News & Resources

On January 16, USMI submitted a comment letter in response to a Notice of Proposed Rulemaking (NPR) issued by the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) on the Basel III Endgame proposed rule that would modify capital requirements for banks with $100 billion or more in total assets. USMI raised the following concerns in the letter: (1) the proposed rule will harm first-time, low- and moderate-income (LMI), and minority homebuyers; (2) the proposed capital treatment for mortgage loans is excessively conservative; (3) the NPR fails to accurately value private MI; (4) the NPR is inconsistent with the Federal Housing Finance Agency’s (FHFA) Enterprise Regulatory Capital Framework (ERCF) rule; and (5) the NPR will negatively impact the housing finance system. “While USMI supports appropriate capital levels for the safe and sound operation of the U.S. banking sector, excessively conservative capital requirements will have a detrimental effect on our economy and consumers’ access to mortgage loans, especially for minority, low- and moderate-income, and first-time homebuyers,” said USMI President Seth Appleton.

The comment letter was covered in an Inside Mortgage Finance article titled, “USMI Calls for Changes to Proposed Bank Capital Rule,” and a National Mortgage News article titled, “Capital rule’s impact on mortgage risk offsets worries industry,” which notes Appleton’s statement, “I’m hopeful that they’ve heard that message because it’s come from a broad spectrum of groups and officials.”

The Basel III Endgame proposal received significant attention earlier this week when Federal Reserve Chairman Jerome Powell testified before HFSC and the Senate Banking Committee. Democratic and Republican members expressed a variety of concerns with the far-reaching proposal, including on the mortgage risk weighting’s lack of credit for private MI, disincentivizing bank mortgage lending, and the consequences for first-time and minority homebuyers. In response to questions from HFSC Chairman Patrick McHenry (R-NC), Chairman Powell stated, “[w]e’ve received voluminous and very substantive comments, as well as the quantitative impact study that we put out. We got those responses in mid-January and we’re carefully analyzing them […] We do hear the concerns and do expect that there will be broad and material changes to the proposal. I’ll add that I’m confident that the final product will be one that does have broad support at both the Fed and in the broader world.”

In January, USMI joined several coalitions in sending letters to financial regulators urging them to reconsider the Basel III Endgame proposed rule. USMI joined leading affordable housing advocates, civil rights groups, and housing industry trade associations, including the National Housing Conference, National Urban League, National Association for the Advancement of Colored People (NAACP), UnidosUS, and Mortgage Bankers Association (MBA), to urge the reconsideration of the NPR. Importantly, the letter noted that “[p]rivate mortgage insurance is a stronger risk mitigant today than it was when the last round of capital rules were ratified, and should therefore be recognized in any new rules.” USMI also joined the MBA, National Association of REALTORS®, National Association of Home Builders (NAHB), the Community Home Lenders of America, and the Manufactured Housing Institute (MHI) in signing a joint industry letter to highlight the proposal’s potential impact on access to mortgage credit and affordability for first-time homebuyers and underserved communities.

On December 6, 2023, USMI President Seth Appleton testified before HFSC’s Subcommittee on Housing and Insurance. The hearing, titled “Housing Affordability: Governmental Barriers and Market-Based Solutions,” focused on the continuing affordability challenges that many currently face in both the single-family housing and rental markets. Appleton’s written testimony noted the role that private MI plays in enabling access to homeownership for low down payment borrowers while also protecting taxpayers. It also addressed the potential impacts of the Basel III Endgame proposed rule, with Appleton writing, “[t]he end result of the Basel III Endgame rulemaking would be fewer, yet more expensive options for borrowers without large down payments to be served by commercial banks […] Instead, U.S. bank capital rules should recognize the risk mitigating benefits of private MI and promote a level playing field between GSE, government program, and bank portfolio executions.” Appleton’s testimony was covered in an article by The MReport, and his opening remarks can be viewed below.

On February 22, USMI published a blog titled, “How Private MI Serves the Housing Finance System as a Source of Strength and Resiliency.” The blog highlighted numerous industry enhancements adopted since the Great Financial Crisis, including the development and implementation of updated Private Mortgage Insurer Eligibility Requirements (PMIERs), a new MI Master Policy, Rescission Relief Principles, and the programmatic use of MI Credit Risk Transfer (MI-CRT) structures. Through these significant enhancements, the private MI industry has demonstrated an ability to tap multiple sources of capital, including equity, debt, traditional reinsurance, and capital markets-based reinsurance, to efficiently manage and distribute risk. It has also demonstrated that private MI is scalable and efficient, working with lenders of all sizes and types, from the largest money center banks to community banks, credit unions, and independent mortgage banks. Private MI has enabled affordable homeownership for more than 38 million people over nearly seven decades, and in 2022 alone, more than 1 million borrowers purchased a home or refinanced a loan with private MI.

In honor of Black History Month and as an industry designed to enable access to homeownership, especially for first-time, LMI, and minority homebuyers, USMI examined data and trends associated with Black homeownership in the US. On February 15, USMI published a blog analyzing the challenges Black households face, including the lasting effects of redlining and discriminatory policies, lack of affordable housing inventory, inflation, and elevated mortgage rates.

In 2022, private MI helped over 1 million low down payment borrowers secure mortgage financing, including nearly 130,000 Black households, with nearly 35% of all borrowers having incomes below $75,000, and 62% of purchase loans going to first-time homebuyers. The private MI industry is proud to have supported over $34 billion in mortgage originations to Black families in 2022 – with an average loan amount of approximately $270,000 – and we are committed to working with policymakers, industry stakeholders, and consumer advocates to address the racial homeownership gap.

On February 26, USMI President Seth Appleton was appointed as the newest member of the Home Builders Institute (HBI) Board of Trustees. USMI is thrilled for Seth to continue advancing housing access and affordability through his work at the association and now as a Trustee of HBI, the nation’s leading nonprofit provider of trade skills education for the building industry. Workforce development is vital for improving housing supply, access, and affordability. Upon his appointment, Appleton stated, “I am honored to be selected to serve on HBI’s Board of Trustees. For more than five decades, HBI has worked to train and educate America’s home construction workforce, thereby supporting housing accessibility and affordability for all. I look forward to supporting HBI’s worthy mission, because it is critical to addressing today’s housing supply challenges.”

On February 29, FHFA announced two key updates regarding the implementation of new GSE credit score requirements: (1) alignment of the implementation dates for the new bi-merge credit reporting requirements and the use of the two new models, FICO 10T and VantageScore 4.0; and (2) accelerated publication of VantageScore 4.0 historical data in 3Q2024. The FHFA subsequently announced four additional stakeholder forums in March and April to gather feedback on the bi-merge implementation and transition period loan delivery.

USMI has consistently called for a transparent process and timeline for the implementation of new credit score requirements at Fannie Mae and Freddie Mac, with particular emphasis on an adequate period of time for stakeholders to comprehensively analyze historical data. On December 20, 2023, USMI joined a coalition of housing finance organizations, including the American Bankers Association, Housing Policy Council, and MBA in sending a letter to FHFA Director Sandra Thompson on this matter. The coalition wrote to request the release of the analyses performed by FHFA, Fannie Mae, and Freddie Mac to assess the FICO 10T and VantageScore 4.0 credit score models, the criteria stipulated in the Credit Score Solicitation, and analyses conducted to support the shift to bi-merge credit reports.

In February, amidst Black History Month, the National Association of REALTORS® released a new report analyzing homebuying trends with demographic data to examine racial disparities in homeownership in the United States. The report found that although homeownership has increased overall since 2012 across all racial and ethnic groups, “resulting in nearly 950,000 more Black Americans transitioning to homeownership,” it is still “worth noting that even though the disparity in homeownership rates between Black and White households showed a slight decrease in 2022, it remains higher than it was a decade ago.” The report acknowledges that affordability challenges and difficulty accessing credit can be obstacles for minority and low-income prospective homebuyers. The private MI industry strives to provide minorities with access to affordable and sustainable mortgages to become homeowners.