On July 31st, USMI submitted the following response to the request for comment regarding the Consumer Financial Protection Bureau’s notice of assessment of the Ability-to-Repay/Qualified Mortgage rule. USMI applauds the Bureau for undertaking an assessment of this critical rule that is aimed at enhancing lending standards and consumer protection, now that sufficient time has passed since it went into effect. As described in the letter, USMI encourages the Bureau to assess whether different QM standards across the various regulatory agencies have negatively impacted consumers. Click here to read the full letter.
Resource Filter: Letters
Letter: USMI Welcomes Effort to Increase Reliance on Private Capital In Housing Finance
USMI delivered the following letter to members of the Senate Banking Committee last night:
May 20, 2015
The Honorable Richard Shelby
Chairman
U.S. Senate Committee on Banking, Housing, and Urban Affairs
534 Dirksen Senate Office Building
Washington, DC 20510
Dear Chairman Shelby:
U.S. Mortgage Insurers (“USMI”) welcomes the effort to make progress on increasing the reliance on private capital in housing finance as part of consideration by the Senate Banking Committee of the Financial Regulatory Improvement Act of 2015.
Specifically, USMI supports Section 706, which calls on the Government Sponsored Enterprises (“GSEs”) to engage in front-end risk sharing transactions. This directive would make greater use of private capital to “de-risk” the GSEs, lower the exposure and costs for the enterprises and taxpayers and should lower costs to borrowers. USMI supports this effort, and will continue to work with the Committee during the legislative process on clarifications to ensure the legislation has the intended effect of being “transaction neutral” to permit a variety of methods of up front risk sharing, with all risk sharing counterparties held to equivalent standards.
Promotion of greater up front risk sharing will help build a strong, stable housing finance system that provides access to sustainable and affordable mortgage credit while protecting taxpayers. We look forward to favorable action on this important effort.
Sincerely,
U.S. Mortgage Insurers
cc: The Honorable Sherrod Brown, Ranking Member
All members of the Senate Banking Committee
Press Release: USMI Supports Affordable Housing Principles and Calls for Transparency in FHFA Duty to Serve Plans
USMI Supports Affordable Housing Principles and Calls for Transparency in FHFA Duty to Serve Plans
USMI submitted comments on the Federal Housing Finance Agency’s (FHFA’s) proposal for how the government sponsored housing enterprises Fannie Mae and Freddie Mac should serve underserved markets. USMI supports both principles of facilitating the financing of affordable housing for low-to-moderate income families consistent with the Enterprises’ overall public purposes while maintaining a strong financial condition and reasonable economic return. To that end, among other things USMI calls for full transparency into the economics of the Plans to ensure policy aims are met in the most efficient way available. USMI looks forward to working with MI customers, FHFA, the Enterprises, and other market stakeholders to help the Enterprises meet their “Duty to Serve” obligations. The text of the USMI comment letter 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.
Letter: Joint Letter on G-fees
USMI Joins Letter on G-fees
In letters to House and Senate Budget Committee leadership, USMI joined a broad group of more than a dozen housing organizations urging Congress to use GSE G-fees for their intended purpose, to support homeownership stability.
“By preventing g-fees to be used as a funding offset, this budget point of order gives lawmakers a vital tool to prevent homeowners from footing the bill for unrelated spending,” the letters said. “We urge you to once again include it in this year’s Budget Resolution.”
Click here for the full text of the House and Senate letters.
Comment Letter: USMI Joins Coalition on Highway Bill Funding
(November 10, 2015) In a letter to conferees on the pending highway bill, USMI joined a broad coalition of 27 housing organizations in urging conferees to draw funds from the Federal Reserve’s surplus, rather than using GSE G-fees, to pay for the extension of the Highway Trust Fund.
The full text of the letter can be found here
Letter: Opposition Builds Against Using Mortgage G-Fees to Fund Highway Bill
(September 17, 2015) This week, in a joint letter to the bipartisan Congressional leadership, USMI and a diverse coalition of thirty-two housing organizations reiterated their opposition to using the mortgage credit risk guarantee fees (g-fees) charged by the housing finance enterprises, Fannie Mae and Freddie Mac, as a source to finance extension of federal highway programs. The letter states: “increasing g-fees for other purposes… imposes an unjustified burden on the housing finance system.” “Adding an additional fee to mortgages for unrelated expenses would only increase the hurdles these families already face in achieving the American dream of homeownership”, it continues.
The full text of the letter can be found here
Letter: USMI Joins Broad Coalition Opposing Use of G-Fees To Fund Highway Bill
(July 23, 2015) This week, USMI joined a broad coalition of nine other housing groups to send a letter to Senate leadership opposing the use of the credit risk guarantee fees (g-fees) charged by the housing finance enterprises, Fannie Mae and Freddie Mac, as a source of funding for the extension of federal transportation programs. The letter states: “whenever Congress has considered using g-fees to cover the cost of programs unrelated to housing, our members have united to emphatically let Congress know that homeownership cannot, and must not, be used as the nation’s piggybank.”
The full text of the letter can be found here.
Letter: Bipartisan Senators Urge Release of Plan for Transferring Credit Risk to Private Sector
(June 10, 2015) A group of Senate Banking Committee members sent a letter today to FHFA urging them to expand and better define the development of the credit risk transfer programs at the GSEs.
The letter and press release can be found here.
Letter: USMI Welcomes Effort to Increase Reliance on Private Capital In Housing Finance
USMI delivered the following letter to members of the Senate Banking Committee last night:
The Honorable Richard Shelby
Chairman
U.S. Senate Committee on Banking, Housing, and Urban Affairs
534 Dirksen Senate Office Building
Washington, DC 20510
Dear Chairman Shelby:
U.S. Mortgage Insurers (“USMI”) welcomes the effort to make progress on increasing the reliance on private capital in housing finance as part of consideration by the Senate Banking Committee of the Financial Regulatory Improvement Act of 2015.
Specifically, USMI supports Section 706, which calls on the Government Sponsored Enterprises (“GSEs”) to engage in front-end risk sharing transactions. This directive would make greater use of private capital to “de-risk” the GSEs, lower the exposure and costs for the enterprises and taxpayers and should lower costs to borrowers. USMI supports this effort, and will continue to work with the Committee during the legislative process on clarifications to ensure the legislation has the intended effect of being “transaction neutral” to permit a variety of methods of up front risk sharing, with all risk sharing counterparties held to equivalent standards.
Promotion of greater up front risk sharing will help build a strong, stable housing finance system that provides access to sustainable and affordable mortgage credit while protecting taxpayers. We look forward to favorable action on this important effort.
Sincerely,
U.S. Mortgage Insurers
cc: The Honorable Sherrod Brown, Ranking Member
All members of the Senate Banking Committee
Letter: USMI Files Broad Tax Extender Support Letter to Congress
Today, USMI joined 586 organizations across the country in filing a letter to the United States Senate and House of Representatives, urging Congress to act in the Lame Duck session to extend seamlessly, enhance or make permanent the expired and expiring tax provisions.
Download the Letter to the U.S. House of Representatives.
Download the Letter to the U.S. Senate.
Comment Letter: FHFA Single Security
Yesterday, USMI submitted comments on the request for input from the Federal Housing Finance Agency (“FHFA”) regarding the proposed structure for a single security to be issued and guaranteed by Fannie Mae and Freddie Mac (the “GSEs”). USMI supports FHFA’s goal of maintaining a highly liquid secondary market while developing a single security, and believes that private MI will help to achieve that objective. Private MI works seamlessly with the to-be-announced (“TBA”) market today and enhances market liquidity by serving as a source of private capital. Preserving the current role of MI and expanding the use of MI as part of any transition will maximize taxpayer protection and enable an efficient and liquid market that benefits lenders, investors, taxpayers and borrowers. USMI looks forward to working with FHFA as work on this initiative progresses.
BY ELECTRONIC SUBMISSION
Federal Housing Finance Agency
Office of Strategic Initiatives Constitution Center
400 7th Street, SW
Washington, D.C. 20024
Re: Request for Input – Proposed Single Security Structure Ladies and Gentlemen:
U.S. Mortgage Insurers (“USMI”) welcomes the opportunity to submit comments on the request for input from the Federal Housing Finance Agency (“FHFA” or “Agency”) regarding the proposed structure for a single security (“Single Security”) to be issued and guaranteed by Fannie Mae and Freddie Mac (collectively, the “Enterprises”). USMI supports FHFA’s goal of maintaining a highly liquid secondary mortgage market in developing the Single Security structure and believes that potential disruptions that might arise from moving to the structure can be mitigated through the preservation of key elements of the existing to-be-announced (“TBA”) market, including the use of private mortgage insurance (“MI”) as a form of credit enhancement. A liquid, well-functioning TBA market is essential to providing single-family borrowers an affordable and accessible 30-year fixed rate mortgage, and large and small lenders alike rely on this market to securitize loans and manage risk.
As further discussed below, USMI supports FHFA’s efforts to work to implement a Single Security. In particular, we note that:
- MI works seamlessly today with the TBA market and enhances the liquidity of the market by serving as a source of private capital that enables the TBA market to operate very effectively for investors, lenders, taxpayers and, most importantly, borrowers. Also, as MI continues to expand access to homeownership, larger securitization volumes will support greater liquidity in the TBA market.
- In any transition to a Single Security structure, preserving the current role of MI and expanding the use of MI will maximize taxpayer protection from credit risk while obtaining the full liquidity potential benefit of the Single Security structure.
The TBA market, as FHFA notes in its proposal, is a cornerstone of a strong and highly liquid secondary mortgage market that benefits taxpayers, lenders, investors, and borrowers. A transition to a Single Security structure will undoubtedly produce some anxiety among stakeholders in the housing industry. Retaining the elements of the current TBA market that lenders and investors have relied upon for years, such as standard cover MI, will help ensure that such anxiety does not disrupt the housing market.
MI is an essential component of the TBA market because of the many benefits it provides taxpayers, lenders, investors, and borrowers. MI has transparent pricing and credit terms that enable participants in the housing market to make informed judgments when assessing mortgages with MI. These terms also create an additional oversight mechanism for the housing market by serving as a form of review of creditors’ and other market participants’ standards.
MI provides a source of private capital that serves to reduce the risk to taxpayers from the Enterprises’ operations by placing MI’s private capital in a first loss position and to enable the Enterprises to support low down payment mortgages with loan-to-value ratios in excess of 80 percent. Without MI, many borrowers, especially first-time homebuyers, low-to-moderate income homebuyers, and homebuyers in underserved communities, would not be able to afford the purchase of a home. MI thus ensures liquidity for a critical part of the residential mortgage market. MI companies have a demonstrated history of making credit available to low down payment borrowers through times of financial stress. Finally, MI contributes to market stability during challenging housing conditions by facilitating foreclosure prevention and loss mitigation to the extent borrowers experience financial hardship.
Earlier this year, FHFA published a draft of revised MI eligibility requirements (“PMIERs”). When finalized and implemented, the PMIERs will be a unified set of standards applicable to all MI companies seeking to do business with the Enterprises. The final PMIERs will solidify MI’s value in the U.S. housing finance system and also will help promote fungible Enterprise mortgage backed securities (“MBS”); a key step towards a Single Security structure.
The remainder of this comment letter responds to two specific questions in the Agency’s request for input.
1. What key factors regarding TBA eligibility status should be considered in the design of and transition to a Single Security?
Because of the extensive benefits of MI described above, FHFA should ensure that all legacy Enterprise MBS reflecting loans with MI remain eligible for the TBA market and that MI’s role as a form of credit enhancement is fully recognized in the analytics calculating the Enterprises’ estimated costs of providing a credit guarantee in a Single Security structure. Recognizing that not all loan level credit enhancements have the same or even similar regulatory environments, the TBA market would be well-served by ensuring that loan level credit enhancements have equivalent capital, reserve, liquidity, and leverage requirements in order to preserve the uniformity and fungibility that is in place in this sector of the market today. By fully recognizing MI in a Single Security structure, the Agency will maximize liquidity in the secondary mortgage market.
4. What can be done to ensure a smooth implementation of a Single Security with minimal risk of market disruption?
Market disruption from the transition to a Single Security framework can be mitigated by preserving the role that MI plays as a form of credit enhancement. FHFA’s implementation of a Single Security structure will require significant changes to the Enterprises’ MBS and disclosure and notice to the housing industry well in advance of the effectiveness of such changes. By refraining from making any changes to either the status or effect of MI, the Agency will leave unaltered an important component of the secondary mortgage market. This will give housing industry stakeholders certainty that, amidst many changes, MI will continue to play an important role in the Enterprises’ securitization activities.
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USMI appreciates the opportunity to comment on FHFA’s Single Security proposal. Questions or requests for further information may be directed to the co-chairs of USMI, Rohit Gupta and Adolfo Marzol, at info@usmi.org.
Sincerely,
U.S. Mortgage Insurers
Comment Letter: To FHFA on G-Fees
For Immediate Release
August 14, 2014
Media Contacts
Robert Schwartz 202-207-3665 (rschwartz@prismpublicaffairs.com)
Michael Timberlake 202-207-3637 (mtimberlake@prismpublicaffairs.com)
Full Recognition of MI Benefits Needed to Avoid Double Charging Consumers
USMI today submitted its response to the Federal Housing Finance Agency (FHFA) request for input (RFI) regarding the guarantee fees (g-fees) that Freddie Mac and Fannie Mae charge to lenders. The RFI follows FHFA’s suspension in January 2014 of proposed increases to g-fees. USMI comments focused on the following key issues:
- The g-fee framework should fully take into account MI’s risk-reducing benefits in order to minimize costs to borrowers. While the framework for calculating g-fees in the RFI is intended to price actual credit risk, USMI believes it fails to fully take into account the risk-reducing benefits of private mortgage insurance (“MI”). As a result, consumers are charged twice for the same credit risk mitigation. This disproportionately disadvantages low- and moderate-income and first time homebuyers. MI is a well accepted and well regarded form of credit enhancement that has made homeownership possible for millions of people who otherwise would not have qualified for mortgage loans. Full recognition of MI should reduce the cost of mortgages with MI, and create stronger incentives for credit risk to be served by private capital in a competitive market.
- Increased transparency of the models used to compute g-fees is needed by market participants. USMI strongly believes that there should be significantly greater transparency with respect to the models (the analytical framework, its assumptions, and its inputs) that are used for pricing and to compute g-fees because these models have an extraordinary impact on the U.S. housing market. Disclosing the specific parameters of the models used and soliciting public input regarding the parameters would be a helpful first step.
- G-fees should not be increased to attempt to “crowd in” private capital. Private label securities historically have been an unreliable source of liquidity in times of economic stress. In addition, increasing g-fees in this manner would result in increased costs to borrowers and potentially other unintended consequences. In the absence of a mandate to use g-fees to attempt to crowd in private capital, there is no justification for such increased costs or other unintended consequences. As such, FHFA should formally withdraw the proposed g-fee increases announced on December 9, 2013.
The full USMI comment letter 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.
