Author: Karl Howley
Press Release: Private Mortgage Insurers Helped Over 1 Million Low Down Payment Borrowers In 2022, Majority Were First-Time Buyers
Industry supported nearly $402 billion in mortgage originations – nearly 97% were for home purchases
WASHINGTON — U.S. Mortgage Insurers (USMI) today announced the industry helped over 1 million low down payment borrowers secure mortgage financing in 2022, according to data from the government-sponsored enterprises (GSEs). Approximately 97% of these mortgages were new purchases and first-time homebuyers represented nearly 62% of purchasers with private MI. In addition, the industry supported nearly $402 billion in mortgage originations in 2022, according to public filings. This resulted in over $1.5 trillion in outstanding mortgages with active private MI coverage at the end of 2022, underscoring the industry’s critical role in serving as the first layer of protection against credit risk in the GSE-backed conventional mortgage market.
“At a time when affordability is a paramount issue, conventional loans backed by private MI continued to make the dream of homeownership a reality for 1 million first-time, low- to moderate-income and minority borrowers,” said Seth Appleton, President of USMI. “The fact that the majority of borrowers with private MI were first-time buyers underscores the great benefits they receive from the availability of low down payment mortgages backed by private capital.”
In 2022, the private MI market also served a large number of low- to moderate-income borrowers. Nearly 35% of those that purchased or refinanced a mortgage with private MI had annual incomes below $75,000, and the average loan amount with MI was approximately $341,716, according to GSE data. The MI industry has enabled approximately 38 million people to access affordable, low down payment mortgages in its 66-year history.
Appleton recently discussed the private MI market with USMI Chairman Adolfo Marzol, who has held senior roles at the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), Fannie Mae, and Essent Group. In the interview, Marzol noted that “the MI industry has continued to be a source of financial strength in the markets, providing uninterrupted access to mortgage credit without any special interventions or actions during the sudden heightened stress we have been witnessing in other sectors of financial services. The same was true during the extraordinary financial stress that hit during the onset of COVID. MI remained available and affordable at all times.”
A key element of the industry’s ability to scale up during times of economic stress is due to its evolution to a “buy, manage, and distribute” model when it comes to risk. From 2015 through 2022, the private MI industry issued 51 insurance linked notes through the capital markets, transferring more than $20.8 billion of risk exposure on nearly $2.2 trillion of notional mortgages and completed 42 quota-share and excess of loss reinsurance transactions, ceding $47 billion of additional risk to the traditional reinsurance market. In total, nearly $68 billion of risk was transferred since 2015, providing the private MI industry additional capacity to support new borrowers.
Marzol explained, “[t]hese transactions have proven to be a durable and cost-effective source of support for the private MI industry. And the ability to use MI-linked note transactions to procure reinsurance through the capital markets has been invaluable, increasing the capacity of our industry to serve borrowers in need of low down payment financing.”
At the end of 2022, the private MI industry held nearly $11 billion of eligible assets in excess of the GSEs’ Private Mortgage Insurer Eligibility Requirements (PMIERs) capital requirements, which represented a 172% sufficiency ratio. This furthered the private MI industry’s ability to support lenders and borrowers over the past year.
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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.
Blog Post: Q&A with USMI Chairman Adolfo Marzol on the Private MI Industry’s 2022 Performance
Press Release: USMI Names Christina Brown as Vice President and Senior Counsel
USMI also promotes Brendan Kihn to Vice President of Government Relations
WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today announced that Christina Brown will serve as Vice President and Senior Counsel for the association. Prior to joining USMI, Brown worked in a senior legal role at a mid-size independent mortgage bank and on regulatory and policy matters related to residential mortgage lending and servicing for a large depository institution. Brown previously served as Acting Principal Deputy General Counsel at the U.S. Department of Housing and Urban Development (HUD).
Brown is a dedicated attorney with significant mortgage, real estate, legal, regulatory, and operations experience across law firms, the federal government, and the private sector. At HUD, she served as the primary advisor to the General Counsel and supported the Department’s senior leaders including the Secretary and Deputy Secretary. She also led multiple administrative reform efforts identified in HUD’s Housing Finance Reform Plan and collaborated with the Federal Housing Finance Agency (FHFA) and other government agencies on cross-cutting legal and regulatory issues, including legislative initiatives related to the COVID-19 National Emergency and HUD’s responsibilities under the CARES Act.
“We are thrilled to have Christina join our team and share her deep knowledge of the mortgage industry, the housing finance system, and the regulatory process to support our members as they enable access to affordable homeownership, while strengthening the safety and soundness of the housing finance system,” said Seth Appleton, President of USMI. “Christina’s background and experience in legal and regulatory matters in the federal government and private sectors provide a unique perspective that will allow us to better serve and advocate for the borrowers and taxpayers who benefit from low down payment mortgages backed by private capital.”
“I look forward to working with the private MI industry, which for over 65 years has been committed to ensuring that home-ready borrowers have access to affordable and sustainable mortgage financing while promoting safety and soundness in the housing finance industry,” said Brown. “Given my passion for housing issues and sustainable homeownership, I am honored to join USMI and the private MI industry as it plays an important role in providing low down payment options backed by private capital, which are crucial for so many borrowers who seek to reach the American Dream of homeownership while building generational wealth.”
USMI is also pleased to announce that Brendan Kihn is being promoted to Vice President of Government Relations. Kihn has worked with USMI for 7 years, previously serving as Senior Director of Government Relations. He represents the association in front of lawmakers, regulators, and housing industry stakeholders in Washington, D.C., where he aids in the development of legislative and regulatory strategies to advocate on behalf of the private MI industry on issues focused on increasing sustainable and affordable homeownership, strengthening the housing finance system, and tax policy. “During his tenure at USMI, Brendan has enabled the association to be nimble and effective on advocacy initiatives with policymakers, housing industry stakeholders, and consumer advocate organizations,” said Appleton. “Brendan’s promotion recognizes his critical role at USMI and is a reflection of the important work that he will continue to do to strengthen USMI through advocacy efforts that benefit millions of low down payment borrowers and the 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.
Letter: Joint Trade Letter to FHFA on Proposed Enterprise Regulatory Capital Framework (ERCF)
USMI joined a coalition of housing finance organizations including the American Bankers Association (ABA), Housing Policy Council (HPC), and the Independent Community Bankers of America (ICBA) in responding to one element of the Federal Housing Finance Agency’s (FHFA) Notice of Proposed Rulemaking (NPR) on enhancements to the Enterprise Regulatory Capital Framework (ERCF). The organizations raised concerns regarding the method of calculating a borrower’s representative credit score once the government-sponsored enterprises (GSEs) migrate to the bi-merge credit report requirements. The coalition recommends that loan-level GSE data from 1999 forward should be published sooner than 4Q 2023 to allow for the necessary analysis and impact assessment ahead of the proposed implementation in 1Q 2024. In addition, the organizations call for FHFA to work more closely with the industry to fully assess operational and regulatory compliance considerations for mortgage market participants, including for the notices and disclosures required under the Fair Credit Reporting Act (FCRA). Click here to read the letter.
Newsletter: April 2023
Op-Ed: PMI is good for first-time buyers and housing finance system
Letter: Mortgage Insurers Respond to SEC’s Proposed Rule 192
Letter: Statement for the Record for U.S. Senate Committee on Finance’s hearing, “Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families.”
USMI submitted a letter for the record for the U.S. Senate Committee on Finance’s March 7 hearing titled, “Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families.” USMI has long supported the tax provision allowing a deduction for MI premiums paid in connection with a mortgage on a qualified residence and commends the bipartisan work on the Middle Class Mortgage Insurance Premium Act to make the deduction permanent and expand taxpayer eligibility. Since 2007, the MI deduction has been a powerful tool in prudently promoting homeownership for low- and moderate-income (LMI) families and has been claimed over 43 million times by qualified homeowners for an aggregate $61.6 billion in tax deductions. Click here to read the letter.
Statement: The Introduction of The Middle Class Mortgage Insurance Premium Act of 2023
WASHINGTON—Seth Appleton, President of U.S. Mortgage Insurers (USMI), released the following statement on the introduction of The Middle-Class Mortgage Insurance (MI) Premium Act of 2023 sponsored by Representatives Vern Buchanan (R-FL) and Jimmy Panetta (D-CA):
“We are grateful to Representatives Buchanan and Panetta 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. Since 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.
“As affordability remains a persistent barrier to homeownership across the country, particularly for first-time homebuyers, the need for this legislation is even more urgent today than when the deduction was first enacted. Low down payment mortgages, including conventional loans with private MI, have proven critical for millions of low- and moderate-income, first-time, and minority borrowers to sustainably buy a home sooner, secure financial stability, and build intergenerational wealth.”
Borrower-paid MI premiums became tax deductible in 2007, but the deduction expired after tax year 2021. Last November, USMI joined a coalition of housing organizations in sending a letter to the House Ways and Means Committee and Senate Finance Committee urging members to make the MI premium tax deduction permanent and increase its income phaseout. 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.
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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.
