News & Resources

On April 14, HousingWire published an op-ed by USMI President Seth Appleton titled, “PMI is good for first-time buyers and housing finance system.” Appleton outlines how private MI has enabled first-time, low- to moderate-income borrowers to secure affordable and sustainable mortgage financing since 1957 while protecting taxpayers from mortgage credit risk. He writes, “[a]t a time when the banking system is making headlines, housing finance regulators should appreciate the strength, stability and resilience of the conventional mortgage market backed by private mortgage insurance.” He adds that the average down payment for first-time buyers was 6% and they constituted more than 60% of low-down payment purchases in the conventional market in 2022. Appleton noted that “[p]olicymakers should pay close attention to the successes of private [MI] since the Great Recession and ensure the housing finance system continues to recognize its role in promoting a housing market in which access to affordable homeownership complements and promotes safety and soundness.”

On April 5, Fannie Mae and Freddie Mac released their 2023 Equitable Housing Finance Plans that build on the inaugural plans released in June 2022. The updated plans provide a progress report on actionable goals and refinements to initiatives designed to identify and address barriers to affordable and sustainable housing opportunities. Federal Housing Finance Agency (FHFA) Director Sandra Thompson reflected on the GSEs’ plans: “As we celebrate Fair Housing Month and the 55^th Anniversary of the Fair Housing Act, we are reminded that every step taken towards bringing more equity into the housing finance system is a step in the right direction.”

Last June, USMI Chairman Adolfo Marzol commended “the commitment considered in the GSEs’ [plans] toward sustainable approaches that will meaningfully address racial and ethnic disparities in the housing finance system.” Marzol added, “[a]s an industry focused on serving low down payment homebuyers, we look forward to continued collaboration with FHFA, the GSEs, and other industry stakeholders to advance policies that promote responsible access to equitable and sustainable homeownership while also supporting the GSEs’ safety and soundness.”

On March 27, the U.S. private MI industry submitted a comment letter to the SEC in response to the Re-Proposed Rule 192, outlining concerns about the potential impact it could have on mortgage insurance-linked note (MILN) transactions that are used to procure reinsurance through the capital markets. From 2015 through 2022, the private MI industry collectively issued 51 MILNs to transfer over $20.8 billion of risk exposure on nearly $2.2 trillion of notional mortgages to capital markets investors. In the letter, the industry asserts that “[a]mbiguities within the Proposed Rule could be interpreted to prohibit or limit the ability to source capital markets-based reinsurance through MILNs, which [private MI] companies and insurance regulators consider to be prudent for the risk management of the industry.” The industry urges the SEC to clarify that MILNs are not synthetic asset-backed securities or conflicted transactions within the meaning of the Proposed Rule. During an April 18 House Financial Services Committee hearing on SEC oversight with Chairman Gary Gensler, Reps. Blaine Luetkemeyer (R-MO), Scott Fitzgerald (R-WI), Young Kim (R-CA), and Ralph Norman (R-SC) noted the value of MILNs as an important capital and risk management tool to help the private MI industry facilitate access to affordable homeownership opportunities.

On March 7, Reps. Vern Buchanan (R-FL) and Jimmy Panetta (D-CA) introduced The Middle Class Mortgage Insurance Premium Act. USMI President Seth Appleton stated, “[w]e are grateful to [the sponsors] for their continued leadership on this critical legislation that would make permanent the ability of middle-class homeowners to deduct private and government MI premiums on their individual federal income tax returns, importantly restoring parity with the deductibility of mortgage interest.” He added that “[s]ince 2007, millions of homeowners have been able to claim the MI tax deduction, allowing them to save more of their hard-earned dollars. The MI tax deduction has long enjoyed bipartisan, industry, and consumer advocate support. We urge swift passage by the House and Senate.” Data through tax year 2020 shows that an average of 3.3 million homeowners have claimed the deduction annually and received an average deduction of $1,427. In aggregate, homeowners claimed more than $61 billion in MI premium deductions between 2007 and 2020.

On March 29, FHFA announced enhancements to the GSEs’ payment deferrals policies in order to promote sustainable homeownership for American families and further support the safety and soundness of the GSEs. This announcement follows FHFA’s review of loss mitigation tools offered to borrowers during the three years of the COVID-19 pandemic. FHFA Director Thompson commented that the “[GSEs] completed more than one million COVID-19 payment deferrals during the pandemic, helping borrowers nationwide to stay in their homes. Based on the success of the COVID-19 payment deferral, we are making this solution a key part of our standard loss mitigation toolkit that is available to all borrowers with eligible hardships.” Fannie Mae (Lender Letter LL-2023-4) and Freddie Mac (Servicing Bulletin 2023-8) subsequently issued guidance on eligibility criteria, performing an escrow analysis for payment deferral, determining the terms of the payment deferral, and solicitation requirements for borrowers exiting forbearance.

On March 1, Fannie Mae issued an update to its Selling Guide (SEL-2023-02) that introduced changes to property valuation policies, which underscored Fannie Mae is “moving away from implying that an appraisal is a default requirement” during the mortgage underwriting process. Fannie Mae explains its valuation modernization initiative “involves leveraging technologies, data, and analytics to enhance the management of collateral risk, making the process more efficient for lenders, borrowers, appraisers, and secondary-market investors.”

Last June, USMI issued Guardrails for Appraisal Modernization and advised that “[a]s the GSEs seek to modernize their valuation policies and technologies, it is critical there be a balance between innovation and the need for transparent standards and appropriate protections from undue risk in the housing finance system.”

On January 19, FHFA announced it would further adjust the upfront fees charged by Fannie Mae and Freddie Mac for certain loan purposes and risk attributes. This followed FHFA’s October announcement waiving upfront fees for certain borrowers, including first-time buyers. USMI applauded “FHFA and Director Thompson for taking a measured and prudent approach to identifying areas where upfront costs could be adjusted, and for many reduced, while maintaining a commitment to strong risk management.” USMI further highlighted that, overall and in aggregate, “FHFA’s review of upfront pricing in the conventional mortgage market will have a positive impact and result in savings and cost reductions for many low down payment borrowers served by private MI, particularly first-time buyers.”

On February 27, the Urban Institute published a report titled, “The FHA and the GSEs: Coordination to Increase Access to Credit.” The report followed refinements to the GSEs’ upfront pricing framework and the Federal Housing Administration’s (FHA) 30 basis point cut to the annual Mortgage Insurance Premium (MIP). The report concluded that although pricing cuts can make certain loans more attractive to homebuyers, “it’s perhaps even more important to increase the number of households that can qualify for mortgages and tap into the security and wealth-building power of homeownership.” The report mentions expanding the credit box as a tool to increase homeownership and suggests that the GSEs “could expand the number of qualifying borrowers by harnessing big data, such as bank statement data, and make this an integral part of their qualification process.”

Urban’s report echoes USMI’s longstanding support for a consistent, transparent, and coordinated approach to the federal government’s housing policy among regulators, policymakers, and other industry stakeholders to best serve homebuyers and protect the American taxpayer from undue mortgage credit risk.

On January 19, The Wall Street Journal’s “Buy Side” published an article titled, “What Is PMI?” Author Rebecca Safier notes that the median down payment for first-time homebuyers is just 7%, debunking the myth that 20% is needed to buy a home. The article touches on the other benefits of private MI, including the low cost compared to other housing fees and the ability to cancel once enough equity is built by the homeowner.