News Filter: Press Releases & Statements

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

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

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

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

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

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

Op-Ed: Private insurance plays a critical part in home mortgage ecosystem

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By Lindsey Johnson

2/17/19

Housing finance reform remains a priority in Washington. Earlier this month, Senate Banking Committee Chairman Mike Crapo (R-Idaho) released a proposal to reform the government-sponsored enterprises, Fannie Mae and Freddie Mac.

Like many other proposals, including House Financial Services Committee Chairwoman Maxine Waters’ (D-Calif.) HOME Forward draft legislation, Chairman Crapo’s proposal recognizes the important role that private capital — and specifically private mortgage insurance — serves to facilitate homeownership for low down-payment borrowers and protect taxpayers from mortgage credit risk.

The nominee for director of the Federal Housing Finance Agency (FHFA), Mark Calabria, recently appeared before the Senate Banking Committee as part of his confirmation process. He’s an individual who appreciates the benefits that private mortgage insurance extends beyond protecting the government and taxpayers.

Private mortgage insurance remains the longest serving, time-tested way to help low down-payment borrowers qualify for home financing in the conventional market.

Our nation’s mortgage finance system is one that must balance access to credit for consumers while also shielding taxpayers. Fortunately, private mortgage insurance is uniquely and permanently dedicated to serving both objectives through all economic cycles. As such, it should remain a critical piece of any future, reformed system.

Access to affordable, low down-payment mortgages is understandably top-of-mind for many policymakers. While there is an important role for government and taxpayer-backed programs to play in the broader system, any comprehensive reform should first encourage the greater use of private capital that ensures access to affordable low down-payment mortgages in the conventional market.

Fortunately, there is generally bipartisan agreement around this principle. Facilitating this kind of mortgage lending is precisely the purpose of private mortgage insurance, which has helped more than 30 million families secure home loans over the last six decades — many of whom were first-time or middle-income homebuyers.

Last year, more than 1 million homeowners qualified to purchase or refinance their home thanks to private mortgage insurance. Of these homeowners, nearly 60 percent were first-time homebuyers and more than 40 percent had incomes below $75,000.

Congressional leaders and the Trump administration must reform the housing finance system into one that works for all Americans by protecting taxpayers while also ensuring access to affordable mortgage financing.

The Harvard Joint Center for Housing Studies projected that the U.S. would add 13.6 million households between 2015 and 2025, which means affordable low down-payment options must be part of the equation.

Mortgage insurance companies support the government-sponsored enterprises and mortgage lenders in the origination of low- to moderate- income mortgage programs that address affordable housing needs of local communities.

The private mortgage insurance industry stands ready to continue its role as the solution to enable millions of families to achieve homeownership.

A version of this op-ed originally appeared in The Hill on February 17, 2019.

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

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

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

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

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

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

Statement: On the Intent to Nominate Mark Calabria as FHFA Director

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

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

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

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

Statement: FHA’s Annual Report to Congress

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

 

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

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

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

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

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

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

Statement: FHFA’s Updates to Private Mortgage Insurers’ Eligibility Requirements (PMIERs)

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WASHINGTON — U.S. Mortgage Insurers (USMI) President Lindsey Johnson issued the following statement on the Federal Housing Finance Agency’s (FHFA) newly released changes to its Private Mortgage Insurer Eligibility Requirements (PMIERS). PMIERS are a set of requirements implemented in 2015 for private mortgage insurance companies to be approved to insure loans acquired by Fannie Mae and Freddie Mac:

“The existing robust capital and operational standards brought by PMIERS have provided exactly what Fannie Mae and Freddie Mac (the GSEs) and other market participants sought in the role of private mortgage insurers (MI)—greater confidence as permanent, dedicated sources of first loss credit risk protection and as trusted ‘second sets of eyes’ to protect long-term value in the housing finance system. PMIERs, which are the set of requirements for mortgage insurers to be approved to insure loans acquired by the GSEs, were developed after a public notice and comment period that the FHFA initiated in 2014. Since being implemented in 2015, PMIERs nearly doubled the amount of capital each mortgage insurer is required to hold, resulting in a minimum MI level of capital assets over 7 percent of risk insured. USMI member companies have maintained levels significantly over the PMIERs requirements, with each company holding millions in excess—and USMI members collectively holding nearly $2.6 billion in excess of these requirements.

“USMI members appreciate the opportunity to provide feedback to the GSEs and FHFA on proposed changes and the incremental improvements made in PMIERs 2.0. We look forward to continuing to work with the GSEs and FHFA in the future to build upon the strong credit enhancement that the mortgage insurance industry provides to protect lenders, the GSEs, and taxpayers. As publicly traded companies, private MIs have a keen interest in ensuring that the process for the development of any changes to PMIERs is transparent and that proposed changes are based on an econometric rationale that can be modeled and explained to investors, industry stakeholders and, importantly, to borrowers. Further, as the only GSE counterparties that have gone through a public notice and comment period for capital and operational requirements when PMIERs were initially developed and implemented, and that are currently transparent to all market participants and stakeholders, there should be greater consistency in the development and application of these same or equivalent capital standards for all sources of credit enhancement who take the same credit risk. This consistency will better ensure GSE counterparties are well capitalized, highly-regulated, are able to protect taxpayers through different market cycles, and will promote a more level playing field.

“PMIERs reflect that today’s MIs are highly capitalized, reliable counterparties. The MI industry provided significant protection against mortgage-related credit risk through the last financial crisis—paying more than $50 billion in claims through the downturn—before PMIERs were implemented. Today, the industry is on much better footing to further protect taxpayers during the next downturn.

“For more than 60 years, private 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 safely purchase or refinance a mortgage. Today, the MI industry is stronger than it has ever been, and the requirements under PMIERs makes the industry even better poised to protect the GSEs and American taxpayers from mortgage credit risk 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: Fannie Mae’s New Enterprise-Paid Mortgage Insurance Product

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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: U.S. Mortgage Insurers Names National MI’s Bradley Shuster As Chairman

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WASHINGTON—U.S. Mortgage Insurers (USMI) today announced that Bradley Shuster will serve as the association’s new Chairman of the Board. Shuster is the Chairman and CEO of National Mortgage Insurance Corporation (National MI) and its parent, NMI Holdings, Inc. (Nasdaq: NMIH). He succeeds Patrick Sinks, CEO of Mortgage Guaranty Insurance Corporation (MGIC). Shuster’s appointment comes at a significant time in the housing finance system, which remains at the center of national policy debates.

“The housing finance system continues to strengthen and make enhancements to safety and soundness that make it more resilient, and the private mortgage insurance industry has played a significant role in these improvements. As policymakers consider how to put the housing finance system on a sustainable, long-term path for the future, I am excited to serve as USMI’s Chairman to continue to champion the important role private mortgage insurance plays – and will continue to play – in facilitating responsible low down payment lending while protecting the government and taxpayers against mortgage credit risk,” said Shuster.

Shuster previously served as USMI’s Vice Chair. He has served as National MI’s Chairman and CEO since April 2012, and brings more than 30 years of experience in the housing finance industry to USMI’s chairmanship. He previously served in the leadership team of The PMI Group, Inc. for over a decade and was a partner at Deloitte LLP where he served as the Partner-In-Charge of the firm’s Northern California Insurance Practice and Mortgage Banking Practice. Shuster also held several consulting positions assisting private investors in the insurance industry.

“We are excited to welcome Brad as USMI’s new Chairman. His leadership and tenure in the mortgage insurance industry will be invaluable as we continue our important work of promoting homeownership and providing Americans with access to affordable and safe mortgage financing,” said Lindsey Johnson, President of USMI. “I want to also offer my profound thanks to Pat Sinks for his commitment to USMI and tireless work as Chairman for the last two years. Pat’s efforts have been vital to USMI and the mortgage insurance industry, and we are grateful that he will continue to serve on our board of directors.”

Richard Thornberry, who is the CEO of Radian Group Inc., will become Vice Chair for USMI.

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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.

Report: Texas Ranks First in U.S. for Number of Homebuyers Who Secured Home Financing Thanks to Private Mortgage Insurance

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Findings Demonstrate Important Contributions by Private Mortgage Insurance to Texas Homeownership

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing five of the six top private mortgage insurance (MI) companies in the United States, today released a report on the role of private MI in Texas. The report found that 79,030 homeowners in Texas secured a home loan with private MI in 2017, which ranks first in the nation in terms of the number of homeowners helped with MI, and breaks down low down payment mortgage lending in Texas.

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

For many Texans, the biggest hurdle in buying a home is the 20 percent down payment they think is required for mortgage approval. It would take the average Texas homebuyer 18 years to save the full 20 percent down payment for a home. MI helps bridge the down payment gap so borrowers can obtain the financing needed to purchase a home, and in doing so allows Texas homeowners to build the kind of long-term wealth that comes with having equity in a home.

According to the report’s findings, 79,030 Texas borrowers became homeowners with the help of MI in 2017. Of these homeowners:

  • 55 percent were first-time buyers
  • 737 was the average FICO score
  • $233,650 was the average loan amount with MI

The report also highlights the number of minority homebuyers, including African-Americans, Hispanics, and Asian-Americans, who have successfully purchase a home in Texas. In 2017, 613,325 total loans were made in Texas, and of that total 200,279– or nearly 33 percent – were purchased or refinanced by minority borrowers.

“Since 1957, private mortgage insurance has played a critical role in helping first-time buyers and low- to moderate-income earners in Texas achieve affordable home financing. Through this successful homeownership, families can build home equity and are able to enhance their financial stability—both of which greatly benefit Texas communities,” Johnson added. “The MI industry has been a time-tested partner for millions of Americans nationwide as they become homeowners, and we will continue to offer this important and competitive product to countless more Texans in the years to come.”

The complete report can be found here and a data fact sheet on MI in Texas is available here.

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

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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

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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.