Category: Announcements & Statements

Statement: FHA’s 2021 Annual Financial Report to Congress

Posted on by dcadmin

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.

 

Letter: USMI Joins Black Homeownership Collaborative Calling the Biden Administration to Include a Housing Assistance Fund in the American Rescue Plan

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The Honorable Joseph R. Biden, Jr.
President of the United States
The White House
Washington, DC 20500

Dear President Biden,

Congratulations on your inauguration. We appreciate your leadership addressing the health and economic impact of COVID-19, and your announcement of comprehensive emergency assistance for the millions of Americans impacted by this crisis. Our organizations have formed a collaborative, or are stakeholders in the work of the collaborative, to achieve 3 million net new Black homeowners by 2030, which would increase the Black homeownership rate to more than 50 percent, a significant step towards closing the homeownership gap for people of color. Essential to this effort is reducing the number of Black households at risk of losing their homes as a result of the economic impact of the pandemic. We are writing to urge that the legislative proposal your administration sends to Congress include $25 billion in direct assistance for the millions of homeowners who are at risk of losing their homes due to the economic impact of COVID-19.

The American Rescue Plan proposal seeks to prevent “untold economic hardship for homeowners” by extending the foreclosure moratorium and continuing applications for forbearances on federally-backed mortgages. Mortgage forbearance is an important tool in avoiding foreclosure, particularly for the millions of homeowners who have lost their jobs through no fault of their own. We commend your support for additional assistance to renters and apartment owners. Low- and moderate-income renters do not have resources to pay past rent when they go back to work, making emergency rental assistance an immediate priority. But homeowners in the same position also need help now.

For residential homeowners, mortgage forbearance is an essential home retention tool for short- term financial hardships. Prolonged forbearance without assistance to reduce or pay off missed payments may not be enough to stave off foreclosure, particularly for households facing long- term reductions in income or with limited home equity. It is appropriate and essential for the federal government to extend the same missed-payment relief to these homeowners as renters, using the same income guidelines that exist in the current rental assistance program being administered by the Treasury Department.

We are requesting that you include a $25 billion Housing Assistance Fund, modeled on the Hardest Hit Fund, to provide funds to state housing finance agencies to help homeowners with COVID-19 hardships bring their mortgage loans current through targeted assistance. The funds would be used for mortgage payment assistance, utility payments, property tax assessments, and other support to prevent eviction, mortgage delinquency, default, foreclosure, or loss of utility services.

Importantly, this growing risk to homeownership has profound implications for people of color, who are especially at risk. In fact, the Black homeownership rate, which plummeted during the Great Recession, has never fully recovered. Black homeownership today is as low as it was in 1968 when the Fair Housing Act was passed. Our country cannot afford to see more damage done to minority homeowners.

According to the Mortgage Bankers Association, there are currently 3.8 million homeowners who are past due on their mortgage. Census Bureau Household Pulse Survey data for the period December 9-21 indicates that over half of these homeowners are people of color. One in five Hispanics and nearly a quarter of all Black mortgage holders reported being late on their mortgage. Our organizations are committed to increasing homeownership rates for all people of color and closing the homeownership gap, but we cannot do so when we continue to lose more homeowners to COVID-19-related financial hardships.

We respectfully request that the legislative proposal for the American Rescue Plan include $25 billion in funding for a Housing Assistance Fund.

Sincerely,

Black Homeownership Collaborative Steering Committee Members

National Housing Conference
Mortgage Bankers Association
National Association of Real Estate Brokers
National Association of REALTORS® National Fair Housing Alliance
National Urban League

Other Key Stakeholders

Center for Community Progress
Cinnaire
Commerce Home Mortgage
Community Home Lenders Association
Consumer Federation of America
Framework Homeownership
Guild Mortgage Comp
International Home Builders
Institute Home
FreeUSA
Homeownership Alliance
HOPE (Hope Credit Union/Hope Enterprise Corporation/Hope Policy Institute)
Housing Assistance Council
Housing Partnership Network
Housing Policy Council
Local Initiatives Support Corporation (LISC)
Low Income Investment Fund
Manufactured Housing Institute
National Association of Affordable Housing Lenders
National Community Reinvestment Coalition
National Community Renaissance
National Community Stabilization Trust
National Council of State Housing Agencies
National Housing Resource Center
National NeighborWorks Association
New American Funding
New York Housing Conference
Prosperity Now
The Leadership Conference on Civil and Human Rights
Up for Growth Action
U.S. Mortgage Insurers
Zillow

Cc: The Honorable Janet Yellen, Treasury Secretary-designate
The Honorable Marcia Fudge, Housing and Urban Development Secretary-designate
The Honorable Tom Vilsack, Agriculture Department Secretary-designate
The Honorable Susan Rice, Director, Domestic Policy Council
Mr. Brian Deese, Director, National Economic Council

For a full PDF of this letter, click here.

Press Release: Private Mortgage Insurers Support Federal Housing Finance Agency Proposed Rule for GSE New Products and Activities

Posted on by dcadmin

USMI Applauds the Proposed Enhanced Transparency, Oversight, and Review and Encourages Rule Application to All Current Pilot Programs

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, submitted its comment letter to the Federal Housing Finance Agency (FHFA) on its Notice of Proposed Rulemaking for New Enterprise Products and Activities, which seeks to replace the 2009 Interim Final Rule that established a process for the government sponsored enterprises (“GSEs” or “Enterprises”) to obtain prior approval for new products and provide notice for new activities.

“USMI is encouraged to see FHFA following its statutory responsibility to establish a much more transparent and appropriate process for considering and approving new GSE products and activities,” said Lindsey Johnson, President of USMI. “The Interim Rule was adopted after the 2008 financial crisis, and as the GSEs continued to play an important and even greater role in the housing market during conservatorship, they at times expanded into new activities that are outside of the secondary market, compete in areas already well-served by the primary market, and not consistent with their mission.”

In its comment letter, USMI welcomes the increased transparency outlined in the proposed rule and supports the inclusion of “pilots” in the criteria for identifying and assessing new activities and products at the GSEs. Considering that numerous prior pilots were developed without meaningful input and analysis from industry stakeholders, USMI believes it is important that the FHFA close the loopholes that could be used again to circumvent the objectives of the proposed framework. USMI urges the FHFA to direct the GSEs to halt all current pilots and, following the implementation of a final rule, require them to submit Notices of New Activity should they want to continue offering such products or programs.

USMI also highlights in its letter the importance of the approval framework ensuring that innovations at the GSEs do not disintermediate private capital and that new activities and products operate in a manner that is within the scope of the secondary market functions set forth in their congressional charters. USMI recommends that the proposed rule be revised to provide additional clarity for the FHFA’s assessment criteria for new activities and products at the GSEs, specifically:

  • The degree to which private market participants are meeting or could meet the needs of the market and consumers, and whether the new activity or product would disintermediate non-GSE market participants;
  • Whether the new activity or product would rely on limited or broad participation by market participants;
  • How certain market participants will be selected over others, whether the activity or product will be made available to other market participants on similar terms, and whether other participants would be harmed by engagement in the activity or product; and
  • Whether the new activity or product would present a conflict of interest for the GSEs, especially where anti-competitive concerns may be present.

“This rule is sound public policy, as it will enhance transparency and provide for the appropriate review of new GSE products and activities to best serve the housing finance system and ensure that government and taxpayers avoid unnecessary new risk,” continued Johnson. “It is imperative that the FHFA continue to establish and enhance its oversight of the GSEs, and this rule is a critical step to that end.”

USMI’s full comments on the FHFA’s proposed rule 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.