Over 10 Years of Reforms and Continued Evolution Make Private Mortgage Insurers Stronger and More Resilient
Industry has facilitated affordable, low down payment mortgages for over 33 million households, contributing to a more stable housing finance market
WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released a report that highlights the many regulatory and industry-led reforms taken since the 2008 financial crisis to improve and strengthen the role of private MI in the nation’s housing finance system. The report, “Private Mortgage Insurance: Stronger and More Resilient,” analyzes the various steps the industry and regulators undertook and continue to take to ensure sustainable mortgage credit through all market cycles and to better serve low down payment borrowers in the conventional market, especially during critical times such as the present.
“Though private mortgage insurers have been a crucial part of the housing finance system for more than 60 years, this is definitely ‘not your father’s’ MI industry. Enhanced capital and operational standards, as well as increased active management of mortgage credit risk, including through the distribution of credit risk to the global reinsurance and capital markets, has put the industry in a stronger position,” said Lindsey Johnson, President of USMI. “These enhancements will enable the industry to be a more stabilizing force through different housing cycles — including the current COVID-19 crisis — which greatly benefits the GSEs and taxpayers and enhances the conventional mortgage finance system.”
The report also highlights the steps the industry has taken since the beginning of the pandemic to support the federal government foreclosure prevention programs, including the announcements made by Fannie Mae and Freddie Mac regarding forbearance programs and other mortgage relief available to support borrowers impacted by COVID-19. USMI members have focused their efforts on helping borrowers remain in their homes by supporting their lender customers during these challenging times.
Among the enhancements to the industry in the last several years, the report outlines and analyzes the following:
- Private Mortgage Insurer Eligibility Requirements (PMIERs) – Adopted in 2015 and updated in 2018 and 2020, PMIERs nearly doubled the amount of capital each mortgage insurer is required to hold. USMI members collectively hold more than $5.1 billion in excess of these requirements.
- New Master Policy – Updated terms and conditions from mortgage insurers for lenders, which provide lenders with greater clarity pertaining to coverage.
- Rescission Relief Principles – First published in 2013 and updated in 2017, these principles allow MIs to offer day-one certainty to lenders of coverage, including automatic relief after 36 timely payments.
- MI Credit Risk Transfer (MI-CRT) Structures – Private MI companies have transferred $41.4 billion in risk on over $1.8 trillion of insurance- in-force (IIF) since 2015—through both reinsurance and insurance-linked notes.
Through the programmatic execution of MI-CRT transactions, the industry continues to transition the business into an aggregate-manage and distribute model for mortgage credit risk. The implementation and expansion of MI-CRT programs have demonstrated the industry’s ability to tap multiple sources of capital to support new business and actively manage and distribute risk.
Since 1957, the MI industry has served the U.S. government and taxpayers as an effective and resilient form of private capital, standing as the first layer of protection against risk and mortgage defaults. Importantly, MI has enabled affordable, low down payment homeownership for more than 33 million people. In 2019 alone, more than 1.3 million borrowers purchased or refinanced a loan with private MI, accounting for nearly $385 billion in new mortgages.
U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org