which the government-sponsored enterprises (GSEs or Enterprises), Fannie Mae and Freddie Mac, will be required to prepare and implement three-year plans to advance equity in housing finance.

“USMI commends the FHFA for soliciting feedback on the Plans to identify the barriers to sustainable housing opportunities, set goals to address those barriers, and implement policies to address them. The private MI industry welcomes the opportunity to work with FHFA, the GSEs, and other housing finance stakeholders to support the Biden Administration’s goal of a comprehensive approach to advancing equity for all,” said Lindsey Johnson, President of USMI. “As an industry that is dedicated to the U.S. housing finance system and exclusively serves homebuyers with limited access to funds for large down payments, USMI and its member companies are keenly interested in advancing policies that promote access to the conventional mortgage market and support sustainable homeownership.”

In order to address longstanding inequities in the housing finance system, USMI encourages the GSEs to explore and implement geography- (including historically redlines areas, areas of concentrated poverty, and rural areas) and income-based initiatives to expand minority homebuying opportunities in the conventional mortgage market.

On behalf of the private mortgage industry, USMI routinely engages with policymakers to sustainably expand access to homeownership and address barriers that disproportionately impact minority homebuyers. USMI believes that the following actions represent viable policies to promote sustainable homeownership and level the playing field for minority homebuyers:

  • Review and Reform Loan-Level Price Adjustments (LLPAs): As 2008-era LLPA fees remain in place and continue to be disproportionately paid in the form of higher interest rates by low- and moderate-income (LMI) and minority borrowers, USMI urges the FHFA to review and reform LLPAs. Changes in the LLPA framework should account for the numerous improvements in the housing finance system since LLPAs were introduced in 2008, promote access to affordable conventional mortgages, and appropriately balance the credit risk being assumed by the GSEs.  Given all of the significant improvements in mortgage lending and risk management, USMI supports a holistic review of GSE pricing, including LLPAs, and the current level of cross-subsidization to support LMI homebuyers.
  • Review and Revise the Enterprise Regulatory Capital Framework (ERCF): As stated in USMI’s August 31, 2020 comment letter, USMI supports FHFA’s efforts to establish capital standards for the GSEs that appropriately reflect their activities and risk exposures to ensure that capital requirements do not arbitrarily price prospective homebuyers out of the conventional mortgage market. As entities with congressionally-mandated public missions, the GSEs’ capital requirements should promote an appropriate level of cross-subsidization and support LMI borrowers. USMI welcomed FHFA’s September 15 release of a notice of proposed rulemaking (NPR) to amend the ERCF to address two critical elements: (1) the prescribed leverage buffer amount (PLBA); and (2) the treatment of credit risk transfer (CRT) transactions. Ultimately, USMI believes that the proposed changes, coupled with the additional recommendations made by USMI, will more appropriately balance prudent risk management and the level of capital for the GSEs, and their statutory missions. 
  • Modify the Preferred Stock Purchase Agreements (PSPAs): USMI welcomed FHFA’s September 14 announcement on the suspension of portions of the January 2021 PSPA amendments, most notably the caps on the acquisition of “high-risk” loans. USMI encourages the agency to remove, and not merely suspend, the provisions concerning the so-called “high-risk” loan acquisition caps that disproportionately impact minority access to conventional mortgages.
  • Finalize the New Products and Activities Rule: While innovation can be beneficial for expanding homeownership opportunities, USMI highlights the need for a transparent and thorough regulatory mechanism to assess new GSE activities and products to ensure they do not disintermediate other market participants. USMI is encouraged by FHFA’s ongoing review of the GSEs’ pilots, activities, and products to ensure they align with the Enterprises’ explicit public policy objectives in compliance with their charters. USMI believes that new products, activities, and pilots should only be allowed when there is clear and compelling evidence that the GSEs are needed to fill a market void that the private market cannot meet.
  • Greater Data and Transparency: To address longstanding inequities in the housing finance system, USMI strongly believes that consistent transparency should be hard-wired into the GSEs’ credit policies and that data around the Enterprises’ performance in key areas, most notably access to credit for minority households, should be publicly available. As noted in USMI’s comment letter, the association firmly believes that additional transparency and data sharing initiatives will enable market participants to enhance access, affordability, and sustainability in the mortgage markets. 

“USMI fully supports increased public-private collaboration along with advancing a coordinated housing policy that ensures all borrowers have access to mortgage products in both the conventional and government-backed markets while maintaining safe and sound operations at the GSEs. Policymakers and stakeholders should work together to implement policies that promote access to sustainable housing finance credit to ensure the ability of consumers to purchase and stay in their homes.”

USMI’s full comments on the FHFA’s RFI on the Plans 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.

Letter: Major Housing Industry Trades and Homeownership Advocates on Tax Treatment of MI Premiums

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USMI joined a coalition of housing finance organizations including the Mortgage Bankers Association, National Association of Home Builders, National Association of REALTORS®, and National Housing Conference, in sending a letter to U.S. House of Representatives Committee on Ways and Means Chairman Richard Neil. The undersigned organizations urged the committee to modify current law to make the mortgage insurance premium tax deduction permanent and to eliminate its income phaseout. As a diverse coalition of stakeholders in the housing finance system, they affirmed that the current AGI phaseout represents a burdensome eligibility criterion for American families to claim the mortgage insurance deduction and that millions more homeowners would benefit from a permanent extension that eliminates the AGI phaseout. Click here to read the letter.

Statement: Nomination of Julia Gordon to Serve as FHA Commissioner

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), issued the following statement on the White House’s nomination of Julia Gordon to serve as Assistant Secretary for Housing, Federal Housing Commissioner, Department of Housing and Urban Development (HUD):

“USMI applauds the nomination of Julia Gordon to serve as Federal Housing Commissioner to lead the Federal Housing Administration (FHA). Gordon has broad experience in the housing finance system, specializing in supporting affordable homeownership and consumer protection policies for underserved markets. Her previous work, including nearly six years leading the National Community Stabilization trust (NCST), public service as manager of the single-family policy team at the Federal Housing Finance Agency (FHFA), and four years as senior policy counsel at the Center for Responsible Lending (CRL), will allow her to efficiently address the important issues facing the housing industry. We look forward to working closely with Gordon in seeking to promote a complementary, collaborative, and consistent housing finance system that enables sustainable homeownership for American families while also protecting taxpayers.”

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

Press Release: 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

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

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.

Statement: Bipartisan Senate Confirmation of Marcia Fudge as HUD Secretary

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), issued the following statement on the confirmation of Marcia Fudge by the United States Senate to serve as Secretary of the U.S. Department of Housing and Urban Development (HUD):

“In 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. Her bipartisan confirmation comes at a critical time as many homeowners, renters, and residents of housing supported by HUD continue to experience hardships due to the COVID-19 pandemic. To strengthen the housing finance system, it is critical for federal policymakers and the industry to collaborate on policies that balance prudent risk management and access to mortgage credit. USMI and our member companies look forward to working with Secretary Fudge on making home financing more affordable, advancing fair housing, and ensuring that the government and American taxpayers are appropriately shielded from mortgage-related credit risks.

“For more than 60 years, the private mortgage insurance industry and Federal Housing Administration have played complementary roles, and we welcome the opportunity to work with Secretary Fudge to best serve borrowers and responsibly facilitate access to homeownership.”

On January 27, USMI sent Secretary Fudge a letter outlining several policies HUD should consider to ensure it is effectively promoting sustainable, affordable, and diverse homeownership.

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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 Honorable Marcia Fudge, HUD Secretary Designate

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The Honorable Marcia Fudge
Secretary Designate
U.S. Department of Housing and Urban Development
451 7th Street SW
Washington, DC 20410

Dear Honorable Fudge,

U.S. Mortgage Insurers (“USMI”) and its member companies congratulate you on your nomination to serve as the Secretary of the U.S. Department of Housing and Urban Development (HUD). Your many years of public service, including as mayor of Warrensville Heights, Ohio and the U.S. Representative for Ohio’s 11th Congressional District, demonstrates your commitment to community, and will serve you well as Secretary of HUD, as you have no doubt seen in your own district the homeownership challenges facing hardworking American families.

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. Working with the government-sponsored enterprises (GSEs) —Fannie Mae and Freddie Mac— and lenders of all sizes and business models, private MIs help borrowers qualify for mortgage finance credit with down payments as low as three percent. In the past year alone, more than 1.5 million people were able to purchase or refinance their mortgage due to private MI. 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. Importantly, because USMI members provide private capital in front of the GSEs and taxpayers, the industry also provides significant loss protection to the mortgage finance system, having covered well over $50 billion in claims through the 2008 financial crisis—losses that would have otherwise been borne by taxpayers.

Through the last year despite the unprecedented challenges presented by COVID-19 pandemic, mortgage credit has been largely affordable due to historically low interest rates and 2020 had the largest mortgage origination volume since 2006—both for the conventional and Federal Housing Administration (FHA) markets. Despite this record mortgage volume and historically low interest rates, there remain significant housing affordability challenges for many borrowers across the country, including that nationwide home price appreciation (HPA) has skyrocketed to 7.3 percent year-over-year, the highest increase since 2014. Moreover, for the past seven years, the segment of the market that has experienced the largest and fastest HPA has been the lower end of the market, which over the last year saw an increase of nearly 11 percent. A driving force behind the high HPA is the fact that consumer demand continues to outpace new home construction, thereby exacerbating housing affordability by driving up home prices and putting homeownership further out of reach for many prospective homebuyers, most notably for minority and first time borrowers.

Policy recommendations such as lowering FHA premiums too quickly and aggressively may significantly impact FHA’s ability to address the challenges that will arise as COVID forbearances end, and coupled with the high delinquencies for FHA loans, could ultimately lead to higher claims, potentially undermining FHA’s ability to help future borrowers. Further, reducing premiums would only add fuel to the fire in terms of artificially lowering what is already relatively affordable mortgage finance credit. Such actions would inject more “demand” into the market without addressing the “supply” side—which will only drive-up home prices further, hurting affordability at the lower end of the market most. Additionally, other policy recommendations such as ending FHA’s “life-of-loan” policy, which would require FHA to continue to insure loans (because FHA insurance does not in fact cancel) without coverage being paid for, could similarly weaken FHA and its ability to meet the housing needs of future borrowers, while also exposing taxpayers to undue risk. FHA’s insurance stays on the loan for the “life of the loan,” therefore those who suggest ending the “life of loan” premiums are essentially advocating for providing free government-backed insurance.

There are other areas that may represent barriers to homeownership that policymakers should also choose to explore, including the targeted use of down payment assistance (DPA) programs for the borrowers who are unable to attain even a 3 percent or 3.5 percent down payment, who truly need the support. It is important that DPA programs are structured and operated in a sustainable manner so as to not create excessive leverage and risk within the mortgage finance system, or pose undue risk to taxpayers and the economy, which will ultimately hurt vulnerable homeowners most. As federal policy makers look to increase homeownership, it is essential that it is done in a manner that promotes sustainable homeownership for borrowers, as it does more harm to a family to get into a home that they can then not afford. There are meaningful ways to enhance borrower sustainability, such as by using part of a DPA to establish a reserve account for certain borrowers. Reserve accounts have been proven to be predictive of a borrower’s ability-to-repay their loan, and by focusing on reserve accounts, HUD not only prioritizes getting people into homes, but also helping them be successful homeowners. There are other important considerations to promote sustainable homeownership, such as housing counseling, for borrowers where HUD or FHA aim to expand access to mortgage finance credit.

Finally, USMI’s members intimately understand the importance of ensuring access to affordable, prudent low down payment mortgages in the marketplace. Understanding that more than 80 percent of first-time homebuyers over the last several years have depended on access to low down payment lending, it is more important than ever that the government-backed FHA program and the conventional market backed by private MI operate in a consistent and coordinated manner. Each plays an important, and distinct, role in the housing finance system and they should not be competing for market share—a situation which ultimately does a disservice to the borrowers we serve and to taxpayers.

FHA has long been a vital resource for many borrowers who may not have the ability to attain mortgage finance credit through the conventional market. Our industry looks forward to working with you and welcomes the opportunity to further engage with HUD and FHA to identify and address risks in the system and barriers to homeownership for borrowers, as well as find ways to further enhance a coordinated and consistent housing market that provides for the greatest access to sustainable mortgage finance credit.

We wish you the best in your transition to HUD Secretary and look forward to working with you once you are confirmed.

Sincerely,

Lindsey D. Johnson
President

For a full PDF of this letter, click here.