Reliability of MI

MORTGAGE INSURANCE RELIABLY TRANSFERS MORTGAGE CREDIT RISK

Borrowers who are not able to make a substantial down payment – typically 20 percent of the home value – are viewed as a higher credit risk.  In order to reduce that risk, Congress required the GSEs to obtain credit enhancement on low down payment loans – most often in the form of MI – so that private capital, and not taxpayers, is first in line to pay when there is a default-related loss.


Mi Helps Provide

 

MI Reliably Transfers Credit Risk

MI is a first layer of protection against mortgage credit losses and a time-tested method of risk sharing that has been used by the GSEs and others on low down payment loans for more than 50 years.

Mortgage Insurers (MIs) covered more than $50 billion in claims to the GSEs since conservatorship, resulting in substantial savings to taxpayers.  Throughout the financial crisis, USMI member companies never stopped paying claims, never received any bailout money from the Federal government, and continued to write new insurance.  In fact, since the crisis, MIs have paid all valid claims, with 96 percent paid in cash and the remainder due over time.

 

Snapshot of Originations from 2000-2014 Shows MI Consistently in the Market

Sample-Graphic-USMI

 

 

 

 

 

 

 

 

 

MIs have a long history of consistently offering mortgage insurance even during significant market downturns.  This makes MI very different from capital markets structures, which disappeared during the crisis and have not returned in any meaningful volume since. Going forward, MIs are even more reliable thanks to new master policies that provide enhanced contractual certainty on how and when MIs pay claims.

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