Category: Blog
Blog: Where Housing Legislation Stands in an Election Year
By Brendan Kihn, Senior Government Relations Director of USMI
As the country kicks off primary elections in the mere matter of weeks, policymakers and advocacy groups are already sizing up what can and cannot be accomplished before voters go to the polls on November 8 for the 2022 midterm election. Just over a year ago, the Democrats gained control of the White House, Senate, and House of Representatives – their first trifecta since January 2011 – and Democrats were hopeful that the party could advance a long list of policy priorities related to taxation, healthcare, and housing investments. Following the enactment of the American Rescue Plan Act, which included $10 billion in homeowners assistance and $22 billion in emergency rental assistance, and the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Deal”), Democrats turned their attention to the Build Back Better Act (BBB), which includes more than $150 billion in housing investments.
Status Update on the “Build Back Better” Agenda
Policymakers are acutely aware of the affordability challenges facing homebuyers and there is especially bipartisan support for increasing housing supply. BBB, both the specific bill and the Biden Administration’s general policy theme, represents a broad collection of policy objectives and programs which includes initiatives to promote access to homeownership, fair housing, and affordable rental opportunities. BBB’s historic investment in housing includes:
- $65 billion to preserve and rebuild public housing
- $26 billion to create and preserve affordable and accessible housing
- $24 billion for new Housing Choice Vouchers to support families struggling to afford their rent
- $10 billion in down payment assistance for first-time, first-generation homebuyers
- $500 million for a wealth-building home loan program
- $250 million increase in allocation to Federal Home Loan Bank Affordable Housing Programs (AHP)
- $100 million to increase access to small-dollar mortgages
The U.S. House of Representatives passed BBB on November 19 with a 220-113 vote only for the bill to hit a major roadblock in the Senate exactly one month later. On December 19, Sen. Joe Manchin (D-WV) announced that “[d]espite my best efforts, I cannot explain the sweeping Build Back Better Act in West Virginia and I cannot vote to move forward on this mammoth piece of legislation.” The Democrats’ razor thin majority in the Senate (50 plus Vice President Harris) creates a tenuous “working majority,” whereby a single defection or absence can make or break a piece legislation. In this case, it is crystal clear that BBB as passed by the House is dead.
2022 began with a certain degree of legislative soul searching among Democrats to strategize avenues to pass elements of BBB that can either: (1) garner bipartisan support and pass via regular order with a 60-vote threshold in the Senate; or (2) enjoy support from the entire Democratic caucus for passage via reconciliation. Democrats will face internal and external pressure to pass something in an effort to show voters that they can govern and deliver for the American people who handed them the levers of power in the 2020 election. Housing advocates remain adamant that housing investments should be included in any legislative packages that seek to advance the Biden Administration’s BBB agenda. And, while critics are concerned that BBB will “dramatically reshape our society,” there is an equally strong sentiment among others that such a “reshape” is exactly what is necessary to invest in the American people and expand economic opportunities, including access to affordable homeownership.
Expanding Access to Mortgage Finance
USMI, as articled in its “2022 Policy Priorities for Access, Affordability & Sustainability in the U.S. Housing Finance System,” has consistently supported legislative and regulatory reforms to remove barriers to homeownership and promote an equitable and sustainable housing finance system. As policymakers seek to advance equity in the housing finance system and address significant affordability issues, they must thread the needle of expanding access to homeownership without further driving up housing costs in a very tight market. The country is experiencing an alarming shortage of homes, most notably in the “starter home” segment of the market, with only 1.8 months of supply for existing homes at the end of 2021, according to the National Association of Home Builders (NAHB). This has been one of the primary drivers of strong home price appreciation which came in at 17.5 percent for 2021, according to the Federal Housing Finance Agency’s (FHFA) House Price Index (HPI). While home price appreciation is a boon for existing homeowners who rapidly build up equity that can be tapped for other financial goals, increasing house prices represent a real hurdle for families looking to attain homeownership.
Survey and reports, including USMI’s 2021 National Homeownership Market Survey, routinely identify saving for a down payment as one of the primary challenges that families face when it comes to purchasing. Recent year’s home price appreciation demonstrates the critical need to ensure continued robust access to low down payment mortgages, where borrowers can put as little as 3 percent down with private mortgage insurance (MI) and 3.5 percent down with government-backed insurance. However, for those who are unable to cobble together the funds for a 3 or 3.5 percent down payment, non-profit organizations and governmental entities throughout the country operate thousands of down payment assistance (DPA) programs designed to help these homebuyers. Policymakers have honed in on DPA as a tool to expand homeownership and legislative proposals, most notably House Finance Services Committee (HFSC) Chairwoman Waters’ (D-CA) Downpayment Toward Equity Act (H.R. 4495 / S. 2920). These proposals understand the need to focus these programs to those who need assistance most, targeting first-time, first-generation homebuyers. BBB included $10 billion for such a program and housing advocates had called for that number to be increased to $100 billion. In the wake of BBB stalling in the Senate, policymakers in the House are exploring upcoming legislative vehicles to appropriate funds for targeted DPA.
Housing Tax Provisions
Mortgage Insurance Premium Tax Deduction
At the end of 2021, various temporary tax provisions commonly referred to as “tax extenders” expired, including the deduction for MI premiums. Borrowers who are unable to put down 20 percent for their homes typically finance the purchase transaction with loans that have either private MI of government-backed MI through the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), or U.S. Department of Agriculture (USDA), and these premiums have been tax deductible for many homeowners since 2007. This deduction has been extremely beneficial for first-time, younger, and minority homebuyers who often rely on low down payment mortgages to purchase homes due to limited access to funds or intergenerational wealth for large down payments.
In December 2021, Reps. Ron Kind (D-WI) and Vern Buchanan (R-FL) introduced H.R. 6109 and earlier this month Sens. Maggie Hassan (D-NH) and Roy Blunt (R-MO) introduced S. 3590 to permanently extend the tax deduction for MI premiums and expand taxpayer eligibility by increasing the income threshold. This bipartisan, bicameral legislation would ensure that millions of homeowners continue to benefit from this tax deduction, which in 2019 amounted to an average deduction of more than $2,000.
State and Local Tax Deduction
One housing-related tax provision that has been extremely important to senators from high-cost states (which often happen to be Democratic states) is addressing the $10,000 limit on state and local tax (SALT) deductions through tax year 2025 imposed by the Tax Cuts and Jobs Act of 2017. In fact, changes to the SALT deduction are so high on the priority list for some members of Congress that they have declared “No SALT, no deal” with regard to supporting a BBB-like package. The House-passed version of BBB raised the SALT deduction cap from $10,000 to $80,000 for tax years 2021 through 2030 but, due to no chance of passage in the Senate, the cap remains unchanged. Outside of the BBB legislative process, lawmakers on both sides of the aisle have introduced standalone bills to address, in various manners, the current SALT cap, including:
- SALT Deductibility Act (R. 613 / S. 85) – repeals the temporary cap for tax years 2021 through 2025.
- SALT Fairness Act (R. 202) – repeals the temporary cap for tax years 2021 through 2025.
- SALT Deduction Fairness Act (804) – increases the cap to $20,000 for joint filers for tax years 2021 through 2025.
- SALT Fairness for Working Families Act (R. 2439) – increases the cap to $15,000 for individual filers and $30,000 for joint filers for tax years 2021 through 2025.
As Democrats look for legislative vehicles to address SALT, including upcoming spending bills and smaller packages that advance targeted portions of BBB, there is a growing sense that modifications should be tailored to help middle class Americans and not amount to a giveaway to millionaires and billionaires.
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The pressure is on for Democrats to deliver on the Build Back Better agenda that was a pillar of the 2020 Biden campaign. One month in Washington, DC is a long time and eight months can seem like an eternity, but all eyes will be on the White House and congressional Democrats’ internal negotiations to determine what housing policies, if anything, can be passed before voters head to the polls in November.
Member Spotlight: Q&A with Brad Shuster of National MI
USMI’s member spotlight series focuses on how the private mortgage insurance (MI) industry works to address several critical issues within the housing finance system, including expanding access to affordable mortgage credit for first-time and minority homebuyers, protecting taxpayers from mortgage credit risk, and recommendations on ways to reform and enhance the housing finance system to put it on a more sustainable path for the long-term.
This month we chat with Brad M. Shuster, National MI’s Founder, Executive Chairman of NMI Holdings, Inc., and Immediate Past Chairman of USMI’s Board. Founded in 2012, National MI was built to serve borrowers, mortgage lenders, and the housing industry by helping more families achieve affordable and sustainable homeownership. The company continues to implement innovative risk management strategies to ensure lenders’ confidence and help borrowers qualify for low down payment mortgages. National MI consistently demonstrates a track record of strong performance and growth while delivering innovative mortgage solutions.
Below, Mr. Shuster discusses National MI’s views on what the housing finance industry should focus on to ensure access for first-time homebuyers as home prices continue to rise and demand remains robust. He also talks about the findings of the 2021 NextGen Homebuyer Report and how demographic changes are shaping the mortgage industry.
(1) Home-price growth reached a record high in the third quarter of 2021, and demand from homebuyers remains robust despite rapidly increasing home prices. What do you think the housing finance industry should do or focus on to improve first-time homebuyers’ access to the housing market?
We are seeing more and more first-time homebuyers enter the housing market. Housing continues to remain strong and as a result, we are seeing an imbalance of supply and demand in the market, creating entry barriers to prospective homebuyers.
While strong House Price Appreciation (HPA) is great for current homeowners, it creates a moving target for those looking to transition from renting to owning. We see historically low supply, especially in the starter home segment of the market. According to the National Association of Home Builders (NAHB) there was only 2.1 months of supply for existing homes as of November 2021. And a recent National Association of REALTORS® (NAR) report said that housing affordability will be an increasingly important consideration for buyers, but with rents rising by 18.5 percent, buying may be the relatively more affordable housing option for some.
Now more than ever, there is a societal need to help qualified borrowers use private mortgage insurance to achieve the dream of homeownership affordably, responsibly and sustainably, and we take that role very seriously.
The housing finance industry should focus on educating homebuyers about all of the options available for mortgage financing. It is critical that younger, first-time and minority homebuyers – who often lack the resources or intergenerational wealth to afford a 20 percent down payment – are aware of the availability of lower down payment mortgages made possible by the support of private MI.
The industry also needs to educate potential homebuyers on the significant benefits of purchasing a home sooner with a low-down payment, rather than waiting many years to save up for a bigger down payment. Buying a home earlier means that the homeowner can begin to build equity and long-term wealth rather than waiting to enter the market.
The increase to the government-sponsored enterprises (GSEs) conforming loan limits for 2022 recently announced by the Federal Housing Finance Agency (FHFA) will also help open up the market, particularly in high-cost areas.
The private MI industry is well-positioned to help meet the needs of consumers and to drive responsible growth in the mortgage market by facilitating access to sustainable low down payment loans for millions of mortgage-ready borrowers. As part of that effort, our industry is working to raise consumers’ awareness of all mortgage financing options available.
(2) In October 2021, National MI collaborated with Cultural Outreach and the Mortgage Bankers Association (MBA) to study NextGen (ages 22-37) homebuying and economic trends. The 2021 NextGen Homebuyer Report found that this generation exhibits different spending patterns and has a lack of understanding about the homebuying process, especially around down payment and income requirements. Could you tell us more about these trends? What patterns are this generation following when it comes to buying a home? Why do you think that is the case?
National MI is committed to expanding homeownership to all segments of the market, and our work with Cultural Outreach and the MBA on the NextGen Homebuyer Report is an important step in that direction. The NextGen population is significant: it accounts for one out of every three home purchases. The report uncovers the challenges and concerns this group of consumers has about entering the housing market.
The 2021 survey revealed that many NextGen future buyers are unsure whether purchasing a home is a good investment. NextGen buyers also indicate that COVID-19 has had a significant impact on their plans to purchase a house. They perceive a lack of information on personal finance and mortgage loans, so they increasingly are performing their own research, turning to their personal networks as one source.
That provides further evidence that the mortgage finance industry needs to do more to educate the NextGen segment of potential homebuyers on what it takes to be “mortgage-ready” and about their different low down payment options. In particular, we need to dispel the myth that to purchase a home, you must have a 20 percent down payment. In fact, the report indicates that more than half of the survey respondents mistakenly believe that they need to save 20 percent for a down payment. By raising awareness of mortgage financing options available with private MI, many NextGen consumers could come to realize that that homeownership may be closer than they think.
USMI’s most recent “MI In Your State Report” provides an analysis of how long it could take for a borrower to save 20 percent compared to a 5 percent down payment. The report found that saving for a 20 percent down payment could take potential homebuyers 21 years — three times the length of time it could take to save for a 5 percent down payment with private MI. For example, for a household earning the 2019 national median income of $68,703, it would take 21 years to save 20 percent, plus closing costs, for a single-family home. That number increases to 26 years for a Hispanic household and to 32 years for a Black household. Private MI can help reduce that timeframe to seven years. That is quite a difference.
(3) National MI hosted two webinars (here and here) on what diversity means in the mortgage industry, which you presented in collaboration with Tony Thompson from the National Association of Minority Mortgage Bankers of America (NAMMBA). Can you share insights into where our industry is today and how it can leverage diversity as a competitive marketplace advantage?
The newest generation of homebuyers is more diverse than previous generations in terms of race, gender, and socioeconomic status. National MI’s training platform offers relevant educational topics to our lender customers, and part of our success has been quickly shifting and refreshing what we offer to address an evolving set of customer needs. Since the data increasingly shows mortgage consumers are young and diverse, the mortgage industry needs to catch up to the new marketplace, especially in gaining skills and seeking guidance in media and training resources to reach the growing market of new homebuyers. Collaborating with industry partners such as NAMMBA enables us to move the conversation forward.
It is also important that companies take steps to make sure their workforces reflect the diversity in the population of homebuyers. When making one of the biggest financial decisions of their lives, consumers may feel more comfortable working with people who look like them and have a similar culture and background.
Still, the real estate finance industry has made great strides to promote diversity, equity and inclusion (DEI). At National MI, DEI is one of our core values and has always been a part of our company culture. Our efforts to further diversity, equity and inclusion guide us both internally and externally as we work to partner with diverse customers, clients and vendors by providing innovative products and value-driven services.
Brad M. Shuster’s Biography
Brad M. Shuster has served as Executive Chairman of the Board of NMI Holdings, Inc. since January 2019. He founded National MI in 2012 and served as Chairman and Chief Executive Officer of the company from 2012 to 2018.
Prior to founding National MI, Mr. Shuster was a senior executive with The PMI Group, Inc., where he served as President of International and Strategic Investments and Chief Executive Officer of PMI Capital Corporation. Before joining PMI in 1995, he was a partner at Deloitte LLP, where he served as partner-in-charge of Deloitte’s Northern California Insurance and Mortgage Banking practices.
Mr. Shuster holds a B.S. from The University of California, Berkeley and an MBA from The University of California, Los Angeles. He has received both CPA and CFA certifications.
Blog: Addressing the Increasing Costs of Homeownership
Buying a home is the largest single investment most Americans will make, but during the last few years, that dream has become increasingly unreachable for a significant portion of the population as the housing market experiences strong home price appreciation (HPA) and historically low levels of supply. A recent Wall Street Journal article reported on this rising home price trend, outlining how mortgage payments can become unaffordable as a result. According to the Federal Reserve Bank of Atlanta, the median American household would need 32.1 percent of its income to cover mortgage payments on a median-priced home – the most since November 2008, when the same outlays would require 34.2 percent of income. Moreover, the Federal Housing Finance Agency’s (FHFA) 2021 Q3 House Price Index (HPI®) report indicates that house prices were up 4.2 percent compared to the second quarter of 2021, but the real surprise comes when you look over the one year period during which home prices climbed 18.5 percent.
With this in mind, it is no surprise that an increasing number of consumers (64 percent) believe it is a bad time for buying a home, according to Fannie Mae’s latest Home Purchase Sentiment Index (HPSI®). This is a dramatic change from a year ago when that rate stood at only 35 percent, a change driven by consumers’ sentiments that home prices (plurality at 45 percent) and mortgage rates (majority at 58 percent) will increase over the next 12 months.
This entire situation only serves to push the goal of owning a home further out of reach for many prospective first-time, minority, and low- to moderate-income (LMI) homebuyers. In addition, there are other fees and charges that potential homebuyers could incur, increasing the cost of homeownership for creditworthy borrowers throughout the country. In fact, USMI’s 2021 National Homeownership Market Survey, which polled 1,000 adults in the U.S., found that 60 percent of respondents believe minorities face added homebuying costs because they tend to have lower credit and higher debt.
Moreover, when asked about the priorities and reforms the housing finance industry should focus on, over 60 percent of respondents believe that reducing costs for low down payment homebuyers is the most important item for the home buying process, and 37 percent support cutting hidden costs on mortgages. Other issues respondents conveyed include:
- Nearly 70 percent of respondents ranked the lack of affordable housing as the number one housing challenge and almost 60 percent stated that low housing supply is another top issue.
- 61 percent of respondents want to eliminate added costs for low down payment homebuyers and 56 percent of respondents specifically support ending Loan-Level Price Adjustments (LLPAs), 2008-crisis era fees that disproportionately affect minority and first-time homebuyers.
- 55 percent of respondents noted the importance of access to low down payment mortgages and the value of mortgage insurance (MI) to help borrowers qualify for mortgage financing.
- 57 percent think credit scores need some or significant reform, driven by respondents’ view that credit score is the underwriting element that most impacts mortgage costs.
Many of the “hidden costs” that borrowers reference when purchasing a mortgage are not really “hidden,” but instead are costs that they may not have anticipated incurring as part of closing the loan. Last week, Fannie Mae released a report titled, “Barriers to Entry: Closing Costs for First-Time and Low-Income Homebuyers,” which finds “[i]n a sample of approximately 1.1 million conventional home purchase loans acquired by Fannie Mae in 2020, median closing costs as a percent of home purchase price were 13 [percent] higher for low-income first-time homebuyers than for all homebuyers, and 19 [percent] higher than for non-low-income repeat homebuyers.” The report also finds that “Black and white Hispanic low-income first-time homebuyers on average paid higher closing costs relative to purchase price than their white non-Hispanic or Asian counterparts […] For some low-income first-time homebuyers, closing costs can be particularly onerous.” Fannie Mae found that some of these “homebuyers had closing costs equal to or exceeding their down payment.”
The FHFA released an Equitable Housing Finance Plans Request for Input (RFI) in September 2021, and the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, are required to submit Equitable Housing Finance Plans to FHFA by December 31, 2021. The plans will be in effect on January 1, 2022. USMI submitted its comment to the RFI in October. Given the private MI industry is one of the only forms of private capital available through market cycles and whose core business is focused on helping people without large down payments achieve affordable and sustainable homeownership, private MIs share the FHFA and GSEs’ view that the two pillars of good mortgage lending are sustainability and affordability. The goal should be a strong housing finance system that ensures equitable access to all mortgage-ready borrowers. USMI strongly supports efforts to remove barriers to homeownership and increase access and affordability, including for historically underserved households, while instilling sustainability for these same borrowers. The MI industry welcomes the opportunity to work with the FHFA, the GSEs, and other housing finance stakeholders to advance these goals.
Member Spotlight: Q&A with Mark Casale of Essent
USMI’s member spotlight series focuses on how the private mortgage insurance (MI) industry works to address several critical issues within the housing finance system, including expanding access to affordable mortgage credit for first-time and minority homebuyers, protecting taxpayers from mortgage credit risk, and recommendations on ways to reform and enhance the housing finance system to put it on a more sustainable path for the long-term.
This month we chat with Mark A. Casale, Chairman, President and CEO at Essent Guaranty, and Vice Chairman of USMI’s board. Essent, founded in 2008, offers private MI for single-family mortgage loans in the United States, providing private capital to mitigate mortgage credit risk for lenders and investors, allowing lenders to make additional mortgage financing available to prospective homeowners. To better execute Essent’s core purpose to ensure borrowers have access to sustainable mortgage credit, Essent remains focused on managing mortgage credit risk, enhancing the business model of the private MI industry, and strengthening private MIs as counterparties to the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, lenders, and other stakeholders.
Below, Casale discusses Essent’s views on the housing market as we come out of the COVID-19 pandemic, the continued evolution of the private MI industry and the role of innovation, and how this evolution will better serve borrowers and the housing finance system.
(1) Given the importance of low-down payment financing in the housing finance system and considering the competitive real estate market, what steps do you think the industry should take in the next year or two to better serve first-time buyers?
The 2021 housing environment has been strong as low interest rates continue to boost refinance and purchase market activity. However, a meaningful lack of housing supply has impacted affordability.
Millennials ―around 80 million strong― continue to contribute to the favorable demand dynamics. Driven by significant life events such as marriage and children, an increasing number of millennials are forming households, and continuing to provide strength to first-time homebuyer demand.
Millennials, and especially Hispanics, which represent 20 percent of this important segment of our population, are projected to be the dominant population and primary drivers of new homeownership for years to come; and we can already see the significant impact they are having on the real estate market and demand for housing.
Given this context, as more millennial homebuyers enter the market, it will be critical for the industry to improve consumer access to affordable credit, especially to first-time, younger and minority homebuyers, who may not have the resources or intergenerational wealth to afford the standard 20 percent down. Private MI companies are an important supporter of affordable, low down payment mortgages, helping more homebuyers get into homes and on a path to building the long-term wealth associated with homeownership.
(2) Private MI has provided credit risk protection to lenders and the GSEs for nearly 65 years, but our industry has also evolved to become stronger and more resilient. How does Essent describe its approach to risk management and credit risk transfer (CRT)?
Risk management has always been a key tenet for mortgage insurers because of the nature of our business of taking first loss credit risk on high loan to value loans. Post the Great Financial Crisis, risk management continues to evolve through new data sources, enhanced analytic tools and techniques, as well as the importance of quality control of the loan manufacturing process.
The ability to transfer credit risk to third parties in CRT transactions is an integral component of risk management for MI companies. The industry traditionally relied on reinsurance transactions and has completed over 30 transactions reducing loss exposure and making more capital available to support additional lending. Innovative leadership by the GSEs and the Federal Housing Finance Agency (FHFA) in the CRT market helped create a broader credit risk transfer market for mortgage insurers through the advent of Insurance Linked Notes (ILN). The MIs began utilizing ILN transactions beginning in 2015 and ILNs have since become a programmatic execution for MIs as a risk management hedging tool and a reliable source of capital. The industry has completed over 43 ILN transactions to date. The MI industry has transferred over $50 billion of risk in force via CRT.
CRT has transformed Essent and our industry from an old business model of “Buy and Hold” risk to a new business model of “Buy, Manage and Distribute” risk. We have approximately 85 percent of our $200+ billion insurance portfolio hedged via CRT as of 2021Q2. This model will make Essent, and our industry, more resilient during times of crisis, enhancing our ability to insure loans during all cycles while serving as strong counterparties to our customers and the GSEs.
(3) How will MI need to innovate and evolve as an industry in order to ensure future generations have access to affordable housing?
A competitive mortgage insurance industry backed by private capital serves the housing finance system very well. Today, over $1.3 trillion of mortgages are financed by loans with private MI. However, mortgage insurers have and will continue to evolve, particularly as technology enables key connection points with loan origination systems and our lenders. In the past 2 years, more refined risk assessment and pricing of risk has been an important evolution in the MI space. Currently, over 95 percent of lenders now get MI quotes from a proprietary risk-based pricing engine vs a legacy rate card. Essent expects more granular risk assessment and pricing to continue to improve by prudently leveraging machine learning and artificial intelligence with existing and new sources of data. We believe these approaches enable us to more accurately assess the risk of the loan and make more affordable credit available to borrowers that traditional approaches might have turned away. Fannie Mae recently announced a change to include rental payment history in Desktop Underwriter, a great demonstration of how incremental data can assist in improving the overall risk assessment of a transaction.
We strongly believe that the inclusion of more data to evaluate loans will be a differentiator that expands access to credit for qualified borrowers and delivers the best MI price available to prospective homeowners. These types of innovations align with FHFA’s stated goals of improving access and affordability as well as reducing racial inequality in homeownership. The MI industry will continue to be a valuable business partner to lenders and the GSEs in improving access and maintaining responsible lending standards so that our housing finance system provides sustainable homeownership.
Mark A. Casale’s Biography
Mark A. Casale is the founder, Chief Executive Officer and Chairman of the Board of Directors of Essent Group Ltd. (NYSE: ESNT). Mr. Casale has more than 25 years of financial services experience, which includes senior roles in mortgage banking, mortgage insurance, bond insurance and capital markets.
Founded in 2008 by Mr. Casale with $500 million of equity funding, Essent Group Ltd. has grown to a market capitalization of approximately $5 billion and manages more than $200 billion of insurance in force. Under Mr. Casale’s leadership, Essent has become a leading mortgage insurer and reinsurer serving as a trusted and strong counterparty to lenders and GSEs and has enabled over two million borrowers to become homeowners. Mr. Casale continues to evolve the franchise using risk-based pricing and AI-driven analytics to support his core mission of prudently growing shareholder value and promoting affordable and sustainable homeownership.
Mr. Casale also champions Essent’s philanthropic mission, supporting local and national organizations centered around children, housing, health, and education. He currently serves as a member of the Board of Trustees for St. Joseph’s University, La Salle College High School, and the Academy of Notre Dame de Namur.
A native of the Philadelphia region, Mr. Casale holds a BS in accounting from St. Joseph’s University and an MBA in finance from New York University.
Blog: Hispanic Homeownership: How Hispanic Population Growth Helps Drive the Homeownership Market
Hispanic homeownership has grown for six consecutive years, even during the COVID-19 pandemic. Sustainably increasing homeownership access through policy tools such as low down payment lending can help bridge the homeownership gap
September 15 marks the beginning of Hispanic Heritage Month, and it is an opportunity to recognize the significant contributions and influence of Hispanic Americans to the history, culture, and achievements of the United States. It is also a moment to reflect on Hispanic homeownership in America. In particular, over the last few years, the Hispanic population has been a key component of the growth in homeownership in the U.S., and it is projected to be the demographic group leading this segment of the industry for the next four decades.
According to the 2020 U.S. Census Bureau report, over the next 40 years Hispanics will be the primary contributors to the U.S. population growth, accounting for 68 percent between now and 2060. The Urban Institute also projects that from 2020 to 2040, most net new homeowners will be Hispanics – estimating that of the 6.9 million new homeowner households, 70 percent will be Hispanic. These figures speak to the importance of this demographic group to our nation and the impact they will have on mortgage markets and the face of homeownership over the next few decades.
Hispanic population growth is also a significant reason to be focused on the barriers to homeownership for all minorities. Economic barriers and housing supply challenges for this population continue to keep homeownership out of reach for many of these potential homeowners. The income gap between Hispanics and non-Hispanic Whites remains steep, with non-Hispanic White households having a median income 26 percent higher than that of Hispanic households. In 2019, the median Hispanic household income was $56,113 (U.S. Census Bureau). Additionally, according to the National Association of Hispanic Real Estate Professional’s (NAHREP) 2020 State of Hispanic Homeownership Report, Hispanics also tend to have higher debt-to-income (DTI) ratios and lower credit scores, and given the youth in the Hispanic community, first-time homebuyers drive Hispanic homeownership gains. In 2019, 56 percent of Hispanic homeowners indicated that they were living in the first home they had ever owned, as reported by the U.S. Census Bureau’s 2019 American Housing Survey. Therefore, Hispanic homebuyers are an important demographic served by low down payment mortgage products, which benefit first-time and low- to moderate-income homebuyers primarily by bridging the down payment gap.
USMI’s 2021 National Homeownership Market Survey, which polled 1,000 adults in the U.S., including an oversample of Hispanics, found that 67 percent of Hispanics consider owning a home as “very important.” Further, the survey found that 53 percent of Hispanic respondents reported having experienced housing problems during the COVID-19 pandemic, with the primary cited concerns including evictions and falling behind rent or mortgage payments.
Among the obstacles Hispanics face, 66 percent indicated that the lack of affordable homes is the biggest housing-related issue. Additionally, 20 percent said that one of the biggest challenges they face when buying a home is the inability to afford a 20 percent down payment, as monthly housing costs consume a large amount of Hispanics’ income – nearly 60 percent said they spend 30+ percent of their monthly household income on housing. Lastly, 65 percent of Hispanics suggested there is socioeconomic bias in the homebuying process, with the survey finding that lower levels of income, lack of intergenerational wealth for down payments, and difficulties in the credit scoring system are the most significant barriers for increasing minority homeownership in the U.S.
However, while these barriers were cited, 90 percent of Hispanics also conveyed that they felt treated fairly during the mortgage process. Nonetheless, myths and misinformation persist around this demographic. By a nearly 3 to 1 ratio compared to White respondents, Hispanics believe the mortgage approval process is not affordable, and stated that they do not fully understand down payment requirements. In fact, 45 percent mistakenly believe a 20+ percent down payment is required, and another 21 percent report they do not know what amount of a down payment is required. In reality, private mortgage insurance (MI) enables homebuyers to purchase homes with down payments as low as 3 percent.
These figures and projections make very clear that as the Hispanic population rapidly grows and has a significant impact on the housing market, policymakers must not lose sight of addressing both near term market challenges, such as the significant lack of affordable homes for purchase or rent, as well as longer-term systemic issues that unnecessarily increase costs or create barriers for minority and lower income homebuyers. Notably, despite having been acutely impacted by the COVID-19 pandemic, Hispanic Americans are the only demographic group to have increased their homeownership rate for six consecutive years (including 2020) according to NAHREP. Removing barriers to minority homeownership will enable even more Hispanic households to benefit from sustainable homeownership in the decades to come.
Private MI enhances the ability of minority and lower income homebuyers to borrow in an affordable and sustainable way, enabling them to achieve housing stability and build wealth—and realize the American Dream. In 2020, nearly 60 percent of borrowers served by private MI were first-time homebuyers and more than 40 percent were borrowers with incomes below $75,000. In fact, USMI’s national survey found that consumers view MI as an important piece of the homeownership puzzle, leveling the playing field by helping low- to moderate-income and first-time homebuyers access home financing.
As we celebrate Hispanic Heritage Month, we are committed to supporting sound and prudent policies that help expand homeownership.
See here for a Spanish version of this blog post.
Blog: Affordability and Supply Among Top Homebuying Challenges
The lack of affordable housing continues to be a focal point for the mortgage finance community as low- to-moderate income (LMI) and first-time homebuyers continue to report challenges in buying starter homes. In fact, today, the Federal Housing Finance Agency (FHFA) released its Home Price Index and reported that home prices were up 1.7 percent in May, and up an astonishing 18 percent year over year. This significant home price appreciation is largely driven by the lack of housing supply in today’s market and is impacting borrowers’ access to homeownership across the country. Therefore, it is no surprise this topic has become an elevated policy concern, as the “underbuilt” gap has dramatically increased over the last decade, and between 2018 and 2020, the housing stock deficit increased by more than 50 percent according to a recent Freddie Mac report.
The National Association of REALTORS® (NAR) recently released a report that highlights the dire housing supply situation our nation currently faces. “The state of America’s housing stock […] is dire, with a chronic shortage of affordable and available homes [needed to support] the nation’s population,” and adds that “[a] severe lack of new construction and prolonged underinvestment [have led] to an acute shortage of available housing […] to the detriment of the health of the public and the economy.” In addition to finding an underbuilt gap of 5.5 to 6.8 million housing units since 2001, the report notes that unbuilt single-family homes account for 2 million of those units. This shortage of available and affordable homes, coupled with a robust demand, is fueling the rise of housing prices for potential homebuyers, putting the goal of homeownership further out of reach. NAR’s Chief Economist Lawrence Yun stated in the report, “[t]here is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream.” In late June, USMI released its 2021 National Homeownership Market Survey, fielded by ClearPath Strategies among 1,000 U.S. adults in the general population, which found that Americans understand the importance of owning a home: more than 7 in 10 respondents see this as important for stability and financial security.
USMI, in representing a sector of the industry that is dedicated to facilitating affordable low down payment lending and promoting sustainable homeownership, explored this topic in our recent survey, which found that lack of affordable housing and low supply of housing ranked among the top homebuying challenges. In fact, nearly 7 in 10 respondents ranked the lack of affordable housing as the number one housing challenge and nearly 6 in 10 stated that low housing supply is another top issue. These issues were more acute among minority and lower income homebuyers as 20 percent of African American and 19 percent of Hispanic respondents note their inability to afford a down payment. Further, more than half of African Americans (59 percent) and Hispanics (57 percent) reported spending over 30 percent of their monthly income on housing, the threshold for a household to be considered “housing-cost burdened.” The complete findings from USMI’s national survey are available here.
These challenges are front and center of the nation’s housing agencies, FHFA and the Federal Housing Administration (FHA). Last month, President Biden appointed Sandra L. Thompson as FHFA’s Acting Director, having previously served as the Deputy Director of the Division of Housing Mission and Goals since 2013. In her accepting remarks, Thompson stated that “[t]here is a widespread lack of affordable housing and access to credit, especially in communities of color,” adding that “[i]t is FHFA’s duty through our regulated entities to ensure that all Americans have equal access to safe, decent, and affordable housing.” President Biden also recently nominated Julia Gordon to be the Assistant Secretary for Housing and FHA Commissioner.
USMI continues to urge policymakers and the housing finance industry to focus on addressing this historic shortage of affordable homes to help balance housing prices and ensure access to homeownership. In a letter directed to the Department of Housing and Urban Development (HUD) Secretary Marcia Fudge, USMI urged HUD to avoid policies that would stoke more demand in the marketplace without addressing the supply issues, as not doing so will only worsen the affordability challenges. And while addressing supply and the shortage of affordable homes is imperative, policymakers must also not lose sight of addressing the issues that unnecessarily increase costs or create barriers for minority and lower income homebuyers. Importantly, expanding homeownership opportunities for these borrowers does not have to be at the expense of reforms made over the last decade that have strengthened the system to reduce risk, protect borrowers, and avoid another housing market collapse.
We appreciate that policymakers recognize the role of low down payment mortgage options in facilitating homeownership. USMI’s survey found that consumers view mortgage insurance (MI) as an important piece of the homeownership puzzle, specifically because MI levels the playing field by helping LMI and first-time buyers access home financing. In fact, 73 percent of all respondents view MI as needed and positive to obtaining homeownership, and nearly 70 percent of respondents citing that it is important to have access to these low down payment loans through both the conventional market backed by private MI and government-backed loans through FHA.
Member Spotlight: Q&A with Rohit Gupta of Enact
USMI’s member spotlight series focuses on how the private mortgage insurance (MI) industry works to address several critical issues within the housing finance system, including expanding access to affordable mortgage credit for first-time and minority homebuyers, protecting taxpayers from risk in the mortgage finance system, and providing recommendations on ways to reform the system to put it on a more sustainable path for the long-term.
This month we chat with Rohit Gupta, President and CEO at Enact. Enact, previously known as Genworth Mortgage Insurance, is an operating segment of Genworth Financial that has provided MI products and services in the U.S. since 1981. Enact operates across all 50 states and the District of Columbia, working with lenders and other partners to help people responsibly achieve and maintain the dream of homeownership by ensuring the broad availability of affordable low down payment mortgage loans.
Gupta talks about the company’s new brand and how it is better positioned to serve low down payment borrowers and the first-time homebuyer market. He also discusses the housing supply and what the U.S. government can do to help increase homeownership.
(1) Your company recently changed its name yet remains committed to helping families across the country either purchase a home or refinance existing mortgages to lower interest rates. Can you speak to the important role that Enact and private mortgage insurance plays in the housing finance system?
You are absolutely correct! We did change our name to Enact, and along with our lending partners, we remain committed to helping more low down payment borrowers safely and affordably achieve the dream of homeownership. Over the years, we have built upon our trusted reputation for quality service, in-depth understanding of our customers’ business, best-in-class underwriting, and risk and capital management expertise through multiple housing cycles.
Private mortgage insurance (PMI) is imperative in order for borrowers with low down-payments to have access to home mortgage financing options. Our Chief Economist Tian Liu’s annual First-Time Homebuyer Market Report highlights how the housing finance system continued to perform well during the fourth quarter of 2020, as the PMI industry ensured access to credit for first-time homebuyers. Credit availability for potential first-time homebuyers can be especially vulnerable given this segment of the market relies heavily on low down payment mortgages. For the full year (2020), low down payment conventional mortgages backed by PMI financed approximately 900,000 first-time homebuyers, that’s a 25% increase from 2019. Even in the midst of the global COVID-19 pandemic, the mortgage industry quickly and successfully shifted a large number of employees from the office to working from home by leveraging technology. This ensured that qualified borrowers could continue accessing credit, while maintaining social distancing protocols.
(2) Please tell us about your quarterly first-time homebuyer market report. Your last report highlighted how 2020 was an unprecedented year, resulting in a record number of first-time homebuyers. Why do you believe this was the case? And what should the industry continue to do or improve to keep first-time homebuyers accessing the housing market?
Our quarterly first-time homebuyer market report provides comprehensive coverage for the first-time homebuyer market, covering conventional, Federal Housing Administration (FHA), VA, USDA as well as the non-agency market. 2020 was a unique year because a number of factors came together – single-family homes became our office, children’s classroom, family’s restaurant, movie theater, and gym. Even as we start to see light at the end of the tunnel, homes will likely take on a bigger role for many people, making them more valuable to potential buyers.
Demographically, we’re also seeing the peak demand from the Millennial generation, the largest cohort in history. Cyclically, interest rates are at record-low levels, which supports housing affordability. Last year, the industry was instrumental in helping borrowers and lenders cope with record demand when shelter and safety were more important than ever for people, and we should continue to rely on technology and data to help potential first-time homebuyers. Our product makes a low down-payment possible, and today serves more first-time homebuyers than any other low down-payment mortgages. I believe that is something the industry should continue focusing on and sharing with the mortgage industry.
(3) The record-low housing supply is consistently increasing home prices. How is this affecting borrowers’ ability to purchase a home?
Today, rising home prices and the lack of inventory are major hurdles for homebuyers. Our industry has limited ability to influence housing supply, but we do and can play a role in making the down payment more affordable through our product. Also, we play an important role in educating borrowers on becoming responsible homeowners and lenders on our products to help their borrowers. Finally, we play an important role in keeping the mortgage origination and servicing process efficient, thereby lowering the cost to borrowers.
(4) Do you think this first-time homebuyer trend could persist? If so, why? And if not, what can the industry stakeholders and government do to ensure future generations can obtain the American Dream of buying a home?
I am optimistic about the first-time homebuyer trend because of its close relationship to homeownership. The COVID-19 pandemic has made homes and homeownership more important than ever. Even though demand continues to outpace supply, supply has been expanding. Housing starts have been over the 1.5-million-unit pace (the historical average) in seven of the past eight months. It will take some time for supply to catch up to demand, but I am confident that the housing industry will be able to deliver.
Rohit Gupta’s Biography
Rohit Gupta, President and CEO of Enact, is passionate about helping more people responsibly achieve and maintain the dream of homeownership. Rohit works with lenders, regulators, and policy leaders to advocate for the value of mortgage insurance to a sustainable housing finance system.
Along with his advocacy, Rohit served as chairman and remains a Board member of the U.S. Mortgage Insurers trade association. He also serves on the Boards of the Mortgage Bankers Association Residential Board of Governors and Housing Policy Executive Council. Additionally, Rohit is a catalyst for community change and serves as the chair of the Genworth Foundation Board, and a board member of American Cancer Society Triangle Leadership Council, and Pratham USA.
Prior to being named CEO, Rohit held the positions of Chief Commercial Officer & Senior Vice President of Products, Intelligence and Strategy, as well as Vice President – Commercial Operations. Rohit has an MBA in Finance from University of Illinois at Urbana Champaign and an undergraduate degree in Computer Science & Technology from Indian Institute of Technology. He resides in Raleigh, North Carolina with his wife and two children.
Blog: Washington Focuses on Infrastructure and Equity with an Eye Toward Homeownership
At the midpoint of the first session of the 117th Congress, policymakers are shifting their focus from the COVID-19 recovery to other priorities on the horizon, chiefly infrastructure, and proposed changes to the tax code to fund investments.
Congressional Democrats are rallying around President Biden’s infrastructure proposals, the American Jobs Plan and American Families Plan, which take a holistic view of infrastructure by including traditional infrastructure projects like roads, bridges, railways, and housing as well as non-traditional infrastructure concepts like universal preschool and childcare. Specifically, Democrats are championing housing policies intended to promote equitable communities and give traditionally underserved Americans a stake in those communities. This includes increasing access to homeownership and wealth-building opportunities.
While both parties agree on the need to upgrade the nation’s roads and bridges, and increase broadband access, Republicans and some Democrats have expressed concerns about the expansive scope of the proposed infrastructure projects, along with certain “pay for” provisions.
Housing and Homeownership in America
There is also growing bipartisan attention to the state of housing in the U.S. Even while a record number of first-time homebuyers entered the market in 2020, longstanding concerns about housing access and affordability have been amplified due to rapidly rising home prices. While homeowners have experienced significant equity gains over the past several years, including nearly 11 percent in 2020, strong home price appreciation (HPA) and severely limited supply has locked some borrowers out of the market. This situation has raised concerns from both Republicans and Democrats, as some of the strongest HPA has occurred in rural states.
These trends have garnered nationwide attention as the effects of COVID-19 reinforced the importance of stable housing, and the value of homeownership and wealth building among Americans. Simultaneously, Millennials aspire to enter the home purchase market in larger numbers. Today, interest rates are low but as interest in homeownership has risen among first-time buyers, so has its cost. Additionally, in a tight purchase market, affordability—and the 20 percent down payment that 45 percent of Americans believe is required to obtain a mortgage, as reported in USMI’s 2021 National Homeownership Market Survey—is farther out of reach, particularly for those who do not have intergenerational wealth or equity from a previous/current home.
Not only policymakers are eyeing solutions to these challenges. As employers look to attract and retain younger workers, some companies have introduced innovative ways to help employees bridge the down payment gap, or other ways to sustainably increase housing affordability. Redwood Trust has introduced a benefit—the Redwood Employee Home Access Program—that covers the cost of mortgage insurance (MI) for employees. When the program launched in April 2021, Redwood CEO Chris Abate noted that “homeownership is the bedrock of our communities. It builds family wealth and contributes to a sense of inclusion, security, and wellbeing,” and added that Redwood seeks to put homeownership within reach of all its employees. Abate encouraged other employers to offer this benefit, similar to subsidizing health insurance. This type of incentive increases affordability, while also maintaining sustainability, as MI will remain in place and offer protection against the risk of higher loan-to-value loans.
Housing Supply is Critical
In Washington, the conversations around housing access and affordability have recognized the impact of limited housing supply on house prices as a primary driver of around affordability issues. Strong demand over the past twelve months has exacerbated the dearth of supply of such homes, construction of which has lagged pre-2008 levels. Congress has already introduced a variety of bipartisan legislation focused on increasing the supply of housing for low- and middle-income Americans, including the “Yes in My Backyard Act” (HR 3198/S 1614) and the “Housing Supply and Affordability Act” (HR 2126/S 902). Further, President Biden’s proposed budget for fiscal year 2022 contains tax incentives for the construction of low-income housing units for both renters and owner-occupants. Democratic infrastructure proposals aim to further increase supply by dedicating funding for affordable housing development.
Bridging the Down Payment Gap
USMI’s 2021 National Homeownership Market Survey noted that the inability to save for a down payment is among the biggest challenges Americans face when it comes to buying a home. The Biden administration and Congressional Democrats are also aware of this, and how it particularly affects those who lack intergenerational wealth to bridge the down payment gap and first-time homebuyers facing a historically competitive housing market. A number of legislative proposals have been put forward related to down payment assistance (DPA) and supporting homeownership. However, policymakers remain cognizant that the housing market does not need additional demand pushed into the market—the key will be increasing homeownership, particularly among traditionally underserved groups, without further decreasing affordability in the housing market.
First-Time/First-Generation DPA Proposals:
“Housing Is Infrastructure Act of 2021”: Released on April 14, House Financial Services Committee (HFSC) Chairwoman Maxine Waters (D-CA) introduced a bill including legislative text (Section 116) for targeted DPA which also exists as a standalone bill, the “Down Payment Toward Equity Act of 2021”. Chairwoman Waters’ proposal appropriates up to $10 billion for targeted DPA that is limited to first-time, first-generation homebuyers (although those who have lost homes due to foreclosure, deed-in-lieu or short sale also are eligible). Further, income for qualified recipients is limited to 120 percent of area median income (AMI), except in areas with high costs of housing, in which case income limit rises to 180 percent of AMI. Down payment grants are limited to $20,000 (or $25,000 in the case of a qualified homebuyer who is a socially and economically disadvantaged individual). The bill also includes conditional repayment terms for recipients who sell their home within five years.
“American Housing and Economic Mobility Act of 2021”: Introduced on April 22 by Rep. Emanuel Cleaver (D-MO) and Sen. Elizabeth Warren (D-MA), the American Housing and Mobility Act aims to increase housing supply and mitigate the historical effects of discriminatory lending. It provides for DPA grants for first-time homebuyers with incomes <120 percent of AMI and who have resided at least four years in a geographic area that was historically denied access to mortgage finance due to official government policy. The bill also proposes investing $445 billion over 10 years in the Housing Trust Fund, and $25 billion over 10 years in the Capital Magnet Fund.
“First-Time Homebuyer Act”: Introduced on April 26 by Reps. Earl Blumenauer (D-OR) and Jimmy Panetta (D-CA), the First-Time Homebuyer Act would provide a tax credit for first-time homebuyers for the lesser of 10 percent of the purchase price of the property acquired or $15,000 for joint tax filers.Assistance would be restricted to homebuyers with incomes ≤160 percent of AMI purchasing homes for ≤110 percent of their area’s median purchase price. This legislation is similar to President Biden’s campaign proposal to provide $15,000 tax credits to homebuyers.
Comparison of DPA Legislation
| Down Payment Toward Equity Act | American Housing and Economic Mobility Act | First-Time Homebuyer Act | |
| Lead Sponsor | Rep. Waters (D-CA) | Rep. Cleaver (D-MO) & Sen. Warren (D-MA) | Rep. Blumenauer (D-OR) |
| Structure | Grant with 5-year occupancy requirement (5-year repayment schedule in the event homeowner sells the property) | Grant | Tax credit with a 4-year recapture period |
| Maximum Assistance | $20k and $25k for homebuyers who are socially and economically disadvantaged individuals | ≤3.5% of the appraised value of the property (or ≤3.5% of maximum principal obligation if the appraised value exceeds the principal obligation amount) | Lower of 10% of the purchase price or $15k (for married tax filers) subject to inflation |
| Targeting | |||
| First-time Homebuyer requirement | Yes and first-generation | Yes and have lived for 4 years prior to enactment in a geographic area historically subject to discrimination or official segregation | Yes |
| Income Restriction | ≤120% of AMI and ≤180% of AMI for properties located in high-cost areas | <120% of AMI | Modified AGI ≤160% of AMI |
| Purchase Price Restriction | N/A | N/A | ≤110% of area median purchase price for full tax credit amount |
| Housing Counselling Required | Yes | Not required | Not required |
Tax Incentives to Support Homeownership:
“American Dream Down Payment Act”: Introduced in February by Reps. Gregory Meeks (D-NY), Joyce Beatty (D-OH), and Al Green (D-TX), the American Dream Down Payment Act would establish qualified down payment savings programs to open tax-advantaged accounts (similar to 529 accounts for educational expenses) to save for a down payment, including closing costs, for the purchase of a principal residence. There is no “first-time homebuyer” requirement for the use of the funds in the account, and the maximum account balance would be $102,080 subject to annual increase based on inflation.
Building Home Equity Among Underserved Borrowers:
In an effort to enable first-generation homeowners to build home equity more rapidly, Sen. Mark Warner (D-VA) has also proposed subsidized 20-year mortgages for first-generation homebuyers. Using a one-time federal subsidy to lower the interest rate, the monthly payments on such a mortgage would be comparable in gross terms to 30-year mortgages for the same property.
More details about these proposals and efforts to increase the housing supply are expected to emerge as Congressional negotiations over infrastructure continue this Summer and Fall.
Blog: Key Takeaways from National Homeownership Market Survey
On June 22, USMI released the results of its 2021 National Homeownership Market Survey. ClearPath Strategies fielded the national survey among 1,000 U.S. adults in the general population from April 13-21. Quotas were set to ensure a cross sample of age, gender, race, region, and education as well as homeowners, first-time homebuyers, and prospective homebuyers. The purpose was to understand the perceptions around homeownership, the mortgage process, and the challenges people face when trying to purchase a home.
This blog is the first in a series that will explore the findings from this comprehensive survey around the housing and mortgage markets in the United States. We kick off the series with the seven key takeaways from the national survey. The complete findings from USMI’s national survey are available here.
- Owning a home matters. More than 7 in 10 respondents see owning a home as important for stability and financial security. However, as we dig into the other key findings, economic and access gaps lead to challenges to buying a home.
- Lack of affordable housing and low supply of housing ranked among the top homebuying challenges. In fact, nearly 7 in 10 respondents ranked the lack of affordable housing as the number one housing challenge and nearly 6 in 10 stated that low housing supply is another top issue. This is contextualized by the current historically low housing supply, which is most acute in the “starter home” segment of the market.
- Housing insecurity during the pandemic was also a significant concern for Americans, particularly among minorities. Sixty-six percent of all respondents ranked housing insecurity, including concerns about the ability to make mortgage and rental payments, as the second highest housing challenge. A further dive into the survey findings underscores these economic concerns are particularly acute among minorities. African Americans and Hispanics said that falling behind on rent or mortgage payments was their number one concern. Twice the number of African American respondents (20 percent) and more than one-half times the number of Hispanic respondents (16 percent) reported this concern compared to white respondents (10 percent).
- The inability to save for a down payment and imperfect credit history also ranked among the biggest challenges to buying a home. African American (74 percent) and Hispanic (66 percent) respondents reported that in addition to the lack of affordable homes or lack of supply on the market, the inability to save for a down payment (39 percent of all minorities) and imperfect credit history (37 percent of all minorities) are the biggest challenges they face when it comes to buying a home. Of all adults surveyed, 60 percent view “credit score” as having the most impact on the cost of a mortgage, while 81 percent said they understand the factors that impact one’s credit score and 79 percent view credit scores as being fair.
- Socioeconomic disparities – such as lower income, lack of intergenerational wealth, limited savings, and the percentage of monthly income dedicated to housing costs – only add to the challenges to buying a home. These factors can lead to lower credit scores and higher overall debt loads to manage, which all can contribute to greater challenges to achieving homeownership. African American and Hispanic respondents rank these issues as more significant challenges compared to white respondents.
- Many Americans still do not realize that low down payment mortgages are widely available. Up to 45 percent of all respondents mistakenly believe that you need a down payment of 20 percent or more to qualify for a mortgage. Thirty percent of all adults surveyed indicate that they are not familiar with down payment requirements. In truth, homebuyers can qualify with a down payment as low as 3 percent with private mortgage insurance, and as low as 3.5 percent with a loan backed by the Federal Housing Administration (FHA).
- While down payments continue to be a significant challenge, mortgage insurance (MI) is seen as leveling the playing field and respondents express strong support for access to mortgages with MI in both the conventional and government-backed markets. Seventy-three percent of all respondents view mortgage insurance as needed and positive to accessing homeownership. MI provides access to home financing for those who might not otherwise be able to purchase a home due to limited funds for a down payment. Nearly 70 percent of respondents cited that it was important to have access to loans through the conventional market backed by private MI and government-backed loans through the FHA.
Member Spotlight: Q&A with Tim Mattke of MGIC
USMI’s member spotlight series focuses on how the private mortgage insurance (MI) industry works to address several critical issues within the housing finance system, including expanding access to affordable mortgage credit for first-time and minority homebuyers, protecting taxpayers from risk in the mortgage finance system, and providing recommendations on ways to reform the system to put it on a more sustainable path for the long-term.
This month we chat with Tim Mattke, CEO at MGIC. MGIC is the principal subsidiary of MGIC Investment Corporation, which founded the private MI industry in 1957 and serves lenders in the U.S., Puerto Rico, and Guam. MGIC is proud to support its lender customers and help make homeownership attainable for borrowers who have lower down payments. As USMI has advocated, it is critical for individuals to have the right information and resources to understand what it means to be “mortgage ready.” That is why financial literacy is so important.
As we commemorate Financial Literacy Month, Mattke highlights the educational programs and tools MGIC has developed and sponsored to help potential homeowners better understand their options. These include:
- Readynest, a consumer-focused website that breaks down the homebuying process, provides tips, and showcases real-life stories to help customers “find, afford and love a home” of their own.
- MGIC’s “buy now vs. wait calculator,” which helps homebuyers explore their financial options.
- Down Payment Connect, in partnership with Down Payment Resource which promotes education around down payment assistance (DPA) and connects homebuyers with DPA programs.
(1) April is Financial Literacy Month. How does MGIC approach financial literacy and help first-time homebuyers get ready for the mortgage process?
The homebuying and mortgage process can seem daunting, especially to those going through it for the first time. In fact, the 2021 Home Buyers and Sellers Generational Trends Report from the National Association of REALTORS® (NAR) showed that “understanding the process” was the most difficult step, after finding the right property, among those aged 22 to 40.
To help overcome this challenge, MGIC has provided homebuyer education for decades. Last year alone, over 100,000 people took our online tests in English or Spanish. More recently we launched a consumer site, Readynest, which reached over 2 million page views in 2020. Readynest’s goal is not to sell MGIC or MI, but rather to demystify the homebuying journey through relatable explanations and stories of others who have gone through the process. The site helps aspiring homebuyers understand how to get their finances in order and includes guides on budgeting, credit, managing student loans, and mortgage insurance.
In addition, we have begun doing more direct outreach, presenting at state and local Housing Finance Agency (HFA) events to consumer audiences. This summer we are partnering with the Boys & Girls Club of Greater Milwaukee to present “The Path to Homeownership” to current college students and recent graduates.
(2) What is MGIC’s message to renters who are interested in buying a home but aren’t sure they can?
Frequently, renters self-disqualify themselves before they even begin. Many have preconceived notions about what it takes to buy a home and how much they need to put down, and too often give up without even trying. Certainly, saving for a down payment and paying bills on time are smart financial moves, but renters may not know how much they need to save. Or they don’t understand that they can have student loan debt and still qualify to buy a home. Many times, they end up waiting longer than necessary, and that could end up costing them more in the long run.
Our “buy now vs. wait calculator” helps renters compare that cost of waiting. Unlike a buy vs. rent calculator, which we also offer, this calculator allows the renter to determine for themselves when the right time to buy might be, based on their specific situation. Like Readynest, this calculator is available in English and Spanish.
(3) Do you think renters appreciate that they can buy a home with a low down payment? Why do you think the common misconception that a borrower needs a 20% down payment is still around?
The 20% down payment myth is so deeply ingrained in the media that it isn’t surprising that so many potential borrowers are held back by this false concept. Many mortgage calculators start with a default of 20% down. Even NAR’s Affordability Index reinforces this concept by using a 20% down payment as the working assumption. It is imperative that we continue to point out that there are many paths to homeownership. If a potential homebuyer believes they need 20% for a down payment, they could unnecessarily delay their first home purchase by many years. During those years they may miss out on increasing equity in the home, and they will very likely pay more for the home they eventually purchase. Just as important, they defer the improved quality of life that comes with achieving their dream of homeownership.
(4) Last year MGIC announced it was partnering with Down Payment Resource to launch “Down Payment Connect,” a program designed to help lenders match potential homebuyers to down payment assistance (DPA) programs. Can you speak to how this tool educates homebuyers on DPA and the value of these programs?
Many potential homebuyers – especially Millennial, minority, and first-time homebuyers – face barriers to saving for a down payment for a variety of reasons, including rising rents, student loan payments, and lack of intergenerational wealth. DPA programs can enable access to conventional financing and homeownership for those borrowers who may need that help.
There are more than 2,400 DPA programs across the country. Keeping up to date on the ins and outs and eligibility for all these programs is a challenge even for seasoned loan officers. So, it is no wonder that many homebuyers can be overwhelmed when beginning to search for programs for which they may qualify – assuming they know such programs exist. Down Payment Connect has been a great partnership with Down Payment Resource, enabling lenders to match borrowers with DPA programs. This assistance could be the difference between a family buying their first home and remaining renters.
(5) What are a few steps federal policymakers can take to make home ownership more accessible and affordable for first-time homebuyers?
It is important that federal policymakers recognize the importance of low-down payment lending, especially for minority, lower-wealth, Millennial, and first-time homebuyers. The expanded use of targeted DPA programs is worth exploring to enable more families to become homeowners. Rep. Maxine Waters, the chairwoman of the U.S. House Financial Services Committee, recently released a draft bill to create a program to provide first-time, first-generation homebuyers with DPA. Targeted solutions like this could play a role in narrowing the racial homeownership gap and address longstanding inequities in access to homeownership.
Access to credit is one side of the coin for homeownership and supply is the other side. In today’s environment, borrowers looking to capitalize on low interest rates are often boxed out of homeownership due to the lack of affordable housing supply. Policymakers should explore ways to reduce regulatory red tape regarding new home construction, or incentivize increased remodeling and rehabilitation of distressed properties, which are often located in central city neighborhoods. Taking measures like these could help increase affordable housing options and close the gap between demand and supply.
The shortage is especially acute in the lower end of the market where many first-time buyers are looking for “starter” homes. Housing supply is at the lowest level of this century, with just two months of supply as of February 2021 according to NAR and the Urban Institute. The lack of supply in turn has led to record year-over-year Home Price Appreciation (HPA), which was 10.8 percent last year according to the Federal Housing Finance Agency (FHFA). Strong HPA is great for current homeowners, but it creates a moving target for those looking to transition from renting to owning.
(6) Considering MGIC’s unique position as the first private MI company, in your opinion, how has private MI improved the housing finance system and homebuying process since 1957?
In many ways, private MI is the original down payment assistance program. We fundamentally changed the conversation when it came to buying a home. Prior to MGIC and the private MI industry in 1957, unless a person relied on the government and the Federal Housing Administration (FHA), the focus by lenders was to increase the amount of equity in the property to help reduce potential losses that may arise from a foreclosure. So, the question lenders would ask is “how much money do you have?” to put down when buying a home. Private MI helped remove or reduce this barrier, changing the conversation to “how much could you afford?” as it “created” the equity lenders sought.
We are able to facilitate access to affordable, low down payment mortgages by providing critical risk protection for lenders, the government sponsored enterprises (GSEs), and American taxpayers. Private MI companies work to not only get buyers into homes, but to keep them there so they may build the long-term, generational wealth that is associated with homeownership.
Since 1957, the private MI industry has helped 35 million homeowners either purchase a home or refinance an existing mortgage, including more than 2 million borrowers in 2020 alone, with nearly 60 percent of purchase loans going to first-time homebuyers.
Tim Mattke’s Biography
Timothy J. Mattke is Chief Executive Officer of MGIC Investment Corporation and MGIC. He joined the company in 2006. Prior to his appointment as CEO, he served as MGIC’s Executive Vice President and Chief Financial Officer from 2014 to 2019, and Controller from 2009 to 2014. Before then, he held other positions within the Accounting and Finance departments. Before joining MGIC in 2006, Mr. Mattke was an Audit Manager with PricewaterhouseCoopers LLP. He has a BBA from the University of Wisconsin-Madison, as well as a Master of Accountancy from that University; and he is a CPA.
Mr. Mattke currently serves as the Board Chair of Goodwill Industries of Southeastern Wisconsin, Inc., and is the Board Chair for the United Performing Arts Fund (UPAF). He also sits on the fundraising committee of SecureFutures and the Advisory Board for the Accounting Department at the University of Wisconsin-Madison.
Blog: Interview with National MI CEO Claudia Merkle on Record-Setting Year for Private MI
The private mortgage insurance (MI) industry helped over 2 million low down payment borrowers secure mortgage financing in 2020, a 53 percent increase from the previous year. The industry also supported $600 billion in mortgage originations. USMI President Lindsey Johnson sat down with National MI CEO Claudia Merkle to discuss the record-setting year. Also, in honor of Women’s History Month in March, the two talked about ways women can seek a long, successful career in housing finance. Watch the full interview below and click here to read more about the record high private MI volume. (Please note the interview was recorded before the final volume numbers were finalized, so there are slight variations between the video and press release. The press release has the most up-to-date numbers for 2020.)
Below is a complete transcript of the above video.
Lindsey Johnson: We are here to talk about the private mortgage insurance industry and the industry’s performance through 2020, a year that was full of new challenges and opportunities. 2020 was a record year for the mortgage industry, and a year where the private mortgage insurers helped a new record number of borrowers achieve homeownership. To help talk us through the numbers, Claudia Merkle, CEO of National MI, is with us. Claudia has extensive experience in the mortgage insurance and mortgage banking industries. As CEO of National MI, Claudia is responsible for the company’s day-to-day management, financial performance, and long-term growth strategy.
As we celebrate Women’s History Month, USMI wanted to highlight Claudia’s impressive experience and important contributions to the housing and mortgage industries, and we look forward to hearing some of Claudia’s thoughts on some of the most pressing issues facing the industry today. So, Claudia, thank you for being here. I did want to just start off by talking about 2020, and despite the uncertainty and the incredible challenges that were presented by the 2020 global pandemic, the real estate market was very strong this past year and the data shows record high volume. Can you peel back some of these numbers and just share your thoughts on 2020’s market, particularly for low down payment borrowers?
Claudia Merkle: Sure, Lindsey. Great to be here. So, 2020 certainly was a year of remarkable challenge, resiliency, and reward for the housing market. Based on industry and federal agency data that has been released today, 2020 mortgage lending activity broke records. First lien originations totaled just over $4 trillion in 2020. The private mortgage insurance industry also produced record volume in 2020. As background, private mortgage insurance companies, such as National MI, enable borrowers to gain access to the housing market more quickly by allowing down payments with as little as 3 percent. The private MI industry directly serves and supports low down payment borrowers in the housing market while protecting lenders against default. The MI industry helped at least 1.75 million families either purchase a home or refinance an existing mortgage.
I mentioned the strength of the broad origination of market in 2020, but we have seen even stronger growth in the private MI market. In 2020, private MIs supported $600 billion in originations, and that traces to several factors. First, there are more and more first-time homebuyers coming into the market. They have good credit, but struggle to put 20 percent down on their first house. Private MI is a great fit for them. Here’s some additional important statistics. Nearly 60 percent of purchase loans with MI are first-time homebuyers, and more than 40 percent of borrowers with MI mortgages have annual incomes below $75,000. This fundamentally underscores the point that MI serves a key demographic of borrowers needing a low down payment mortgage.
A second factor attributed to this large MI market is low interest rates. Rates helped fuel the strong mortgage market momentum in 2020 for both the purchase segment and also for refinances. We have seen private MI penetration of refinancing more than double, with a 65/35 split between purchase and refinance transactions. The combination of these various factors contributed to a really strong production in 2020.
Johnson: It’s such a great overview of some of the borrowers that we helped through 2020 and the critical role that the industry really played in helping millions of people access affordable mortgage credit when rates were really at historic lows. Can you speak to how the industry managed the COVID crisis while also meeting that incredible demand?
Merkle: Sure. Yeah, importantly over the past year the MI industry has worked closely with federal policymakers, industry groups, and consumer organizations to support homeowners experiencing financial hardship due to the COVID-19 pandemic. Mortgage insurers have routinely updated their guides and processes to align with the GSE policies in order to implement nationwide forbearance programs. One key element of the industry’s success and ability to scale up for record volume is the industry’s transformation since the 2008 financial crisis into sophisticated managers of mortgage credit risk.
Additionally, it’s important to note that the MI industry as a whole entered into the COVID crisis with a tremendous amount of financial strength. Today, mortgage insurers are well capitalized, and USMI members currently hold more than $6.3 billion in excess of PMIERs requirements, a sufficiency ratio of 149 percent. All USMI members were able to raise capital in the debt and equity markets throughout 2020 in order to scale up and support the increased volume. It’s terrific to see that the capital markets have shown confidence in our MI industry, which furthers our ability to pursue new business and support lenders and borrowers in the current market.
Johnson: So, it’s really great to hear how the strength of the industry and that transformation supported that ability for the industry to really enable access for millions of borrowers and support that volume. So, we’ve talked a lot about the volume for 2020. What are your expectations for the housing market, and in particular, the low payment market for 2021?
Merkle: Yeah, the housing market continues to be a really bright spot during the challenge of the pandemic. So, we expect home price appreciation will continue as demand continues to outstrip the supply. Forecasts indicate the 2021 originations will be approximately 3.5 trillion, which is less than the record breaking 2020 volume, but still very high based on historical trends.
As we begin to see mortgage interest rates start to rise modestly. Fewer homeowners will be in the money to refinance. The purchase-refi breakdown could likely trend back to normal shares of the market. That split is traditionally around an 85 percent purchase and a 15 percent refinance mix. But the 2020 refi boom shifted that mix of new business to 65/35.
We’re also closely monitoring extensions of the GSE’s single-family forbearance programs and trends concerning loan modification for homeowners with COVID-19 financial hardships. We believe that the government’s support is crucial to assist impacted homeowners by providing an adequate runway to recover from financial hardships triggered by COVID. Broadly speaking, the housing industry has been a strong economic driver in the wake of the pandemic and a way to expand access to all the benefits that homeownership provides, which include a safe environment to shelter from the virus, an ability to establish community identity, and an equitable opportunity for long-term wealth creation.
It’s important to note that COVID has brought into sharp focus the important role that the private MI sector and industry plays in supporting a healthy and functioning housing finance system. We foresee that MI will continue to work for borrowers, lenders, and taxpayers in 2021 and beyond, across all markets cycles.
Johnson: So, you highlighted the importance of having a place to call home, especially during this pandemic. Considering your extensive experience in the mortgage industry and the key roles you’ve played, both on the lending side and on the mortgage insurance side as well as an executive of National MI, what is your message to Washington lawmakers and regulators about how the private mortgage insurance industry can better serve low- to moderate-income borrowers?
Merkle: Yeah, very important question. Thanks, Lindsey. So first and foremost, members of USMI commend the swift actions that Washington lawmakers have made to support borrowers during times of hardship through COVID. The first and most impactful priority has been providing continuing support to the housing market, and we were pleased to see the extension of forbearance that was announced in February.
The MI sector understands how crucial it is to participate in policy discussions that define and shape the mortgage industry, and to ensure we are adequately serving the needs of low- to moderate-income borrowers. When thinking about affordability and serving low- to moderate-income families, it is important to consider two things: one, access to credit, and two, supply. With access to credit, the MI industry has the capacity and the desire to help even more low- and moderate-income families become homeowners and to do it in a sustainable way that sets borrowers up for success.
Policymakers need to be mindful, however, of the impact federal regulations can have on the mortgage market with tilting the scales in favor of particular lending programs. Policymakers should ensure a level playing field to avoid a bifurcated market, such that minority borrowers are arbitrarily directed to lending programs with fewer lender and product options. These borrowers shouldn’t be left with the only option of a loan insured by the Federal Housing Administration (FHA), especially since there are nearly three times the number of HMDA (Home Mortgage Disclosure Act) reporting lenders originating conventional purchase loans compared to FHA purchase loans.
As it relates to supply, access to credit is a critical part of our industry, but policymakers must also consider the severe lack of affordable housing supply. Housing supply is at the lowest level this century, with just 1.9 months of supply as of January 2021. The shortage is especially acute in the lower end of the market, where many first-time buyers are looking for starter homes. The lack of supply in turn has led to record year-over-year home price appreciation, which was 10.8 percent last year according to the Federal Housing Finance Agency (FHFA). Strong home price appreciation is great for current homeowners but creates a moving target for those looking to transition from renting to owning.
Johnson: So, you touched on supply and access. From an access to mortgage credit perspective, we know that private mortgage insurance facilitates low down payment home financing in the conventional market because executives like you and others are in the market every single day, in the trenches, really making that possible. Can you elaborate on the importance of low down payment lending?
Merkle: Sure. Yeah, with mortgage insurance we’re in the dream of homeownership business. I’m really proud of that. Low down payment mortgages are critical to enable first-time, lower wealth, and minority homebuyers achieve this dream of purchasing a home. For many borrowers, the need to accumulate a large amount of cash for down payment, usually 20 percent of the property’s value, is the biggest hurdle in the homebuying process. Eighty percent of first-time homebuyers utilizing financing do so with low down payment mortgages. Conventional mortgages with private MI have been the number one way in recent years for these borrowers to become homeowners.
Between rising rent, student loan payments and strong home price appreciation, it could take a family on average of more than 20 years to save for a 20 percent down payment to purchase a home. There are many creditworthy borrowers who do not have 20 percent who deserve to have options to enable them to get into homes and to enjoy the benefits of homeownership. With MI, it is important that these families have access to mortgages with 3 percent, 5 percent or 10 percent down payments, so they can purchase homes sooner and begin to build the long-term wealth and pride that comes with homeownership.
Johnson: So as with most things, there’s always a balancing act. And the conversation, especially in DC, is constantly kind of around this access to mortgage finance credit, but sustainability and making sure that you’re not exposing taxpayers to undue mortgage credit risk. So, can access to low down payment programs be expanded without increasing that risk to government or taxpayers, and if so, then how do we do that most effectively?
Merkle: Sure. So private capital plays an essential role in a strong functioning housing market. For nearly 65 years, the private MI industry has played a critical role in facilitating access to affordable low down payment mortgages, while also protecting the GSEs, lenders, and American taxpayers from mortgage credit risk. MIs have stood in the first loss position, all while helping more than 34 million families secure low down payment mortgages and financing.
As an industry that is fully committed to the U.S. housing finance system, and one that has never stopped writing new business, insuring loans or paying claims, private mortgage insurers are an important source of private capital. We are stronger and more resilient than ever, with well-capitalized balance sheets and the capacity to serve all borrowers that don’t have 20 percent down needed to purchase a home.
A key development over the past several years has been the industry’s programmatic use of credit risk transfer, CRT transactions, in order to access the global capital and reinsurance markets to disperse risk. Since 2015, the industry has issued 35 insurance link notes deals, ILNs, transferring $14.3 billion of risk on nearly $1.4 trillion of insurance in force. USMI members have also executed 29 reinsurance deals since 2015, transferring nearly $34 billion of risk on approximately 700 billion of insurance in force.
Johnson: So kind of continuing on the theme of that balance, there has been this long standing debate about the appropriate balance between government- and taxpayer-backed FHA, and then utilizing MI. In one, the government backs a 100 percent of the risk, and in the other, the industry and private capital is standing in the first loss position, as you mentioned. How should policymakers be thinking about these two markets and the important role that they each play? And as some call for an expansion of FHA, why is it important for lawmakers and regulators to take equivalent steps to ensure access to the conventional market?
Merkle: Yeah, an important topic. So conventional loans with MI and mortgages insured by the FHA are the two primary methods for American families to attain homeownership with down payments of less than 20 percent. Policymakers should consider that both private MI and FHA have a critical place in a functioning housing finance system, critical that there be a coordinated federal housing policy to ensure that the FHA and conventional mortgage markets complement one another rather than purely compete against each other.
There is an appropriate balance between the two entities and the role that they each serve. We need to stress the importance of private capital in the housing industry and the need to lessen the current burden placed on FHA, which is directly connected to taxpayers. Plus for some borrowers, conventional execution with private MI is much more attractive than an FHA loan.
It’s also important that policymakers calibrate housing finance regulations, including the qualified mortgage standards and GSE capital requirements, to make sure borrowers aren’t arbitrarily driven to a specific program. FHFA should revisit loan level price adjustments (LLPAs), and either eliminate across the board, or at a minimum, exempt mortgages with MI since low down payment borrowers, many of them who are minority, lower-income and/or first-time homebuyers, are double charged for risk protection.
Additionally, home ready borrowers should have access to a wide variety of mortgage lenders and products across the conventional and FHA markets. I’d also comment that FHA should focus on its core mission of supporting borrowers who do not have access to traditional financing and have policies in place to ensure it can play its designed countercyclical role. The conventional market, including the private mortgage insurance industry, is backed by private capital and is well positioned to play a larger role in facilitating access to affordable credit. So, we should strive to secure the appropriate balance between the private and public sectors.
Johnson: Claudia, this has been fantastic. I would be completely remiss if I did not acknowledge that it is Women’s History Month, and as the mortgage industry generally has been historically led by men, I think it’s important to appreciate perspective, experience, and the expertise that women can bring to the table. What’s your message for young ladies in the industry who seek a long and successful career?
Merkle: Yeah, and congratulations to you as well for Women’s History Month, Lindsey. Yeah. One of my passions is finding ways to help other women in the mortgage insurance, mortgage industry in general succeed. And that includes mentoring and giving advice and certainly leading by example. Women bring a diverse skill set to the table, and while there are many messages to share with young women in our industry, I’d offer out two important messages. One, I’d say, take the initiative. Take the risk. Raise your hand for that project and lead it. Don’t wait. Don’t be too polite. Two, I’d say maintain a high organizational awareness. Who are the leaders you need to connect with? What’s happening throughout your company, and how do you lock arms with those leaders to move the organization forward?
And I’ll leave you with one final thought, Lindsey. As women, we have the unique ability to know how things are shifting, whether it’s good or bad. We were born empathetic leaders. If you have a sense that something is shifting in your organization, think about what you need to do to either change the course or further the course; then set the pace by taking action.
Johnson: That is fantastic advice. And I just want to thank you again, Claudia, for the updates on the private mortgage insurance industry and how it’s really aided the efforts and supported the efforts of the GSEs, of lenders and policymakers, through COVID-19. But also how the industry has facilitated homeownership for a record number of borrowers this year, and it continues to do so while shielding the government and taxpayers from risk. We are super grateful for your leadership and also just your insights as we had this conversation today. Thank you.
Merkle: Thank you so much, Lindsey. It was great to be here. Really appreciate it.
