Letter: USMI Submits Letter To DBRS Morningstar on the Proposed Mortgage Insurance (MI) Credit Appendix

June 26, 2023

USMI submitted a letter to DBRS Morningstar in response to its request for comment on the Proposed Mortgage Insurance (MI) Credit Appendix to the residential mortgage-backed securities (RMBS) model and rating methodology, which updates RMBS Insight Model 1.3 to include consideration of factors including an MI’s willingness and ability to pay to estimate the amount of credit given for private MI. The association requests additional information on the following elements of the model and rating methodology to further evaluate the proposal and provide comprehensive feedback: (1) The underlying assumptions employed to arrive at the base-case exception rate and what is considered a typical rate; (2) whether the historical data used to determine the MI Exception Rate captures experience that includes the Great Financial Crisis; (3) the basis for how DBRS Morningstar derived the multipliers applied to the base-case exception rate; and (4) whether credit will only be applied for private MI rated by DBRS Morningstar or whether ratings from other credit rating agencies will be considered. Click here to read the letter.