PRIVATE MORTGAGE INSURERS SUPPORT FEDERAL HOUSING FINANCE AGENCY PROPOSED RULE FOR GSE NEW PRODUCTS AND ACTIVITIES
USMI Applauds the Proposed Enhanced Transparency, Oversight, and Review and Encourages Rule Application to All Current Pilot Programs
WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, submitted its comment letter to the Federal Housing Finance Agency (FHFA) on its Notice of Proposed Rulemaking for New Enterprise Products and Activities, which seeks to replace the 2009 Interim Final Rule that established a process for the government sponsored enterprises (“GSEs” or “Enterprises”) to obtain prior approval for new products and provide notice for new activities.
“USMI is encouraged to see FHFA following its statutory responsibility to establish a much more transparent and appropriate process for considering and approving new GSE products and activities,” said Lindsey Johnson, President of USMI. “The Interim Rule was adopted after the 2008 financial crisis, and as the GSEs continued to play an important and even greater role in the housing market during conservatorship, they at times expanded into new activities that are outside of the secondary market, compete in areas already well-served by the primary market, and not consistent with their mission.”
In its comment letter, USMI welcomes the increased transparency outlined in the proposed rule and supports the inclusion of “pilots” in the criteria for identifying and assessing new activities and products at the GSEs. Considering that numerous prior pilots were developed without meaningful input and analysis from industry stakeholders, USMI believes it is important that the FHFA close the loopholes that could be used again to circumvent the objectives of the proposed framework. USMI urges the FHFA to direct the GSEs to halt all current pilots and, following the implementation of a final rule, require them to submit Notices of New Activity should they want to continue offering such products or programs.
USMI also highlights in its letter the importance of the approval framework ensuring that innovations at the GSEs do not disintermediate private capital and that new activities and products operate in a manner that is within the scope of the secondary market functions set forth in their congressional charters. USMI recommends that the proposed rule be revised to provide additional clarity for the FHFA’s assessment criteria for new activities and products at the GSEs, specifically:
- The degree to which private market participants are meeting or could meet the needs of the market and consumers, and whether the new activity or product would disintermediate non-GSE market participants;
- Whether the new activity or product would rely on limited or broad participation by market participants;
- How certain market participants will be selected over others, whether the activity or product will be made available to other market participants on similar terms, and whether other participants would be harmed by engagement in the activity or product; and
- Whether the new activity or product would present a conflict of interest for the GSEs, especially where anti-competitive concerns may be present.
“This rule is sound public policy, as it will enhance transparency and provide for the appropriate review of new GSE products and activities to best serve the housing finance system and ensure that government and taxpayers avoid unnecessary new risk,” continued Johnson. “It is imperative that the FHFA continue to establish and enhance its oversight of the GSEs, and this rule is a critical step to that end.”
USMI’s full comments on the FHFA’s proposed rule can be found here.
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.