News Filter: Press Releases & Statements

Press Release: Ohio Ranks #5 in the U.S. for Low Down Payment Mortgage Lending in 2021

Posted on by Chloe Plefka

Over 64,000 in the state turned to private mortgage insurance to access homeownership, saving for a 20% down payment could take Ohioans 10 years.

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual report on mortgage lending supported by private MI at the national and state levels. The report finds that the industry helped more than 37 million low down payment borrowers over its 65-year history to secure mortgage financing, including nearly 2 million in 2021, according to data from the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Ohio was among the top five states in the nation for borrowers who benefitted the most from private MI. The report also finds it could take Ohioans 10 years on average to save for a 20% down payment plus closing costs, but 64,149 homeowners in the state avoided the wait by qualifying for a low down payment mortgage backed private MI, with 60% of purchasers being first-time homebuyers. According to Fannie Mae, private MI ranks among the lowest costs associated with homeownership, with total private MI payments representing 0.5% of lifetime homeownership costs for the average purchase borrower, plus it can be canceled after a period of time.

“Access to low down payment loans was more important than ever this past year as many Ohioans weighed economic concerns with surging inflation and home prices skyrocketing due to severely low housing supply,” said Lindsey Johnson, President of USMI. “Through it all, the private MI industry was there to support new borrowers and current homeowners. First-time and low- to moderate-income borrowers were particularly well served during 2021, allowing them to access homeownership sooner.”

Private MI facilitates access to sustainable and affordable mortgage finance credit for millions of people who put less than 20% down on a home loan. The USMI report examines the number of borrowers served, the percentage of borrowers who were first-time homebuyers, average loan amounts, and average FICO credit scores. USMI also calculates the number of years to save a 5% versus 20% down payment for each state plus the District of Columbia. For many Ohioans, the biggest hurdle in buying a home is the 20% down payment they mistakenly believe is required for mortgage approval.

Key findings about Ohio from the report include:

  • It could take 10 years for an Ohio household earning the state median income of $60,110 to save 20% (plus closing costs) for a $214,400 single-family home, the median sales price in the state.
  • The wait time drops to three years if the household purchases a home with a 5% down payment insured mortgage—a 30% decrease in wait time at the state level.
  • Of the Ohio homeowners who secured a low down payment loan with private MI in 2021, 60% (a 1% increase from 2019) of purchase mortgages went to first-time buyers, with an average loan amount of $217,314.

The number of years to save for a down payment decreased in comparison to USMI’s past reports as the personal saving rate reached record highs during the first six months of 2021, as reported by the Federal Reserve Bank. This was largely due to consumer spending decreasing, government stimulus checks, and an increase in unemployment insurance.  According to a 2020 Congressional Research Service report, the “saving rate usually goes up when there’s a decline in general economic activity, but it can quickly fall back down when there are positive signs of growth.” The U.S. economy experienced this growth as businesses reopened during the second half of 2021, once the COVID-19 pandemic started to recede. As a result, personal saving rates resumed regular levels as consumers began spending more and saving less, while at the same time the economy experienced high inflation, limiting people’s ability to save.

“For 65 years, the private MI industry has been leveling the homebuying playing field, enabling over 37 million people access affordable, low down payment mortgages, serving as a bridge for homebuyers to qualify for home financing despite a low down payment,” Johnson added. “The benefits private MI provides allows Ohio homeowners to build the kind of long-term wealth and stability that comes with homeownership.”

Loans backed by private MI provide protection against mortgage credit risk and is structured to protect the GSEs in the conventional mortgage market. In 2021, the industry insured $1.4 trillion of mortgages, including $1.2 trillion of mortgages backed by the GSEs. Private MI has proven to be a reliable method for shielding the GSEs, having paid nearly $60 billion in claims since the 2008 financial crisis and housing market downturn.

USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers and homeowners 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 a comment letter on the Federal Housing Finance Agency’s (FHFA) Request for Input (RFI) on the GSEs’ Equitable Housing Finance Plans; and joined the Black Homeownership Collaborative in calling on 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.

The complete report is available here and more specific information on Ohio 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. Learn more at www.usmi.org.

Press Release: New Report – For 65 Years, Private Mortgage Insurers Enabled More than 37 Million Families to Access Homeownership Sooner

Posted on by Chloe Plefka

In 2021, the industry helped nearly 2 million low down payment borrowers secure mortgage financing; Texas, California, Florida, Illinois, and Ohio rank as the top states for mortgage financing with private MI.

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual report on mortgage financing supported by private MI at the national and state levels. The report finds that the industry helped more than 37 million low down payment borrowers over its 65-year history to secure mortgage financing, including nearly 2 million in 2021, according to data from the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Meanwhile, the report finds that saving for a 20% down payment could take potential homebuyers 14 years — almost three times longer to save for a 5% down payment. Texas, California, Florida, Illinois, and Ohio rank as the top five states for mortgage financing with private MI. According to Fannie Mae, private MI ranks among the lowest costs associated with homeownership, with total private MI payments representing 0.5% of lifetime homeownership costs for the average purchase borrower, plus it can be canceled after a period of time.

“Skyrocketing home prices driven by record low housing supply have made homeownership unreachable for many Americans. It is critical that affordable, sustainable low down payment mortgages are available to meet borrowers’ needs,” said Lindsey Johnson, President of USMI. “For 65 years, the private MI industry has been helping to level the homebuying playing field, providing first-time and low- to moderate-income borrowers with access to mortgage credit. Thanks to private MI nearly 2 million borrowers purchased a home or refinanced in 2021.”

Private MI facilitates access to sustainable and affordable mortgage finance credit for millions of people who have down payments smaller than 20%. The latest USMI report examines the number of borrowers served, the percentage of borrowers who were first-time buyers, average loan amounts, and average FICO credit scores. USMI also calculates the number of years to save for a 5% versus 20% down payment for each state plus the District of Columbia.

Key findings from the report include:

  • It could take 14 years on average for a household earning the national median income of $67,521 to save 20% (plus closing costs), for a $353,400 single-family home, the national median sales price.
  • The wait time decreases to five years with a 5% down payment insured mortgage — a 64% shorter wait time at the national level.
  • In 2021, the number of homeowners who qualified for a mortgage because of private MI reached nearly 2 million.
  • Nearly 60% of purchase mortgages went to first-time buyers, and more than 40% had annual incomes below $75,000. The average loan amount purchased or refinanced with private MI was $310,275.
  • The private MI industry supported approximately $585 billion in mortgage originations in 2021. Approximately 80% was for new purchases while 20 percent was for refinanced loans, resulting in approximately $1.4 trillion in outstanding mortgages with active private MI coverage at year-end.

The number of years to save for a down payment decreased in comparison to USMI’s past reports as the personal saving rate reached record highs during the first six months of 2021, as reported by the Federal Reserve. This was largely due to consumer spending decreasing, government stimulus checks, and an increase in unemployment insurance. According to a 2020 Congressional Research Service report, the “saving rate usually goes up when there’s a decline in general economic activity, but it can quickly fall back down when there are positive signs of growth.” The U.S. economy experienced this growth as businesses reopened during the second half of 2021, once the COVID-19 pandemic started to recede. As a result, personal saving rates resumed regular levels as consumers began spending more and saving less, while the economy also experienced high inflation, limiting people’s ability to save.

The below table shows the top five states where private MI was used by borrowers to purchase or refinance homes in 2021.

State Number of Borrowers Helped with Private MI First-Time Homebuyers
Texas 148,366 59%
California 134,231 72%
Florida 128,897 55%
Illinois 84,490 65%
Ohio 64,149 60%

 

Loans backed by private MI provide protection against mortgage credit risk and is structured to protect the GSEs in the conventional mortgage market. In 2021, the industry insured $1.4 trillion of mortgages, including $1.2 trillion of mortgages backed by the GSEs. Private MI has proven to be a reliable method for shielding the GSEs, having paid nearly $60 billion in claims since the 2008 financial crisis and housing market downturn.

USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers and homeowners 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 a comment letter on the Federal Housing Finance Agency’s (FHFA) Request for Input (RFI) on the GSEs’ Equitable Housing Finance Plans; and joined the Black Homeownership Collaborative in calling on 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.

The complete report is available here, along with fact sheets for all 50 states and the District of Columbia.

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

Statement: Senate Confirmation of Sandra Thompson as FHFA Director

Posted on by Chloe Plefka

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

“USMI and our member companies congratulate Sandra Thompson on her bipartisan Senate confirmation to serve as the next FHFA Director. Thompson has been serving as the agency’s Acting Director since June 2021 and understands the importance of ensuring the safety and soundness of the GSEs, Fannie Mae and Freddie Mac, and the housing finance system. We are confident that she will continue to help instill strength into the housing finance system as families face barriers to homeownership due to severely limited supply and record home price appreciation. We look forward to continuing to work closely with Director Thompson in seeking ways to establish a more collaborative, transparent, and consistent housing policy that ensures homebuyers have affordable and prudent options for low down payment mortgage finance credit while also protecting taxpayers and the U.S. government from undue risk.”

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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 Transferred Over $55 Billion in Risk on Nearly $2.8 Trillion of Active Coverage at Year-End 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 has transferred over $55 billion in risk on nearly $2.8 trillion of insurance-in-force (IIF) from 2015 through 2021. The industry’s use of MI credit risk transfer (MI-CRT) reduced volatility in the business and brought more sources of private capital to the housing finance market. MI-CRT, combined with enhanced capital standards required by the government-sponsored enterprises (GSEs) and the Federal Housing Finance Agency (FHFA), has transformed the industry from a cyclical business to a more stable, long-term manager of mortgage credit risk.

“While some housing market participants either paused or reduced their CRT activities during the past two challenging years, the private MI industry continued to execute CRT transactions,” said USMI President Lindsey Johnson. “This underscores the confidence investors and reinsurers have in the private MI industry in terms of the critical role we play in helping millions of people access affordable mortgage credit while taking a disciplined approach to writing new business.”

From 2015 through 2021, the private MI industry issued 49 insurance-linked notes (ILNs), transferring $20 billion of risk exposure on more than $2 trillion of notional mortgages to capital market investors, and completed 25 quota share (QSR) and excess of loss (XOL) reinsurance transactions, ceding $35 billion of additional risk to the global reinsurance markets. That is $55 billion of risk transferred off private mortgage insurers’ balance sheets, meaning additional capacity to support new borrowers. In 2021, the industry insured $1.4 trillion of mortgages, including $1.2 trillion of mortgages backed by the GSEs.

Johnson recently discussed MI-CRT with National MI President and CEO Adam Pollitzer.

“MI-CRT is central to how the private MI industry manages credit risk. The tools we use—insurance-linked notes offerings, excess of loss reinsurance treaties, and quota share reinsurance agreements—each serve to absorb risk and loss in stress scenarios,” said Pollitzer. “CRT enhances our counterparties’ strength, bolsters and diversifies our funding profile beyond entity-based equity capital, and allows us to write more business and support more borrowers with greater efficiency. Every dollar of risk transferred through CRT opens another dollar of mortgage volume that we can support for new borrowers.”

The private MI industry complies with a set of operational and capital standards known as the Private Mortgage Insurance Eligibility Requirements (PMIERs), which were developed and are periodically updated by the GSEs and FHFA. At the end of 2021, the private MI industry held a collective $25.3 billion qualifying PMIERs funding, which represented a 170% sufficiency ratio—holding 70% more capital than the required regulatory threshold.

“The private MI industry is better positioned today than ever before to support borrowers in need and provide private capital solutions that insulate lenders, the GSEs, and ultimately taxpayers from risk and loss in the event of an economic downturn,” said Pollitzer. “Over the last 10 years, the terms of our coverage, the regulatory framework governing our actions, our funding requirements and capital position, our underwriting standards, and the way we approach evaluating risk, pricing policies, and managing our tail exposure have all fundamentally changed. And the performance of the private MI industry through the arc of the pandemic serves as a highlight.”

The MI industry has enabled more than 37 million families to access affordable, low down payment mortgages in its 65-year history. In 2021, the industry enabled nearly 2 million borrowers to access mortgage finance credit and supported $585 billion in mortgage originations. Nearly 60 percent of these insured loans went to first-time homebuyers, over 40 percent went to borrowers with incomes below $75,000, and the average loan amount for a mortgage with private MI was approximately $310,000.

USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers and homeowners 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 a comment letter on the Federal Housing Finance Agency’s (FHFA) Request for Input (RFI) on its Equitable Housing Finance Plans; and joined the Black Homeownership Collaborative in calling on 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.

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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 Confirmation of Julia Gordon as Federal Housing Commissioner

Posted on by Chloe Plefka

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

“USMI welcomes the confirmation of Julia Gordon to serve as Federal Housing Administration (FHA) Commissioner. In Commissioner Gordon, America gains an accomplished leader with broad experience in the housing finance system, who has specialized in supporting affordable homeownership and consumer protection policies for underserved markets. Her confirmation comes at a critical time as many homeowners, renters, and residents supported by the FHA continue to experience pandemic-related hardships and families face barriers to homeownership due to severely limited supply and record home price appreciation.

“The FHA is an important piece of the housing finance system that helps provide affordable housing opportunities to moderate- and low-income borrowers, and we are confident that Commissioner Gordon will be a strong steward of the agency’s government-backed mortgage lending program. USMI and our member companies look forward to working closely with Commissioner Gordon in seeking ways to establish a more complementary, collaborative, and consistent housing policy between the conventional and FHA markets that we serve.”

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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: Departure of USMI President Lindsey Johnson

Posted on by Chloe Plefka

WASHINGTON – U.S. Mortgage Insurers (USMI) announced today that Lindsey Johnson, USMI president, will be leaving the organization in June to serve as the next president and CEO of the Consumer Banking Association.

USMI Board Chair, Derek Brummer, of Radian said:

“I am confident that I can speak on behalf of our Board of Directors and USMI member companies, when I say that Lindsey is an extraordinary professional, subject matter expert, leader and advocate. She has served as USMI’s president since 2015 and has been a tireless defender of sustainable and prudent low down payment lending and expanded homeownership opportunities for more Americans.  We thank Lindsey for her steadfast leadership at USMI and wish her tremendous success at the Consumer Banking Association.”

USMI President Lindsey Johnson said:

“Our member companies have enabled more than 10 million households to become homeowners during my tenure as USMI president. Leading USMI has been a true professional privilege and I will always appreciate being a small part of the incredible role that the private mortgage insurance industry plays in creating sustainable homeownership for so many people. I have been extremely fortunate to have the incredible leadership of the USMI Board of Directors, and to work alongside their talented and knowledgeable teams and the amazing USMI team, and it is because of them that we have made great strides in advancing many of the industry’s policy priorities. I am also grateful for the relationships that have been forged, for me and for USMI, with the professionals across the housing and mortgage finance industry and in government with whom we work. I look forward to seeing what the next chapter for USMI holds under the leadership of my successor.”

Lindsey Johnson will continue to serve as USMI president through June 6, 2022 and will work closely with the USMI Board of Directors and staff on its leadership transition planning. The USMI Board will commence a search for a new president.

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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.

Statement: Nomination of Sandra Thompson 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 Biden’s intent to nominate Sandra Thompson for Federal Housing Finance Agency (FHFA) Director:

“USMI and our member companies welcome President Biden’s nomination of Sandra Thompson to serve as the next Director of FHFA. Thompson brings decades of experience in financial regulation, risk management, and consumer protection, all of which will help ensure the safety and soundness of the GSEs, Fannie Mae and Freddie Mac, and the Federal Home Loan Banks and will help instill strength into the housing finance system.

“Since being named Acting Director of FHFA in June, Thompson has quickly demonstrated her commitment to promoting an equitable and robust conventional mortgage market that balances access to affordable and sustainable mortgage credit. Private mortgage insurers share Thompson’s objectives to achieve sustainability and affordability for borrowers, as well as enhance equitable access to all those who are mortgage ready. Once confirmed by the Senate, the MI industry looks forward to continuing to work with Thompson in her new capacity to advance these goals.”

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

Posted on by dcadmin

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

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

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

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

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

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

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

Posted on by dcadmin

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

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

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

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

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

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

Statement: FHA’s 2021 Annual Financial Report to Congress

Posted on by dcadmin

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

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

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

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

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

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

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

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

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

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

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

USMI’s full comments on the FHFA’s RFI on the Plans can be found here.

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