News Filter: Press Releases & Statements

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

Posted on by Rhina Portillo

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

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

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

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

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

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

Posted on by dcadmin

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

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

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

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

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

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

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

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

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

Statement: FHA’s Annual Report to Congress

Posted on by Rhina Portillo

Report Shows Agency’s Financial Reserves Weakening

WASHINGTON — Today, the Federal Housing Administration (FHA) released its “Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund (MMIF) Fiscal Year 2017.” The following statement can be attributed to Lindsey Johnson, USMI President and Executive Director:

“The Federal Housing Administration today released its 2017 annual report to Congress on the financial status of its MMIF. According to the report, the MMIF stands at 2.09 percent, down from 2.35 percent last year and now just slightly above the statutory requirement of 2 percent. The FHA has taken important steps in recent years to improve its financial stability after requiring a $1.7 billion government bailout in 2013 when the agency did not have the necessary capital to cover losses, though more needs to be done. With more than $1.2 trillion in mortgage credit risk, the FHA must enhance its financial strength to continue to serve the borrowers who need it the most.

“The FHA is a critical part of the housing finance system. While there have been calls to reduce FHA insurance premiums, today’s report makes clear that had this happened, the fund would be at 1.76 percent and undercapitalized. The FHA should resist calls for significant policy changes, such as reducing the cost of its insurance or cancelling the collection of insurance premiums while the FHA insurance protection remains in-force on a mortgage. This will help the agency rebuild its financial strength.

“Now is the time for the FHA to refocus on its core mission, scaling back from the oversized role it played during the recession so that it can return to serving low-to-moderate income individuals who need the FHA’s 100-percent government backed loans the most. Today borrowers have low down payment options through the conventional market backed by private mortgage insurance. Private mortgage insurers put their own capital at risk, paying more than $50 billion in claims since the financial crisis, and have all implemented new higher robust capital standards. USMI looks forward to working with Congress and the Administration to establish a coordinated and consistent housing policy so that private capital can shoulder more of the credit risk in the housing markets, while FHA and the private sector act in the marketplace together to ensure borrowers have access to safe, sustainable and affordable mortgage options. Private MI has served as a reliable and affordable credit enhancement tool for more than 25 million American families for 60 years.”

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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: House Tax Reform Legislation

Posted on by dcadmin

WASHINGTON — U.S. Mortgage Insurers (USMI) President and Executive Director Lindsey Johnson issued the following statement on H.R. 1, the “Tax Cuts and Jobs Act,” the comprehensive tax bill released by the U.S. House Ways and Means Committee yesterday:

“USMI is encouraged by efforts in Congress to simplify the current tax code for everyday Americans and to promote economic growth. Comprehensive tax reform holds the promise of allowing Americans to keep more of their hard-earned money, modernize the tax code to help working families and spur economic growth.

“The House Republican proposal represents an important start towards putting the American tax system on a more simple and sustainable path, but USMI is concerned that the current draft excludes the premiums paid by borrowers for mortgage insurance as part of the definition of ‘mortgage interest.’ Since 2007, the deductibility of mortgage insurance premiums has provided helpful tax relief for millions of middle class homeowners with low and moderate incomes. IRS data from 2015 show the mortgage insurance deduction was claimed on 4.1 million tax returns that year—the vast majority of those returns had incomes ranging between $30,000 and $100,000. This is clear evidence that this specific tax deduction should be preserved because it helps make homeownership more affordable for Americans who value and need this help the most. So long as mortgage interest remains tax deductible, as is the case in the House legislation, so too should mortgage insurance.

“We understand comprehensive tax reform is as challenging of an undertaking as it is important—and we know there are difficult choices that have to be made throughout the process. USMI supports many of the stated objectives of tax reform, but is concerned that current and prospective low- and moderate-income homebuyers will lose an important deduction that they have come to build into the cost of their mortgage. Therefore, USMI will continue to work with House and Senate leadership to ensure the final tax reform package includes this important provision aimed at helping bring down borrowing costs for responsible taxpayers who need it most.”

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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 Hearing of Brian Montgomery for FHA Commissioner

Posted on by Rhina Portillo

WASHINGTON — Lindsey Johnson, President and Executive Director of the U.S. Mortgage Insurers (USMI), today issued the following statement on the U.S. Senate Committee on Banking, Housing, & Urban Affairs’ hearing on the nomination of Brian Montgomery for Federal Housing Administration (FHA) Commissioner:

“Brian Montgomery is a respected expert and seasoned mortgage finance professional who our industry supports to serve once again as FHA Commissioner. While serving in the President George W. Bush administration, Mr. Montgomery led the FHA when the agency expanded as part of its countercyclical role during the financial crisis – a time of unprecedented market stress. As such, Brian Montgomery has the historic experience and expertise to oversee and manage the FHA’s return to its smaller, appropriate, and intended role in the market focusing on those borrowers who need the FHA’s 100% taxpayer-backed loans the most. The conventional mortgage market today is healthy and continues to prudently serve creditworthy homebuyers, including those with low down payments.

“The FHA serves an incredibly important role for many low-to-moderate income borrowers. We are confident that as FHA Commissioner, Brian 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 agree with Mr. 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, and it is encouraging to know that he believes the FHA ‘should never take the place of the private sector first-loss solution provided by private mortgage insurers.’

“While the FHA serves a very important function in the housing finance system, its footprint has expanded dramatically since the financial crisis. Now is the time to focus on ensuring that the FHA is not overexposing taxpayers to undue risk and refocus the agency on its core mission of serving borrowers who need 100% government-backed home loans. We look forward to working closely with Brian Montgomery in seeking ways to establish a more collaborative, coordinated, and consistent housing policy and to help expand private capital’s role in shouldering more risk in front of taxpayers in the housing market. For 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: Confirmation of Deputy HUD Secretary Pam Patenaude

Posted on by Rhina Portillo

WASHINGTON — Lindsey Johnson, President and Executive Director of the U.S. Mortgage Insurers (USMI), today issued the following statement on the confirmation of Pam Patenaude to be Deputy Secretary of the Department of Housing and Urban Development (HUD):

“USMI applauds the Senate for its confirmation of Pam Patenaude to be Deputy Secretary of HUD. As a longtime public servant and expert in the housing finance system, Deputy Secretary Patenaude fully understands the need for a coordinated, consistent, and transparent approach to federal housing policy across government channels.

“Deputy Secretary Patenaude’s extensive background in housing finance will allow her to immediately begin work on the most important issues facing the housing finance system. Importantly, Deputy Secretary Patenaude’s leadership in these efforts will ensure that Americans have greater access to mortgage finance credit, promote a greater role for increased private capital in mortgage finance, and reduce taxpayer risk exposure. USMI and the private mortgage insurance industry look forward to working with Deputy Secretary Patenaude going forward to establish a more equitable and robust housing finance system.”

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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: March 2017 FHFA Credit Risk Transfer Progress Report and RFI

Posted on by Rhina Portillo

The following statement can be attributed to Lindsey Johnson, USMI president and executive director:

“Private mortgage insurance is a 60-year old bedrock of the housing system that for decades has helped low down payment borrowers qualify for mortgage financing—more than 25 million borrowers to date—and has provided critical credit risk protection to the government and taxpayers through numerous housing cycles. MI works and is a reliable form of credit risk protection, as evidenced by the more than $50 billion in claims that mortgage insurers paid to the GSEs through the downturn. As FHFA states in its progress report, private mortgage insurance remains the primary form of credit enhancement used on mortgages sold to the GSEs with loan-to-value ratios over 80 percent, and in the first quarter of 2017 MI covered $48 billion of mortgages the agencies purchased.

“In the absence of comprehensive GSE reform, FHFA is rightfully exploring options in the credit risk share market through various pilots, and USMI encourages greater balance, transparency, and comparable standards among these options. The cost of credit enhancement has more than doubled for many of the back-end CRT tranches sold, which indicates price volatility continues to be present for these transactions. Our industry remains confident that greater potential benefits can be realized through front-end risk sharing, specifically as outlined in our proposal last year to explore deeper MI coverage, where even more risk is transferred away from the government before it ever touches the GSEs’ balance sheets. The vast majority (more than 97 percent based on risk in force) of CRT transactions to date have been done on the back-end, with the GSEs warehousing credit risk before transferring to the private sector. The GSEs need not carry this level of risk considering there is ample opportunity to increase or at a minimum balance the level of front-end transactions.

“We also encourage equivalent counterparty standards for other CRT transactions, similar to the stringent requirements of mortgage insurers. Doing this will ensure taxpayers are better protected. In the last two years, MIs have materially increased their claims paying ability in both good and bad economic times due to new higher capital standards under the Private Mortgage Insurance Eligibility Requirements (PMIERs).  All MIs have met or exceeded PMIERs requirements as of December 31, 2015.”

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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: Requests to Reduce FHA Mortgage Insurance Premiums

Posted on by Rhina Portillo

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USMI Statement on Requests to Reduce FHA Mortgage Insurance Premiums

WASHINGTON — Over the last couple of weeks, there have been requests, including from some trade organizations and Democratic members of Congress for the U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson to reinstate a cut scheduled under the Obama Administration to the Federal Housing Administration (FHA) mortgage insurance premiums (MIP). The following statement can be attributed to Lindsey Johnson, USMI President and Executive Director:

“Helping creditworthy homebuyers qualify for mortgage financing despite a low-down payment is good policy. It is precisely why conventional loans with private mortgage insurance (MI) and the government-backed FHA loans exist. However, reducing FHA premiums is neither necessary nor prudent at this time. Credit remains available for these borrowers in the conventional market, where the risk is backed by private capital, such as MI. A FHA premium reduction will only draw borrowers served in this market over to the FHA, where the risk is 100 percent backed by the government and taxpayers.

“The FHA has and continues to serve an important role in the housing finance system. While the financial health of the FHA has improved since the financial crisis, it is by no means in a position to have the fees it charges for the insurance it provides reduced. Taxpayers are currently exposed to more than $1 trillion in mortgage risk outstanding at the FHA. This would only increase if FHA premiums were reduced.

“Rather than reduce premiums, the FHA should continue to make the needed improvements to its financial health. Policymakers should also work to establish a more coordinated and transparent housing policy that will promote increased access to low down payment lending while at the same time decreasing the federal government’s role in housing, such as reducing or eliminating the GSEs’ loan level price adjustments (LLPAs)—a more effective and prudent means for improving access to mortgage finance credit. Further, we strongly urge against any change to FHA’s life of loan coverage. Unlike private MI, which is cancellable, FHA’s insurance coverage does not go away—thus, taxpayers are on the hook for FHA-insured mortgages for the entire life of the loan.

“Private capital can and should play a leading role in insuring low down payment mortgages so the government and taxpayers are protected from mortgage credit risk. Past FHA commissioners strongly agree with this sentiment. For over 60 years, private MI has been a time-tested and reliable way for Americans to become homeowners sooner—with more than 25 million borrowers helped to date. USMI looks forward to working with all interested parties in Congress and the housing market to ensure we create a housing finance system that protects taxpayers while also promoting homeownership throughout 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: Mortgage Bankers Association Report on Reform Recommendations for the GSEs and the Housing Finance System

Posted on by dcadmin

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USMI Statement on Mortgage Bankers Association Report on Reform Recommendations for the GSEs and the Housing Finance System

WASHINGTON — Lindsey Johnson, President and Executive Director of the U.S. Mortgage Insurers (USMI), today issued the following statement on the Mortgage Bankers Association report on reform recommendations for Fannie Mae and Freddie Mac (the GSEs) and the housing finance system:

“Today the Mortgage Bankers Association (MBA) released a thoughtful report that outlines its recommendations to reform Fannie Mae and Freddie Mac (the GSEs) and the housing finance system. The report covers many areas and USMI is particularly pleased that MBA recognizes the value of loan-level credit enhancement and the benefit of private mortgage insurance (MI). Importantly the report promotes greater use of front-end credit risk sharing, including through private mortgage insurance. The report also recognizes the important functions of private market participants such as lenders, private mortgage insurers and others, and reinforces that there should be a bright line between the functions of these private market participants in the primary market, and those of secondary market participants.  Housing finance is the last, and possibly the greatest, unfinished reform needed from the financial crisis. USMI is pleased to see MBA and other industry, trade and consumer groups provide ideas and proposals for how to reform the housing finance system and we look forward to continuing to work with MBA and others to promote reforms to the housing finance system to put more private capital in front of taxpayer risk and to create a more sustainable housing finance system that works for market participants, taxpayers and consumers.

“For 60 years, MI has provided effective credit risk protection for our nation’s mortgage finance system. This time-tested form of private capital should be the preferred method of absorbing credit loss in front of any government guaranty, helping to minimize taxpayer risk while ensuring mortgage credit remains accessible.”

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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 Ben Carson as HUD Secretary

Posted on by dcadmin

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USMI Statement on Senate Confirmation of Ben Carson as HUD Secretary

WASHINGTON — Lindsey Johnson, President and Executive Director of the U.S. Mortgage Insurers (USMI), today issued the following statement on the United States Senate confirmation of Ben Carson as Secretary of the Department of Housing and Urban Development (HUD):

“USMI congratulates Secretary Carson on his Senate confirmation to lead the U.S. Department of Housing and Urban Development, a critical federal agency that is a component of the more than $10 trillion U.S. single-family outstanding mortgage debt market. We look forward to collaborating with Secretary Carson and HUD on a comprehensive and coordinated housing policy to promote a stronger and more equitable mortgage finance system that serves American taxpayers, homebuyers and lenders.

“The U.S. mortgage insurance industry welcomes Secretary Carson’s statements that more private capital needs to be brought into the mortgage market and USMI members stand ready to do more, building on the industry’s 60-year history as an effective and time-tested source of credit loss protection. Private MI shields the government and taxpayers from mortgage-related risks in the U.S. housing market that is available during both good and bad housing market cycles.

“In the past six decades, private capital in the form of MI has helped more than 25 million families get into homes; in 2016 alone, MI helped nearly 830,000 families purchase or refinance homes – nearly 50 percent of whom were first-time homebuyers. We look forward to working with Secretary Carson and his team to continue serving American families while also reducing risk to taxpayers and the government.”

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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 Mortgage Insurance Premium Reduction

Posted on by dcadmin

WASHINGTON —The Federal Housing Administration (FHA) announced today it will reduce its mortgage insurance premiums (MIPs) by 25 basis points. In November 2016, a HUD official stated there would be no additional MIPs cuts following its annual report to Congress on the financial status of its Mutual Mortgage Insurance Fund (MMIF), which showed it had finally reached its required capital levels after nearly a decade of severe stress. The following statement can be attributed to Lindsey Johnson, USMI President and Executive Director:

“While the MMIF is making needed improvements to its financial health, now is the time to establish a more coordinated housing policy to ensure broad access to low down payment lending while reducing the government’s footprint in housing and protecting taxpayers. Arbitrary reductions to the FHA’s MIP is bad policy because it pulls borrowers who would otherwise be served by the conventional Fannie Mae and Freddie Mac market, which is backed by private mortgage insurance for first losses versus the taxpayer. Taxpayers are currently exposed to $1.3 trillion in mortgage risk outstanding at FHA. As a result, and unless Fannie Mae and Freddie Mac make commensurate fee adjustments to reflect the FHA decision, the government will likely assume increased amounts of mortgage credit risk.

“We agree with views of past FHA commissioners who contend private capital should play a leading role in guaranteeing low down payment mortgage credit risk so the government and taxpayer don’t have to. Given the wide availability of MI-backed mortgages, the FHA does not need to undercut private capital. USMI continues to believe that FHA serves a very important role, but it has expanded its footprint dramatically since the financial crisis and should instead remain focused on its core mission of serving underserved borrowers. FHA and the GSEs should be much more coordinated to promote broad sustainable homeownership.

“The last time FHA reduced its premiums in 2015, the move resulted in a high volume of FHA loan refinancing versus new mortgage origination, in essence maintaining the same borrowers and home loans while collecting less in insurance premiums. In other words, the same FHA mortgage credit risk but with less protection. This will result in a less financially resilient FHA and increased risk for taxpayers.”

For the consumer, private MI offers distinct advantages over FHA mortgage insurance. For instance, unlike FHA, private MI can be cancelled once approximately 20 percent equity is achieved either through payment or home price appreciation. This step immediately lowers the monthly mortgage for the homeowner.

Private mortgage insurers, who put their own capital at risk to mitigate mortgage credit risk, provided over $50 billion in credit risk protection since the financial crisis to the GSEs and did not take any taxpayer bailout. The market has been strengthened since the financial crisis as all MIs have all implemented significant new capital requirements, or the Private Mortgage Insurer Eligibility Requirements (PMIERs), which are stress-tested financial and capital requirements established by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency, enhancing MI’s ability to assume 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: FHA’s Annual Report to Congress

Posted on by dcadmin

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For Immediate Release             

Media Contact: Dan Knight

202-777-3544

media@usmi.org

USMI Statement on FHA’s Annual Report to Congress

WASHINGTON — Today, the Federal Housing Administration (FHA) released its “Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund (MMIF) Fiscal Year 2016.” The following statement can be attributed to Lindsey Johnson, USMI President and Executive Director:

“Consistent with improvement in the overall mortgage credit market, we welcome the news that FHA’s single-family forward program and the home equity conversion mortgage (HECM) program are combined above the statutory required 2 percent capital ratio. Now that FHA’s single-family fund has climbed its way back, this moment presents an opportunity for the new Administration and lawmakers to consider a coordinated housing policy to ensure broad access to low downpayment lending while reducing the government’s footprint in housing and protecting taxpayers.

“FHA serves an important countercyclical role in the mortgage finance system. Following the financial crisis, FHA’s insured market share grew nearly 300 percent from its pre-crisis market and remains at elevated levels today — and it has taken nearly a decade for the MMIF to recover from serving this countercyclical role. Now that FHA is back to meeting the 2 percent ratio requirement, there is also an opportunity to focus on strengthening FHA’s capital standard, which is dramatically less than what is required of FHA’s private market counterparts, to make the agency more financially resilient going forward. Changes in market conditions, or changes in the very volatile HECM program, could easily push the FHA back into the red.

“Further, this is also the time to refocus the FHA back to its core mission. Fortunately, today there is a healthy low downpayment GSE mortgage market — backed by private mortgage insurance — available to borrowers so FHA no longer needs to play an oversized role in our housing market. Private mortgage insurers put their own capital at risk to mitigate mortgage credit risk, provided over $50 billion in credit risk protection since the financial crisis to the GSEs, and did not take any taxpayer bailout. And this market has been strengthened since the financial crisis as all MIs have all implemented significant new capital requirements, or the Private Mortgage Insurer Eligibility Requirements (PMIERs), which are stress-tested financial and capital requirements established by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency, enhancing MI’s ability to assume mortgage credit risk in the future.

“The MI industry and FHA should serve complementary roles to promote broad and sustainable homeownership. To accomplish this, FHA needs to not only become more financially resilient, in line with the rest of the financial system, but also remain focused on its core mission of serving underserved communities. USMI stands ready to work with the new Administration and Congress to enhance a mortgage finance system that meets the needs of low downpayment 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.