Category: Announcements & Statements

Statement: President Trump’s Executive Order on Housing Affordability

Posted on by dcadmin

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

Posted on by dcadmin

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

Posted on by dcadmin

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

Posted on by dcadmin

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

Posted on by dcadmin

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

Posted on by dcadmin

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.

Statement: Fannie Mae’s New Enterprise-Paid Mortgage Insurance Product

Posted on by dcadmin

WASHINGTON — Lindsey Johnson, President of U.S. Mortgage Insurers (USMI), today issued the following statement on the Fannie Mae’s new Enterprise-Paid Mortgage Insurance (EPMI) product:

“USMI appreciates the level of detail provided to the marketplace thus far and the additional details promised in the near future about Fannie Mae’s new Enterprise-Paid Mortgage Insurance (EPMI) product. However, Fannie Mae’s new EPMI pilot program is a troubling development and heightens concerns about the GSEs’ expanding roles in the housing finance system. Even after Congress raised questions about the Federal Housing Finance Agency (FHFA) and GSEs’ lack of transparency in developing, approving, and rolling out new products and activities—and their expanding operations in the mortgage market—Fannie Mae has moved ahead with a new program that bypasses the high capital and operational standards developed and enforced by the GSEs for private mortgage insurers, despite the fact that these entities are taking the exact same risk. Like Freddie Mac’s Integrated Mortgage Insurance (IMAGIN) program, this new Fannie Mae program represents a significant blurring of the bright line separation between primary market and secondary market activities and greater vertical integration of private sector activities into the GSEs.  Further, this promotes an unlevel playing field in the private market by allowing for different terms and standards for EPMI versus other sources of private capital. From a taxpayer perspective, we believe it is much more appropriate and prudent for dedicated forms of private capital that are available through economic cycles, such as private mortgage insurance, to continue to perform the critical functions of underwriting and assuming first loss credit risk at the loan level. This form of credit risk protection can and should be done even as the GSEs continue to disburse and diversify credit risk through channels such as reinsurance and the capital markets, just as private mortgage insurers do today. The MI industry continues to be a strong counterparty to the GSEs and our focus continues to be on the value MI brings to our customers, consumers, and to the federal government and American 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: New Report Shows Importance of Private Mortgage Insurance in Helping Low Down Payment Borrowers Qualify for Mortgages in All 50 States

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TX, CA, FL, IL and MI are Top Five States in 2017

WASHINGTON, June 7, 2018 /PRNewswire-USNewswire/ — U.S. Mortgage Insurers (USMI), the association representing five of the top six private mortgage insurance (MI) companies in the United States, today released a report on the role of MI in all 50 states and the District of Columbia. The report finds that nearly 30 million homeowners have been served by MI for more than 60 years, and breaks down on a state-by-state basis low down payment mortgage lending. The report underscores the historic importance of MI, how MI has helped promote homebuying in the U.S., and the significant protection against undue mortgage credit risk that MI provides to American taxpayers and the federal government.

“Private mortgage insurance has helped millions of first-time and middle-income homebuyers across the United Statesfor more than 60 years. This report confirms what we have long known: MI is a critical piece of the U.S. housing finance system, helping Americans realize the dream of homeownership while providing important protections to taxpayers and the federal government,” said Lindsey Johnson, President of USMI. “For decades, low down payment borrowers have relied on MI to help them affordably and responsibly buy a home, and MI will continue to serve countless more prospective homebuyers in the years to come.”

The report looks at how MI helps bridge the down payment gap that affects many borrowers and analyzes at a state level who specifically benefits from MI. The report presents data that highlights:

  • The number of years it takes to save a 20 percent down payment in all 50 states plus the District of Columbia
  • The total number of homeowners helped by MI in 2017 broken down by state—and key lending characteristics including average home price and credit scores of borrowers with MI
  • The number of minority borrowers who have obtained or refinanced mortgages broken down by state

Since 1957, MI has helped more than 30 million families qualify for a mortgage by bridging the gap between the down payment and home financing. In 2017 alone, MI helped more than one million borrowers purchase or refinance a mortgage; of that total number of borrowers, 56 percent were first-time homebuyers and more than 40 percent had annual incomes below $75,000. The top five states in which MI was used by borrowers to purchase homes in 2017 are:

  1. Texas: 79,030 borrowers (55 percent first-time homebuyers)
  2. California: 72,938 borrowers (66 percent first-time homebuyers)
  3. Florida: 69,827 borrowers (58 percent first-time homebuyers)
  4. Illinois: 47,866 borrowers (63 percent first-time homebuyers)
  5. Michigan: 41,810 borrowers (57 percent first-time homebuyers)

 

The report also focuses on how MI reduces taxpayers’ exposure to mortgage credit risk and protects the federal government from that risk. MI serves as credit protection against mortgage credit risk in the event of a borrower defaulting on his or her mortgage, meaning every dollar that an MI company covers when a borrower defaults on his or her mortgage is a dollar that the GSEs and taxpayers do not have to pay. In fact, since the 2008 financial crisis the MI industry has paid over $50 billion in claims – losses the government and taxpayers did not have to bear.

“Coming out of the financial crisis, the MI industry is even stronger with more robust underwriting standards, stronger capital positions, and improved risk management. The MI industry follows a strict set of requirements to insure mortgages acquired by the GSEs, which are known as Private Mortgage Insurer Eligibility Requirements, and has implemented Master Policy Agreements to bring more efficiency and greater transparency to payment of claims,” added Johnson. “MI has played a critical role in protecting taxpayers and the federal government from undue mortgage credit risk for six decades, and will continue to provide this important function in the housing finance system moving forward.”

The complete report on MI in the U.S. is available here. All 50 states fact sheets, plus data for the District of Columbia, 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.

SOURCE U.S. Mortgage Insurers

This release originally appeared on PR Newswire. Click here to view the original release.

Statement: Confirmation Of Brian Montgomery As FHA Commissioner

Posted on by dcadmin

WASHINGTON — Lindsey Johnson, President and Executive Director of U.S. Mortgage Insurers (USMI), today issued the following statement on the U.S. Senate’s confirmation of Brian Montgomery to serve as Federal Housing Administration (FHA) Commissioner:

“USMI applauds the Senate for its bipartisan vote to confirm Brian Montgomery to serve as FHA Commissioner. Commissioner Montgomery is a respected expert and seasoned mortgage finance professional, and his unique experience and past public service will be assets in tackling the challenges facing the FHA and housing finance system going forward.

“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 are encouraging, as well as his belief that the FHA ‘should never take the place of the private sector first-loss solution provided by private mortgage insurers.’ We are confident that Commissioner Montgomery will continue to be a champion for a robust housing finance system that strikes the appropriate balance between the conventional market backed by private capital and government-backed FHA loans. We also believe that Commissioner Montgomery’s experience and expertise overseeing and managing the FHA will be pivotal in returning the FHA to its more appropriate and intended role in the housing market – one that focuses on those borrowers who need the FHA’s 100% taxpayer-backed loans the most.

“The FHA has and will continue to play a critical role in the housing finance system, but its footprint has expanded dramatically since the 2008 financial crisis. Commissioner Montgomery must focus on ensuring that the FHA is not overexposing taxpayers to undue mortgage credit risk and refocus the agency on its core mission. We look forward to working closely and collaboratively with Commissioner Montgomery to create a more coordinated, consistent, and transparent housing system – a system that can expand private capital’s role 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: On IMAGIN

Posted on by dcadmin

WASHINGTON — U.S. Mortgage Insurers (USMI) President and Executive Director Lindsey Johnson issued the following statement on the recent news that Freddie Mac is piloting a new low down payment insurance program aimed at a small segment of the market called Integrated Mortgage Insurance (IMAGIN).

“Mortgage insurers (MI) have been supporting the U.S. housing market since 1957 by enabling homeownership opportunities for more people by providing insurance on mortgage loans where borrowers cannot afford a 20 percent down payment. To date, the MI industry has made homeownership possible for more than 25 million Americans.

“Mortgage insurers have taken steps to enhance both their claims paying ability—by increased capital and operational standards through the Private Mortgage Insurer Eligibility Requirements (PMIERs)—and their claims paying process through updated Master Policy Agreements.  These important steps lay the foundation for efforts to further “de-risk” the government sponsored enterprises (GSEs) through expanded use of private capital with MI, including through deeper cover mortgage insurance.

“Last week, Freddie Mac rolled out a pilot program (IMAGIN) that bypasses the highly regulated and highly capitalized MI industry, and began purchasing credit enhancement from an entity that is not held to the same regulatory standards as the MI industry.  We believe that the IMAGIN pilot violates the spirit of the Congressional charter for Freddie Mac and represents a significant blurring of the bright line separation between primary market and secondary market activities.  Because MI selection is currently handled by the lender as part of the primary market process, the IMAGIN program sets a precedent of allowing the GSEs to participate in primary market activities while also putting the taxpayer at greater risk by circumventing the high capital and regulatory standards that MIs are held to today.

“USMI is also concerned with the lack of transparency about the program and its development as well as the inherent conflict of interest in Freddie Mac’s role of imposing PMIERs standards on private MIs and then designing a program that relies on less regulated (and in turn less expensive) reinsurers to circumvent these standards.  We are also concerned about this program due to its lack of sustainability.  As monoline insurers, the MIs serve as capital that is more permanent and committed to taking only U.S. housing risk, where the IMAGIN panel of reinsurers have no such commitment.  This could leave the mortgage finance industry—and taxpayers—exposed and negatively affect home ownership.

“Rather than moving forward with this new pilot, we believe now is the time for the GSEs to explore options to use more private mortgage insurance.  The MI industry has demonstrated its ability to raise capital in the equity and debt markets, and also tap into other investors in the capital and reinsurance markets, to distribute risk.

“A deep MI pilot built around the core strengths of the MI industry, lender relationships, independent underwriting standards, and expertise in pricing long tailed credit risk, combined with Credit Risk Transfer via the capital and reinsurance markets by MI companies, can better protect the U.S. taxpayer while also providing prudent access to home ownership.”

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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: Great News For Homebuyers: U.S. Congress Extends Mortgage Insurance Tax Deduction

Posted on by Rhina Portillo

WASHINGTON — U.S. Mortgage Insurers (USMI) President and Executive Director Lindsey Johnson issued the following statement on the federal budget deal passed by Congress and signed into law by President Trump today, which includes an extension of the tax deduction for mortgage insurance (MI) premiums.

“Mortgage insurance has helped millions of middle income Americans become homeowners and for nearly ten years, the tax deductibility of MI premiums has helped to reduce the cost of homeownership. In a bipartisan manner, our elected lawmakers in Congress demonstrated today their commitment toward helping low down payment first time homebuyers by keeping mortgage insurance tax deductible. This is important, because while many on Capitol Hill appreciate how MI protects the government and taxpayers from credit risk in the housing system, MI also directly benefits everyday workers.”

First available to taxpayers in 2007 and extended multiple times since then on a bipartisan basis, this tax deduction has been a successful tool in ensuring low- and moderate-income homebuyers have access to prudent and affordable low down payment mortgage finance. In 2015 alone, 4.1 million families benefitted from the MI premium tax deduction, for an average deduction of $1,528. The deduction is available to homeowners with MI who have an adjusted gross income under $100,000 and phases-out for adjusted gross incomes up to $110,000. USMI data show that more than half of purchase loans with private MI go to first-time homebuyers and more than 40 percent of borrowers with private MI have incomes below $75,000. The deduction expired at the end of 2016.

Over the past 60 years, private MI has helped more than 25 million families qualify for home financing by bridging the gap between a 20 percent down payment and perfect credit. In the past year alone, MI helped more than 850,000 families purchase or refinance homes.

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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.

Testimony: Chairman Patrick Sinks Before Congress on Mortgage Insurance and Sustainable Housing

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Sinks Highlights Importance of Private Mortgage Insurance In Helping Borrowers Qualify for Low Down Payment Mortgages While Protecting Government Against Risk

WASHINGTON — U.S. Mortgage Insurers (USMI) Chairman and Mortgage Guaranty Insurance Corporation (MGIC) CEO Patrick Sinks today testified on behalf of USMI in front of the House Financial Services Committee’s Subcommittee on Housing and Insurance in a hearing entitled “Sustainable Housing Finance: Private Sector Perspectives on Housing Finance Reform, Part IV.”

In his testimony, Sinks highlighted the long and successful role that private mortgage insurance (MI) has played in the housing finance system to help homebuyers responsibly purchase homes with affordable low down payments – all while protecting U.S. taxpayers and the federal government from undue mortgage credit risk. Sinks also discussed the MI industry’s performance through the Great Recession and the key improvements made by the industry that make it more resilient going forward.

“Over the last 60 years, private MI has helped more than 25 million families attain homeownership in a prudent and affordable manner. MI reduces taxpayer risk exposure by transferring a substantial portion of mortgage credit risk to companies backed by private capital. Mortgage insurers covered more than $50 billion in claims since Fannie Mae and Freddie Mac entered conservatorship resulting in substantial savings to taxpayers,” said Sinks.

In addition to the important role the MI industry plays in the housing finance system, Sinks proposed specific principles for housing finance reform and lessons that should be applied to all market participants, as well as recommendations to increase the role of private capital in the housing finance system to further protect taxpayers and the government.

Acknowledging that there should be a diverse set of participants in the future to assume and protect against all mortgage credit risk ahead of an explicit government guaranty, Sinks noted that, “We believe much more can be done to reduce the risk to the federal government and make taxpayer risk exposure even more remote without jeopardizing the ability for creditworthy borrowers to continue to buy a home with mortgage financing. This includes a greater reliance on the mortgage insurance model where private capital stands in front of the government and taxpayers.”

In an August 2017 report, the Urban Institute found that GSE loans with MI consistently have lower loss severities than those without MI. In fact, the report shows that for nearly 20 years, loans with MI have exhibited lower loss severity each origination year. The Urban analysis states that “for 30-year fixed rate, full documentation, fully amortizing mortgages, the loss severity of loans with PMI is 40 percent lower than [loans] without.”

USMI President and Executive Director Lindsey Johnson echoed Sinks’ Congressional testimony today: “Private MI has been an invaluable piece of the housing finance system for a long time, decades longer than any other low down payment model being tested. Fortunately, our industry is strong and ready to shoulder an even greater responsibility in the system moving forward. Underscoring the strength of MI, the industry paid more than $50 billion in claims since the financial crisis and has implemented new higher robust capital standards. We appreciate Congress’ work to address long overdue reforms to the housing finance system and USMI members look forward to continuing and enhancing the credit risk protection MI provides to shield taxpayers from mortgage credit risk and to promote homeownership across the country.”

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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.