Category: Announcements & Statements

Statement: HUD’s 2019 Annual Report to Congress

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WASHINGTON— Lindsey Johnson, President of the U.S. Mortgage Insurers (USMI), released the following statement today on the U.S. Department of Housing and Urban Development (HUD) release of its 2019 Annual Report to Congress on the financial status of the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund (MMIF):

“USMI appreciates HUD’s thorough analysis of the MMIF’s economic condition and the release of valuable data on FHA borrower trends and mortgage performance. According to the report, the MMIF’s capital ratio stands at 4.84 percent, up from 2.76 percent last year, continuing the much-needed upward trend above the thin statutory requirement of only 2 percent. We applaud the FHA’s continued efforts to stabilize and further strengthen the fiscal health of the fund so that the FHA can continue its important role alongside the rest of us in serving the low-down payment market. We are encouraged by the longer-term focus of FHA as stated in their Annual Report, recognizing that ‘the MMI capital ratio is a result, not the target.’ Given the ‘extreme risk layering’ that FHA cites is on the rise, the cyclicality of the mortgage market, and the volatility of the Home Equity Conversion Mortgage (HECM) program, USMI agrees with the Administration’s actions to ensure that FHA can withstand another housing downturn and serve its important countercyclical role.

“In the Annual Report, Secretary Carson highlights that ‘[i]n our Housing Finance Reform Plan released in September of this year, we propose a number of solutions that would reduce risks to the MMI Fund, protect taxpayers from future bailouts, and ensure the FHA maintains its focus on providing access to mortgage financing to low- and moderate-income families that cannot be fulfilled through traditional underwriting.’The FHA is a very important part of the housing finance system, and USMI has long called for a more complementary, not competitive, role between FHA and the conventional market. Thankfully, today there is a vibrant low-down payment conventional market backed by private capital that continues to prudently facilitate the low-down payment credit needs of millions of Americans, giving consumers more options and shielding taxpayers from undue risk. In the past year alone, the private mortgage insurance (MI) industry helped more than 1.1 million people purchase or refinance their home—nearly 60 percent of purchasers were first time homebuyers and more than 40 percent of borrowers with private MI had annual incomes of $75,000 or less.

“Private MI continues to be well positioned to play a leading role in enabling borrowers to access affordable and sustainable low-down payment mortgage credit and serving as the first layer of protection against mortgage defaults to protect U.S. taxpayers and the federal government. In this sense, private MIs hold nearly double the capital assets that they held before the financial crisis, and just last week, USMI released details on the innovative growth of private MI credit risk transfer (MI CRT). Over the last four years, through new MI CRT structures, the industry transferred nearly $34 billion in risk on nearly $1.3 trillion of insurance-in-force, enhancing MI resiliency and the risk protection provided to the conventional mortgage market.

“Going forward, USMI and our member companies look forward to working with FHA and the Administration to promote complementary roles for the conventional market and FHA in the low-down payment lending space in order to best serve borrowers and protect 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.

Newsletter: November 2019

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CONGRATS TO THE NATS! While the baseball season has officially ended, housing finance reform still has a few innings left in the game. On Monday, National Mortgage News reported on U.S. Mortgage Insurers’ (USMI) release of new details on the growing mortgage insurance credit risk transfer (MI CRT) market. USMI President Lindsey Johnson also spoke about innovative MI CRT on a panel at the Structured Finance Association’s (SFA) Residential Finance Symposium. On the housing finance reform front, Federal Housing Finance Agency (FHFA) Director Mark Calabria said that he is currently in negotiations with the Treasury Department to amend the Preferred Stock Purchase Agreements (PSPAs). He also spoke at an event hosted by the American Action Forum (AAF), where he was followed by a panel discussion on housing finance reform. Last week, FHFA released its 2019 Strategic Plan and 2020 Scorecard for Fannie Mae and Freddie Mac (“the GSEs”). This comes following several recent comments by Director Calabria reiterating the agency’s commitment to responsibly ending the GSEs’ conservatorships. In mid-October, Citizens Against Government Waste (CAGW) applauded the direction of FHFA under Director Calabria’s leadership. Lastly, we’re seeing more movement coming with the nomination of Brian Montgomery as Deputy Secretary of the Department of Housing and Urban Development (HUD) in early October.

Despite a busy month, there’s still plenty to look forward to at the #NEXTDC19 conference on November 18 and 19, which will bring policy experts together and create a great stage for lively discussions on the future of housing policy. Most importantly, ahead of the Veterans Day holiday, we want to thank and recognize all of the veterans who have bravely served in the United States Armed Forces. We are grateful for your service. 

USMI announces details on MI Credit Risk Transfer. On November 4, USMI announced that private MI companies transferred nearly $34 billion in risk on nearly $1.3 trillion of insurance-in-force from 2015 to 2019 to the global reinsurance and capital markets. USMI released details on the development and growth of the MI CRT market, which outlines the types of structures being used by the industry to transfer risk to reduce volatility and exposure of mortgage credit risk within the mortgage finance system, including to the GSEs, and therefore taxpayers. It also finds that active adoption of CRT by private mortgage insurers has transformed the industry to better insulate it from cyclical mortgage markets and enhanced MIs’ ability to be more stable, long-term managers and distributors of credit risk.

USMI President Lindsey Johnson spoke to MI CRT on a panel at the SFA’s Residential Finance Symposium. She also spoke with National Mortgage News on the innovative ways private MI is now actively managing mortgage credit risk. Johnson stated that in recent years mortgage insurers are not just participating in GSE CRT transactions, but also distributing their own risk through MI CRT.

AAF hosts panel discussion on housing finance reform. On November 6, AAF hosted a panel titled, “Fannie Mae and Freddie Mac: What’s Next?” Speakers included FHFA Director Mark Calabria; Dr. Norbert Michel, Director of the Center for Data Analysis at the Heritage Foundation; Dr. Michael Stegman, Senior Fellow of the Housing Finance Program at the Milken Institute Center for Financial Markets; and Thomas Wade, Director of Financial Services Policy at AAF. The panel was moderated by CNN’s senior economics writer, Donna Borak. The panel discussed the Treasury Department’s and HUD’s GSE Reform Plans, FHFA’s and Treasury’s actions to allow for the recapitalization of the GSEs, and additional reform initiatives by the Administration.

FHFA releases new Strategic Plan and Scorecard for Fannie Mae and Freddie Mac. On October 28, FHFA released its 2019 Strategic Plan and 2020 Scorecard, detailing the near-term future for the GSEs. In the Strategic Plan, FHFA provided a roadmap on how the GSEs will fulfill their statutory missions and maintain their focus on safety and soundness while preparing for what the FHFA calls “a responsible end to the conservatorships.” The 2020 Scorecard details how the GSEs will remain accountable for “the effective implementation of the Strategic Plan in the coming year.” Both documents outlined three key goals: (1) foster competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing; (2) operate in a safe and sound manner appropriate for entities in conservatorships; and (3) prepare for their eventual exit from conservatorships.

In FHFA’s press release, Director Calabria said, “Our nation’s mortgage finance system is in urgent need of reform. The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

FHFA intensely focused on the GSEs exiting conservatorship. At a meeting with reporters on October 31, Director Calabria noted that he is not giving Fannie and Freddie an easy pass. “I’ll certainly say I have yet to meet anybody who wants to get out of conservatorship as much as Fannie and Freddie do. But certainly, what you’ve been seeing over the last few years is not the kind of day-to-day behavior that you would expect from companies that are in conservatorship.”

Earlier that week, Director Calabria gave a keynote speech at the Mortgage Bankers Association’s Annual Convention in Austin, TX, and explained that after just one quarter of capital retention where Fannie and Freddie profits weren’t swept to Treasury, the companies doubled their capital buffers. “Fannie and Freddie will move forward thoughtfully, but this does not mean moving slowly.” But as exiting the conservatorship moves closer, Director Calabria explained he will ensure that it is done right. “I will not end the conservatorship unless I am confident that once Fannie and Freddie leave, they will never have to return.”

CAGW applauds FHFA’s new leadership. On October 16, CAGW wrote that “Mark Calabria is moving FHFA in a new direction and making taxpayers his top priority.” CAGW provided several examples of Director Calabria’s work, including FHFA’s focus on building capital at the GSEs to protect taxpayers, revising the GSEs’ multifamily lending caps, and the termination of the GSEs’ Mortgage Servicing Rights (MSR) pilot program.  Regarding the MSR pilot, CAGW noted that FHFA should apply this logic to any other pilots that allow the GSEs to push into markets and engage in activities that are already thriving. It is promising that Director Calabria is reviewing all pilots and new activities that expand the GSEs’ market dominance and encourages the enterprises to expose taxpayers to additional risk.”

Nomination of Brian Montgomery as HUD Deputy Secretary. On October 8, HUD announced that Commissioner Montgomery had been nominated to serve as Deputy Secretary and the Senate Banking Committee will consider his nomination on November 20. Montgomery, who also serves as HUD’s Assistant Secretary for Housing and Federal Housing Commissioner, would manage the day-to-day operations of the agency and assist Secretary Carson in leading the department’s nearly 8,000 employees. USMI applauded the decision, noting “Commissioner Montgomery is a respected, seasoned mortgage finance expert, and his unique experience and past public service have been major assets to the FHA. His extensive background will allow him to immediately begin work on the most important issues facing the housing finance system.”

Upcoming events. The#NEXTDC19 conference is an event focused on delivering policy intel. On November 18 and 19, it will bring together the most influential housing policy leaders, mortgage lenders, and fintech firms.

Press Release: Private Mortgage Insurers Transfer Nearly $34 Billion in Risk on Nearly $1.3 Trillion of Insurance-in-Force from 2015-2019

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USMI releases details on the developments and growth of private mortgage insurance credit risk transfer

WASHINGTON — U.S. Mortgage Insurers (USMI) today announced that private mortgage insurance (MI) companies transferred nearly $34 billion in risk on nearly $1.3 trillion of insurance-in-force from 2015 to 2019. USMI released details on the developments and growth of the MI credit risk transfer (MI CRT) market, which outlines the types of structures being used by the industry to transfer risk to reduce volatility and exposure of mortgage credit risk within the mortgage finance system, including to the government sponsored-enterprises (GSEs), and therefore taxpayers. It also finds that active adoption of CRT by private mortgage insurers has transformed the industry to help better insulate it from the cyclical mortgage market and enhanced their ability to be more stable, long-term managers and distributors of risk.

“Through innovative new MI CRT structures, the industry is taking additional steps to enhance MI resiliency and the risk protection provided to the conventional mortgage market. MI CRT demonstrates that MI companies are sophisticated experts in pricing and actively managing mortgage credit risk,” said Lindsey Johnson, President of USMI. “Private MI plays a critical function in the housing finance system by serving as the first layer of protection against mortgage defaults. MI is also one of the only sources of private capital that has been available through all market cycles. After the financial crisis, the MI industry improved its safety and soundness through enhanced capital and operational standards, which in turn made us more resilient to withstand severe economic stress.”

USMI examined the two main MI CRT structures: Reinsurance and Capital Markets. It found that mortgage insurers have executed 18 reinsurance deals since 2015, transferring over $25 billion of risk on over $530 billion of insurance-in-force. As for the Capital Markets structure, the industry introduced MI Insurance Linked Note (ILN) programs beginning in 2015. Since then, mortgage insurers have issued 19 ILN deals, transferring $7.8 billion of risk on over $730 billion ofinsurance-in-force.

“While the MI industry has distributed credit risk for decades, these innovative CRT structures adopted by the industry in 2015 have transformed it from a ‘buy-and-hold’ into an ‘aggregate-manage-and-distribute’ model,” said Johnson. “The financial risk management approach of private MI companies has become much more countercyclical and significantly benefits the housing finance system.”

Because private mortgage insurers typically hold a portion of the first loss there is an alignment of incentives that ensures quality underwriting continues to be done by the industry, which reduces investors’ risk exposure, and ensures quality control on risk for investors and within the broader financial system. The investor base in these transactions continues to grow exponentially as the frequency of transactions increases, and the MI CRT investors to date represent trillions of dollars of private capital under management that provides a stable, deep pool of liquidity for the market.

“The MI CRT structures underscore the resilient nature and benefits of MI and the private capital it supplies to the housing market, safeguarding taxpayers against mortgage defaults, and ensuring that the private MI industry will continue to play a vital role in the mortgage finance system,” added Johnson.

More information on MI CRT is 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.

Statement: Nomination of Brian Montgomery as Deputy Secretary of the HUD

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the President’s intent to nominate Federal Housing Administration (FHA) Commissioner Brian Montgomery as Deputy Secretary of the U.S. Department of Housing and Urban Development (HUD):

“USMI applauds the White House’s intent to nominate Brian Montgomery to serve as the Deputy Secretary of HUD. Commissioner Montgomery is a respected, seasoned mortgage finance expert, and his unique experience and past public service have been major assets to the FHA. His extensive background will allow him to immediately begin work on the most important issues facing the housing finance system. USMI and the private mortgage insurance industry look forward to working with Commissioner Montgomery going forward to establish a coordinated and robust housing finance system that prudently enables homeownership for American families.”

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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: The Administration’s Housing Finance Reform Reports

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the Administration’s Housing Finance Reform reports to address the nation’s housing finance system, including the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.
 
“USMI applauds the U.S. Treasury Department (Treasury) and the Department of Housing and Urban Development (HUD) for releasing their comprehensive Housing Reform Plan and Housing Finance Reform Plan (“Plans”) that together outline needed reforms to the housing finance system.  While USMI looks forward to reviewing the Plans in greater detail, we particularly appreciate Treasury and HUD identifying specific areas where the Administration can focus its efforts to put the housing finance system on a more sustainable path ahead of comprehensive legislative reform.
 
“While Congress ultimately needs to address the underlying structural challenges of the GSEs, the Administration’s proposal to reduce taxpayer risk exposure and address the areas of misaligned incentives of the GSEs while increasing transparency and market discipline could be the catalyst to break the legislative logjam and enable policymakers to enact comprehensive reforms.  Many of the actions proposed by the Administration’s Plans align with USMI’s principles for Administrative Reform, including our position that these actions could further reduce taxpayer risk by increasing private capital within the financial system, level the playing field between the GSEs and private market participants, provide greater transparency regarding GSE pricing and practices, and ensure that consumers have access to affordable and sustainable mortgage finance credit.
 
“Further, the Plans call for the Federal Housing Finance Agency (FHFA) and HUD to develop and implement a specific understanding as to the appropriate roles and overlap between the GSEs and the Federal Housing Administration (FHA).  USMI has long called for a consistent housing policy across different agencies and for greater coordination between the government-backed FHA market and the conventional market, and we look forward to working with the Administration as it seeks to define these important roles. 
 
“USMI is encouraged by the thoughtful and comprehensive Plans released today by the Administration and looks forward to working with the Administration to promote private capital ahead of taxpayer risk, instill greater transparency and market discipline within the housing finance system, and ensure Americans continue to have access to safe and affordable mortgage finance options.”
 
Last fall, USMI released a white paper on administrative reform (available for download here) that outlined 11 key recommendations for policymakers to consider when contemplating the future of housing finance. A PDF of these recommendations can be downloaded 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: President Trump’s Executive Order on Housing Affordability

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on President Trump’s Executive Order on Establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing:

“We welcome the Trump Administration’s executive order on housing affordability because it recognizes the significant challenges that exist for many first time and repeat borrowers with finding affordable homes and seeks tangible steps to address the underlying issues. To support sustainable homeownership growth, home-ready borrowers need access to prudent, affordable mortgage credit while also ensuring the private sector, and not taxpayers, are on the hook for mortgage credit risk. The private mortgage insurance industry’s business is focused on facilitating sustainable mortgage finance credit to home-ready borrowers who do not have large down payments—helping more than one million individuals in 2018 attain homeownership sooner than they otherwise could—all the while shielding taxpayers from mortgage credit risk. USMI looks forward to continuing to work with the Administration and other stakeholders to find effective ways for homebuyers to gain access to prudent and affordable mortgages.”

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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: U.S. Senate’s Confirmation of Mark Calabria as New Director of Federal Housing Finance Agency

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the U.S. Senate’s confirmation of Dr. Mark Calabria as the Federal Housing Finance Agency (FHFA) Director:

“USMI applauds the Senate’s confirmation of Director Mark Calabria to serve as the next FHFA Director. Fannie Mae and Freddie Mac (the ‘GSEs’), the 11 Federal Home Loan Banks, market participants, and American homebuyers will be well-served under Director Calabria’s leadership at this critical time in the housing finance system.

“Director Calabria’s deep understanding of the mortgage finance system will be invaluable in promoting a more robust housing market that provides borrowers with access to affordable low down payment mortgage credit while simultaneously protecting taxpayers from undue mortgage credit risk. Director Calabria has long been an advocate for greater taxpayer protection against mortgage credit risk, including the use of private mortgage insurance (MI) to shield taxpayers and the federal government from financial risk on low down payment lending. We are confident that Director Calabria will continue to recognize the importance of private MI in the housing finance system.

“We look forward to working closely with Director Calabria to ensure that homebuyers continue to have affordable and prudent options for low down payment mortgage finance credit while also protecting taxpayers. For more than 60 years, private mortgage insurers have played a leading role in promoting affordable and sustainable homeownership and we look forward to building upon this important mission in the future.”

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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: USMI Applauds the U.S. Senate Banking Committee’s Approval of Mark Calabria as the New Director of Federal Housing Finance Agency—Urges Quick Senate Floor Consideration

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the U.S. Senate Banking Committee’s confirmation of Dr. Mark Calabria as the Federal Housing Finance Agency (FHFA) Director: 

“USMI applauds the Senate Banking Committee’s approval of Dr. Mark Calabria to serve as the next FHFA Director. Dr. Calabria’s extensive public service and deep understanding of the mortgage finance system will serve the Agency, Fannie Mae and Freddie Mac (the “GSEs”), market participants, and homebuyers well.

“Dr. Calabria has long been an advocate for greater taxpayer protection against mortgage credit risk, including the use of private mortgage insurance to guard taxpayers and the federal government from financial risk on low down payment lending. We are confident that Dr. Calabria will continue to recognize the importance of private mortgage insurance in the conventional mortgage market both in helping creditworthy low down payment borrowers qualify for home financing, while also protecting American taxpayers from undue mortgage credit risk. Over the last 60 years, private MI has helped more than 30 million individuals become homeowners. Right now, private mortgage insurance protection is the only source of private capital that is permanently dedicated to standing in a first-loss position in front of the GSEs and taxpayers on GSE-backed mortgages, through various credit cycles.

“USMI looks forward to working closely with Dr. Calabria to ensure that borrowers continue to have competitive options for low down payment mortgage finance credit in the conventional market and to protect taxpayers even further. USMI urges a quick Senate Floor vote and support for Dr. Calabria. For more than 60 years, private mortgage insurers have played a leading role in promoting affordable and sustainable homeownership and we look forward to building upon this important mission in the future.”

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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: Senate Banking Committee Chairman’s Outline for Reform of Fannie Mae and Freddie Mac

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WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the outline released today by Senate Banking Committee Chairman Mike Crapo (R-ID) on proposed reforms to Fannie Mae and Freddie Mac (the GSEs) and the housing finance system:

“Today Chairman Crapo released a thoughtful outline to reform the GSEs in order to put the housing finance system on more stable footing. The reform plan covers many areas and USMI is particularly pleased that Chairman Crapo recognizes the importance and value of private mortgage insurance in enabling access to low down payment conventional mortgages while protecting taxpayers at least to the levels that they are protected today.  Ten years after conservatorship of the GSEs, it is essential that meaningful reforms be done to better protect taxpayers and to ensure consumers will have access to mortgage finance credit through all market cycles.

“USMI is pleased to see Chairman Crapo provide these ideas for reform and we look forward to working with his office and the Committee on the details of these concepts.  We are committed to working with the Senate, House, and the Administration to promote reforms that put more private capital in front of taxpayer risk and to create a more sustainable housing finance system that works for consumers, market participants, and taxpayers.

“For more than 60 years, MI has provided effective credit risk protection for our nation’s mortgage finance system and helped 30 million families become homeowners.  This time-tested form of private capital stands ready to continue minimizing taxpayer risk while ensuring that mortgage credit remains accessible and affordable.”

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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: On the Intent to Nominate Mark Calabria as FHFA Director

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WASHINGTON — Lindsey Johnson, President of the U.S. Mortgage Insurers (USMI), today issued the following statement on President Trump’s intent to nominate Dr. Mark Calabria for Federal Housing Finance Agency (FHFA) Director: 

“USMI applauds the nomination of Mark Calabria to serve as the next FHFA Director. Dr. Calabria is a respected housing finance expert and longtime public servant who understands the intricacies of the housing and mortgage finance markets. His extensive housing experience in both the public and private sectors, including his role in crafting the Housing and Economic Recovery Act of 2008, will allow him to immediately tackle the important issues facing our housing finance system. Dr. Calabria has been a long-time advocate for greater taxpayer protection against mortgage credit risk, including promoting the greater use of private mortgage insurance to further insulate the federal government and taxpayers from mortgage related risks. We are confident that as FHFA Director, Calabria will continue to recognize the importance of private mortgage insurance in the conventional mortgage market and work to ensure that private capital plays its appropriate role in enabling access to homeownership for low-down payment borrowers while also protecting the federal government and American taxpayers against mortgage credit risk.

“We look forward to working closely with Dr. Calabria to grow the role of permanent sources of private capital in shouldering more risk in front of taxpayers in the housing market. For more than 60 years, private mortgage insurance has played a leading role in promoting affordable and sustainable homeownership and we look forward to building upon our success in the future.”

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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 Annual Report to Congress

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Report Underscores the Importance of Private Mortgage Insurance for Low Down Payment Lending While Government-Backed FHA Financial Health Not Yet Out of the Woods

 

WASHINGTON— Lindsey Johnson, President of USMI, released the following statement on the Federal Housing Administration’s (FHA) “Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund (MMIF) Fiscal Year 2018”:

“Today, the FHA released its 2018 Annual Report to Congress on the financial status of its Mutual Mortgage Insurance Fund (MMIF). According to the report, the MMIF’s capital ratio stands at 2.76 percent, up from 2.18 percent last year and slightly above the statutory requirement of 2 percent. The FHA, which insures roughly $1.3 trillion in mortgage credit risk, is an integral piece of the housing finance system. In addition to risks in the reverse program that still exist, the report also highlights that cash-out refinances continue to grow exponentially at FHA, comprising 63 percent of all FHA refinance transactions—as well as an increase in the number of mortgages with very high debt-to-income ratios. This year’s report underscores the need to further put FHA on more stable financial footing, so it can continue to serve low- and moderate-income borrowers who need it most.

“This report is the first under the leadership of FHA Commissioner Brian Montgomery, a seasoned mortgage finance expert who previously served as FHA Commissioner under President George W. Bush during the last housing crisis – a time of unprecedented market stress. Commissioner Montgomery appreciates the importance of properly managing the FHA and returning it to its core mission and intended role in the housing market, which is to focus on borrowers who truly need its 100 percent taxpayer-backed home loans. We agree with Commissioner Montgomery’s statement in the Actuarial Report that one of FHA’s guiding principles should be appropriately managing risks on behalf of borrowers, lender participants, and the U.S. taxpayer. As of September 30, 2018, the MMIF Capital Ratio was 2.76 percent, slightly above the 2.00 percent required by Congress. While an increase from Fiscal Year 2017, this is a thin margin, and taxpayers should never be put at risk again.”

“The FHA has been and will continue to be a critical participant in the housing finance system, but its current oversized role and weak financial health remain a cause for concern. The FHA must continue to refocus on its core mission and scale back its expanded footprint that grew significantly during the great recession.

USMI also agrees with Commissioner Montgomery’s previously expressed views that private capital should play a leading role in guaranteeing low down payment mortgage credit risk to protect U.S. taxpayers and the federal government. Fortunately, there is a robust and available private market today through private mortgage insurance (MI) that is ready to help low-down payment borrowers become homeowners. Private MI  has successfully worked to ensure that creditworthy borrowers have access to safe, sustainable and affordable mortgage options for more than 60 years, and USMI will continue to work with FHA, Congress and the Administration to foster a more robust housing finance system that relies on a coordinated and consistent housing policy so private capital takes more of the credit risk in the housing markets.”

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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.