USMI Roundup: Developments in Housing Finance

June marks the official start of summer and National Homeownership Month. This week, USMI released its 2021 National Homeownership Market Survey, which examined perceptions around homeownership, the mortgage process, and the challenges people face when trying to purchase a home. USMI also released its annual MI in Your State report in early June, which found borrowers were able to access home financing three times sooner in 2020 because of private mortgage insurance (MI). We dig further into these reports and more below.

USMI’s 2021 National Homeownership Market Survey
Black Homeownership Collaborative Launches in Ohio
USMI’s MI in Your State Report
Supreme Court Decision: Collins v. Yellen
Federal Agencies Extend Foreclosure Moratoria
MI Premium Tax Deductibility Proposal in Congress
Credit Risk Retention Rule
HUD Confirmations and Nominations
What We’re Listening To: “Radian On Air” Podcast
What We’re Watching: New American Funding Panel on Down Payment Assistance & Increasing Black Homeownership
What We’re Reading: Redwood Trust’s Employee Home Access Program

USMI’s 2021 National Homeownership Market Survey. On June 22, USMI released its 2021 National Homeownership Market Survey. This new research, fielded by ClearPath Strategies to 1,000 adults in the U.S., found that nearly 7 in 10 (69 percent) ranked lack of affordable housing and nearly 6 in 10 (57 percent) ranked low housing supply among the biggest homebuying challenges. The survey also specifically looked at these responses by race to better understand minorities’ perceptions and challenges around homeownership, housing affordability, and the mortgage process. It also revealed that many people continue to not understand the down payment requirements to purchase a home. Housing insecurity (66 percent) was also among the top concerns from respondents. Socioeconomic disparities – such as lower income, lack of intergenerational wealth, limited savings, and the percentage of monthly income dedicated to housing costs – were reported to make these challenges more acute, particularly among minorities.

Black Homeownership Collaborative. In collaboration with more than 100 organizations and individuals involved in the Black Homeownership Collaborative, USMI supports policies that promote equity and work to increase homeownership rates among Black Americans. On June 18, the Collaborative unveiled a solutions-based initiative to close the Black homeownership gap. The Collaborative’s seven-point plan includes homeownership counseling, targeted down payment assistance, housing production, credit and lending reforms, civil and consumer rights enforcement, advancing homeownership sustainability, and marketing and outreach. The goal is to create 3 million net new Black homeowners by 2030. Read more at 3by30.org.

USMI’s MI in Your State Report. On June 2, USMI released its annual MI in Your State report on the role of private MI in all 50 states and the District of Columbia. The report found that home loans backed by private MI increased 53 percent in 2020, with more than 2 million borrowers securing mortgage financing — a record year for the industry’s 65-year-history. The report also found that saving for a 20 percent down payment could take potential homebuyers 21 years — three times longer than it could take to save 5 percent down. Texas, California, Florida, Illinois, and Michigan were the top five states for mortgage financing with private MI. Fact sheets for all 50 states, plus the District of Columbia, are available here.

Supreme Court Decision: Collins v. Yellen. On June 23, the Supreme Court released its opinion for Collins v. Yellen, giving the U.S. President greater control over the Federal Housing Finance Agency (FHFA) and the future of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The Court held that “[t]he Recovery Act’s restriction on the President’s power to remove the FHFA Director, 12 USC 4512(b)(2), is unconstitutional.” This provides President Biden with the authority and opportunity to nominate a new FHFA Director who will be in better alignment with the Biden Administration’s policy positions and priorities. The Court also held that GSE shareholders’ statutory claim must be dismissed since the FHFA’s actions regarding the Net Worth Sweep did not exceed its “powers or functions” as a conservator. This is undoubtedly a significant determination for the future of the leadership of FHFA, as well as the future of the GSEs. USMI continues to promote a housing finance system that is backed by private capital, and also promotes sensible reforms to the GSEs that include utility-like regulation of the GSEs.

Following the Court’s opinion, President Biden appointed Sandra Thompson, formerly the Deputy Director of the Division of Housing Mission and Goals, as the Acting Director of the FHFA. Prior to joining the FHFA in 2013, Acting Director Thompson spent more than 23 years at the Federal Deposit Insurance Corporation (FDIC), most recently as the Director of the Division of Risk Management Supervision. Her experience in financial supervision, consumer protection, and outreach will continue to benefit the FHFA and housing finance system. USMI looks forward to continued engagement with Acting Director Thompson and her FHFA colleagues to promote a robust conventional mortgage market and access to affordable mortgage credit.

Federal Agencies Extend Foreclosure Moratoria. On June 24, the White House announced a number of actions to protect renters and homeowners still experiencing financial hardships due to the COVID-19 pandemic. The Administration indicated that the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) are extending their foreclosure moratoria for one month, until July 31, 2021, and that homeowners with mortgages insured or guaranteed by the agencies may enter into COVID-related forbearance through September 30, 2021. FHFA followed with a statement that the GSEs are extending their foreclosure moratoria on single family foreclosures and real estate owned (REO) evictions through July 31, 2021. Homeowners with GSE-backed single family mortgages continue to be eligible for COVID-related forbearance.

MI Premium Tax Deductibility Proposal in Congress. On June 18, USMI joined with the Mortgage Bankers Association, National Association of Home Builders, and National Association of REALTORS® on letters to Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) of the House Committee on Ways and Means as well as Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) of the Senate Finance Committee. The groups expressed their support for making the mortgage insurance premium tax deduction permanent and eliminating the adjusted gross income (AGI) phaseout. Analysis from USMI demonstrates that, even after the doubling of the standard deduction in the 2017 tax law, nearly 2.4 million Americans continue to benefit from this important homeownership deduction. Importantly, nearly 60 percent of the taxpayers taking the deduction had AGIs of less than $75,000, demonstrating the importance of this deduction for low- and moderate-income families. The current phaseout represents a burdensome eligibility criterion for American families to claim the MI deduction and millions of homeowners could benefit from a permanent extension that eliminates the AGI phaseout. In April, USMI sent letters to the Joint Committee on Taxation, House Ways and Means Committee, and Senate Finance Committee outlining the legislative proposal.

Credit Risk Retention Rule. On June 11, USMI joined with several other housing and finance organizations on a comment letter to banking and housing regulators. The letter provided observations and recommendations with respect to the review of certain provisions of the 2014 Credit Risk Retention Rule that was jointly issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the FDIC, the Securities and Exchange Commission, the FHFA, and HUD. Following careful analysis of the changes issued by the Consumer Financial Protection Bureau (CFPB) in its final Qualified Mortgage (QM) rule, the organizations expressed strong support for the continued alignment of the Qualified Residential Mortgage (QRM) and QM frameworks.

HUD Confirmations and Nominations. This month, Adrianne Todman was confirmed as HUD’s Deputy Secretary, Damon Smith was nominated to serve as the agency’s General Counsel and Julia Gordon was nominated to serve as the commissioner of the Federal Housing Administration (FHA). Smith previously served as the acting general counsel for HUD in 2014. Gordon had managed the single-family policy team at the FHFA from 2011 to 2012, and more recently, was a member of the FHFA and HUD agency review team for the Biden administration. USMI looks forward to working with HUD leadership and the FHA team on policies to best serve borrowers and responsibly facilitate access to homeownership.

What We’re Listening To: “Radian On Air” Podcast. Lindsey Johnson sat down with Radian President of Mortgage and current USMI Chairman Derek Brummer for the company’s latest podcast episode of “Radian On Air” titled, “National Homeownership Month: Expanding Minority Homeownership.” They discussed the importance of homeownership, barriers for first-time homebuyers, solutions to address low housing supply, and the role of private MI in promoting homeownership. Listen to the full episode here.

What We’re Watching: New American Funding Panel on Down Payment Assistance & Increasing Black Homeownership. On May 20, Lindsey Johnson joined Freddie Mac’s Sam Noel, and Stockton Williams, Executive Director of National Council of State Housing Agencies, in a virtual discussion hosted by New American Funding for its New American Dream initiative. Panelists discussed the pressing problem of bridging the down payment gap, how potential homebuyers can overcome that obstacle, and how to increase and sustain Black homeownership.

What We’re Reading: Redwood Trust’s Employee Home Access Program. In case you missed it, Redwood Trust announced its Employee Home Access Program (“the Redwood Benefit”), an MI benefits program for its workforce that supports employees seeking a path to homeownership. Through the program, Redwood is reimbursing all MI costs to help its employees put down roots in areas of their choosing. Citing limited access to affordable housing supply and challenges to access affordable housing, Redwood CEO, Chris Abate encouraged other corporate leaders to offer MI support for their employees: “If as a corporate leader you’re focused on environmental, social and governance objectives, I urge you to consider this benefit for your employees, too.”

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