Data Filter: PMI By the Numbers

Press Release: Private Mortgage Insurers Helped Over 1 Million Low Down Payment Borrowers In 2022, Majority Were First-Time Buyers

Posted on by Karl Howley

Industry supported nearly $402 billion in mortgage originations – nearly 97% were for home purchases

WASHINGTON — U.S. Mortgage Insurers (USMI) today announced the industry helped over 1 million low down payment borrowers secure mortgage financing in 2022, according to data from the government-sponsored enterprises (GSEs). Approximately 97% of these mortgages were new purchases and first-time homebuyers represented nearly 62% of purchasers with private MI. In addition, the industry supported nearly $402 billion in mortgage originations in 2022, according to public filings. This resulted in over $1.5 trillion in outstanding mortgages with active private MI coverage at the end of 2022, underscoring the industry’s critical role in serving as the first layer of protection against credit risk in the GSE-backed conventional mortgage market.

“At a time when affordability is a paramount issue, conventional loans backed by private MI continued to make the dream of homeownership a reality for 1 million first-time, low- to moderate-income and minority borrowers,” said Seth Appleton, President of USMI. “The fact that the majority of borrowers with private MI were first-time buyers underscores the great benefits they receive from the availability of low down payment mortgages backed by private capital.”

In 2022, the private MI market also served a large number of low- to moderate-income borrowers. Nearly 35% of those that purchased or refinanced a mortgage with private MI had annual incomes below $75,000, and the average loan amount with MI was approximately $341,716, according to GSE data. The MI industry has enabled approximately 38 million people to access affordable, low down payment mortgages in its 66-year history.

Appleton recently discussed the private MI market with USMI Chairman Adolfo Marzol, who has held senior roles at the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), Fannie Mae, and Essent Group. In the interview, Marzol noted that “the MI industry has continued to be a source of financial strength in the markets, providing uninterrupted access to mortgage credit without any special interventions or actions during the sudden heightened stress we have been witnessing in other sectors of financial services. The same was true during the extraordinary financial stress that hit during the onset of COVID. MI remained available and affordable at all times.”

A key element of the industry’s ability to scale up during times of economic stress is due to its evolution to a “buy, manage, and distribute” model when it comes to risk. From 2015 through 2022, the private MI industry issued 51 insurance linked notes through the capital markets, transferring more than $20.8 billion of risk exposure on nearly $2.2 trillion of notional mortgages and completed 42 quota-share and excess of loss reinsurance transactions, ceding $47 billion of additional risk to the traditional reinsurance market. In total, nearly $68 billion of risk was transferred since 2015, providing the private MI industry additional capacity to support new borrowers.

Marzol explained, “[t]hese transactions have proven to be a durable and cost-effective source of support for the private MI industry. And the ability to use MI-linked note transactions to procure reinsurance through the capital markets has been invaluable, increasing the capacity of our industry to serve borrowers in need of low down payment financing.”

At the end of 2022, the private MI industry held nearly $11 billion of eligible assets in excess of the GSEs’ Private Mortgage Insurer Eligibility Requirements (PMIERs) capital requirements, which represented a 172% sufficiency ratio. This furthered the private MI industry’s ability to support lenders and borrowers over the past year.

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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 Nearly 2 Million Low Down Payment Borrowers in 2021

Posted on by Chloe Plefka

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today announced the industry helped nearly 2 million low down payment borrowers secure mortgage financing in 2021, similar to the industry’s 2020 activity, according to data from the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The industry also supported nearly $585 billion in mortgage originations, according to public filings. More than 80 percent of this volume by loan count was for new purchases while approximately 20 percent was for refinance loans. This resulted in nearly $1.4 trillion in outstanding mortgages with active private MI coverage at year’s end, underscoring the industry’s critical role serving as the first layer of protection against credit risk in the conventional mortgage market backed by the GSEs.

“As the economy continues to navigate the impact of the COVID-19 pandemic, conventional loans backed by private MI kept leveling the homebuying field for millions of low down payment borrowers,” said Lindsey Johnson, President of USMI. “In 2021, private MI companies continued to be well-capitalized and maintained their high volumes, allowing more families achieve the dream of homeownership.”

USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers throughout the year. The organization sent letters and released statements in support of bipartisan and bicameral legislative initiatives to make permanent the ability of homeowners to deduct MI premiums from federal income; submitted comment letters on the Federal Housing Finance Agency’s (FHFA) Request for Input (RFI) on its Equitable Housing Finance Plans; joined the Black Homeownership Collaborative calling the Biden Administration to focus on the critical need for housing production to address the significant deficit that continues to drive up home prices across the country; among many other actions it took in support of first-time, low- to moderate-income (LMI), and minority homebuyers.

“Skyrocketing home prices combined with record low housing supply have made homeownership unreachable for many. It is critical that affordable, sustainable low down payment mortgages are available to meet borrowers’ needs,” said Johnson. “Private MI assumes the first loss —limiting risk to taxpayers and the government— while also facilitating access to sustainable and affordable mortgage finance credit for millions of people who do not have significant down payments.”

Home price appreciation (HPA) reached 17.5 percent over the course of 2021, according to FHFA’s House Price Index (HPI®). In addition, the U.S. median home price hit a record in March, reaching $375,300, according a press release issued yesterday by the National Association of REALTORS®. At the end of 2021, the private MI industry collectively held more than $10.4 billion in excess of the capital requirements set by the GSEs, for a sufficiency ratio of over 170 percent. The MI industry has enabled more than 37 million people to access affordable and sustainable low down payment mortgages in its 65-year history. In 2021, 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 $310,000.

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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, “Private Mortgage Insurance: Stronger and More Resilient”

Posted on by dcadmin

Over 10 Years of Reforms and Continued Evolution Make Private Mortgage Insurers Stronger and More Resilient

Industry has facilitated affordable, low down payment mortgages for over 33 million households, contributing to a more stable housing finance market

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released a report that highlights the many regulatory and industry-led reforms taken since the 2008 financial crisis to improve and strengthen the role of private MI in the nation’s housing finance system. The report, “Private Mortgage Insurance: Stronger and More Resilient,” analyzes the various steps the industry and regulators undertook and continue to take to ensure sustainable mortgage credit through all market cycles and to better serve low down payment borrowers in the conventional market, especially during critical times such as the present.
 
“Though private mortgage insurers have been a crucial part of the housing finance system for more than 60 years, this is definitely ‘not your father’s’ MI industry. Enhanced capital and operational standards, as well as increased active management of mortgage credit risk, including through the distribution of credit risk to the global reinsurance and capital markets,  has put the industry in a stronger position,” said Lindsey Johnson, President of USMI. “These enhancements will enable the industry to be a more stabilizing force through different housing cycles — including the current COVID-19 crisis — which greatly benefits the GSEs and taxpayers and enhances the conventional mortgage finance system.”  
 
The report also highlights the steps the industry has taken since the beginning of the pandemic to support the federal government foreclosure prevention programs, including the announcements made by Fannie Mae and Freddie Mac regarding forbearance programs and other mortgage relief available to support borrowers impacted by COVID-19. USMI members have focused their efforts on helping borrowers remain in their homes by supporting their lender customers during these challenging times.
 
Among the enhancements to the industry in the last several years, the report outlines and analyzes the following:

  • Private Mortgage Insurer Eligibility Requirements (PMIERs) – Adopted in 2015 and updated in 2018 and 2020, PMIERs nearly doubled the amount of capital each mortgage insurer is required to hold. USMI members collectively hold more than $5.1 billion in excess of these requirements.
  • New Master Policy – Updated terms and conditions from mortgage insurers for lenders, which provide lenders with greater clarity pertaining to coverage.
  • Rescission Relief Principles – First published in 2013 and updated in 2017, these principles allow MIs to offer day-one certainty to lenders of coverage, including automatic relief after 36 timely payments.
  • MI Credit Risk Transfer (MI-CRT) Structures – Private MI companies have transferred $41.4 billion in risk on over $1.8 trillion of insurance- in-force (IIF) since 2015—through both reinsurance and insurance-linked notes.

Through the programmatic execution of MI-CRT transactions, the industry continues to transition the business into an aggregate-manage and distribute model for mortgage credit risk.  The implementation and expansion of MI-CRT programs have demonstrated the industry’s ability to tap multiple sources of capital to support new business and actively manage and distribute risk. 
 
Since 1957, the MI industry has served the U.S. government and taxpayers as an effective and resilient form of private capital, standing as the first layer of protection against risk and mortgage defaults. Importantly, MI has enabled affordable, low down payment homeownership for more than 33 million people. In 2019 alone, more than 1.3 million borrowers purchased or refinanced a loan with private MI, accounting for nearly $385 billion in new 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

Blog: Private Mortgage Insurance Is Helping First-Time Homebuyers Become Homeowners

Posted on by dcadmin

By Lindsey Johnson

A myth about homeownership that discourages many prospective homeowners is that they need a 20 percent down payment to obtain a home loan. Not true! What many borrowers do not realize is that they can qualify for a mortgage with significantly less than 20 percent down. This is particularly true when it comes to first-time homebuyers.

A recent survey from the National Association of REALTORS® found that among first-time homebuyers who obtained a mortgage, more than 70 percent made a down payment of less than 20 percent. What’s more, according to Genworth Mortgage Insurance’s August 2018 “First-Time Homebuyer Market Report,” 66 percent of all homebuyers using low down payment mortgages were first-time buyers, and 79 percent of all first-time homebuyers used some form of low down payment mortgages.

As first-time homebuyers consider taking the exciting leap into homeownership, it’s important for them to fully understand all the home loan options available in the market. Of the variety of home loans available, conventional loans with private mortgage insurance (MI) stand out as one of the most competitive and affordable paths to homeownership.

U.S. Mortgage Insurers (USMI) recently released a report highlighting how MI helps bridge the down payment gap in the United States and promotes homeownership. Importantly, the report confirmed what has long been known: MI makes it easier for creditworthy borrowers with limited down payments to access conventional mortgage credit. Specifically, the report found:

  • MI has helped nearly 30 million families nationally purchase or refinance a home over the last 60 years
  • In 2017 alone, MI helped more than one million borrowers purchase or refinance a home
  • Of the total 2017 number, 56 percent of purchase loans went to first-time homebuyers and more than 40 percent of those borrowers had annual incomes below $75,000, which further demonstrates that MI serves middle-income households
  • At the state level, Texas ranks first in terms of the number of homeowners (79,030) who were able to purchase or refinance a home with MI in 2017. This was followed by California (72,938), Florida (69,827), Illinois (47,866), and Michigan (41,810)

Data show that today many Americans are spending more of their income on rent than they are on mortgage payments. From 1985 to 2000, the share of income spent on mortgage payments was 21 percent; in Q2 2018 it was 18 percent. Conversely, from 1985 to 2000 the share of income spent on rent was slightly higher at 26 percent and has risen to 28 percent as of Q2 2018. As many individuals and families look to make the step from renting to owning their own home to create greater stability and build long-term equity, it’s essential that these individuals have prudent low down payment options – such as private MI – available for their future homeownership needs.

In addition to the wealth creation that homeownership fosters, today’s historically low mortgage interest rates are a good reason to buy a home now. Over the course of nearly 35 years, the housing market has experienced an extraordinary decline in mortgage interest rates. In 1981, the average rate for a 30-year fixed-rate mortgage stood at over 18 percent; it stood at approximately 4.72 percent at the end of September 2018. Borrowers should take advantage of these historically low mortgage interest rates because housing finance experts forecast that this interest rate decline is over, and primary mortgage rates are on the rise.

Homebuyers shouldn’t sit on the sidelines and put off buying the home of their dreams simply because they aren’t in the position to put 20 percent down. Since 1957, MI has helped millions of Americans – particularly first-time homebuyers – become successful homeowners, and it will continue to be a foundation of the housing market and a resource for borrowers in the years to come.

Press Release: Private Mortgage Insurance Helped More Americans Become Homeowners in 2015

Posted on by dcadmin

For Immediate Release

June 1, 2016

Media Contacts

Laura Capicotto 202-777-3536 (lcapicotto@clsstrategies.com)

Private Mortgage Insurance Helped More Americans Become Homeowners in 2015

USMI Data Highlights Consumer Benefits During National Homeownership Month

(June 1, 2016) – Private mortgage insurance (MI) helped approximately 740,000 homeowners in 2015, a more than 18 percent increase over 2014, U.S. Mortgage Insurers (USMI) today announced in conjunction with National Homeownership Month.  This growth mirrors the positive national trend showing total mortgage borrowing reaching a four-year high.

“As we celebrate Homeownership Month, USMI is proud that private mortgage insurance is an essential part of the mortgage finance system that helped even more borrowers become homeowners last year” said Lindsey Johnson, USMI President and Executive Director.  “MI is a great option to help borrowers address high down payment requirements, which can be one of the biggest hurdles to homeownership.  Consumers should know about all the options, including the benefits of MI, before making one of the most significant financial decisions of their lives.”

MI Makes Homeownership Affordable

MI has helped millions become homeowners by enhancing their ability to obtain a mortgage in an affordable way.

There are a number of consumer benefits from MI:

  • MI Provides Savings to Borrowers – Borrowers with above average credit scores can save as much as $8,000 over five years with private MI compared to FHA insurance, according to WalletHub’s 2016 Mortgage Insurance Report.
  • MI Helps First-Time Homebuyers – Nearly 50 percent of loans covered by MI in 2015 were for first-time homebuyers and more than 40 percent were borrowers with incomes below $75,000. In 2015, MI helped approximately 740,000 homeowners purchase or refinance a mortgage.  For more data, visit the USMI data-snapshot.
  • MI is Cancelable – Private MI paid for by the borrower can be cancelled when the borrower pays down the mortgage to 78 percent of the home value. Because borrowers can stop paying private MI premiums at a certain point, this can lead to real savings over the life of their loan.  With home value appreciation, a borrower may be able to cancel MI even sooner.  For more information on MI cancelability, visit our comparison of private mortgage insurance and FHA insurance.
  • MI is Tax Deductible – MI premiums are treated as “mortgage interest” and are tax deductible for many borrowers. According to the IRS, 4.7 million taxpayers benefited from deductions for MI in 2013, with an average deduction of $1,387.  For more data, visit the USMI data-snapshot.
  • MI Protects Taxpayers from Another Bailout – Because private MI is backed by private capital, if the borrower defaults, MI covers the first losses thus reducing the risk to government – and ultimately taxpayers – of another bailout. Independent polling shows Americans support reducing taxpayer exposure through greater reliance on private capital.

“Homeownership remains an important goal for most Americans, creating long-term value for individuals and their communities.  USMI members are proud to help millions of Americans become homeowners,” said Johnson.  “A strong and vibrant private Mortgage Insurance industry plays an important role in facilitating homeownership for millions of Americans, and MI is prepared to do more.”

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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 (MI) 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.

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