USMI Releases New Study on Housing Finance Risks – NMP Skip to main content

USMI Releases New Study on Housing Finance Risks

National Mortgage Professional
Oct 19, 2015
Housing Risks

U.S. Mortgage Insurers (USMI) has released a new study demonstrating how housing finance risks can be significantly reduced for the government-sponsored enterprises (GSEs) and taxpayers, while maintaining access to homeownership with improved borrower economics, through greater use of private mortgage insurance (PMI). Among the key findings of "Analysis of Deep Coverage Mortgage Insurance," prepared by Milliman Inc., covering additional mortgage credit risk with MI:

►Almost doubles the amount of loss protection afforded to the GSEs;
Would allow the GSEs to reduce their committed capital for this risk by approximately 75 percent, resulting in lower GSE guarantee fees (G-Fees); and
Reduces borrower costs by an average of $8 per month or approximately $2,300 over the average life of the loan.

USMI commissioned Milliman Inc., an independent consulting and actuarial firm, to conduct a third-party proof-of-concept of a proposal to deepen MI coverage down to 50 percent of the value of the home, using publicly available GSE information.

The Milliman report comes as policymakers are considering proposals to de-risk the GSEs through greater reliance on private capital, such as expanded up-front risk sharing using private MI. Upfront risk sharing with MI shifts the risks away from taxpayers right at the time individual loans are made and before the risk gets to the GSEs. MI is a first layer of credit protection for investors and a time tested method of risk sharing that has been used on low down payment loans for more than 50 years. 

"As the GSEs enter the seventh year under conservatorship, taxpayers still face significant exposure to losses from another housing downturn," said Rohit Gupta, president and CEO of Genworth Mortgage Insurance and chair of USMI.  "The housing finance system needs to be put on a more sustainable footing, with the private sector bearing more of the risks of another housing downturn so the taxpayers don't have to, and Americans continue to have access to prudent and affordable mortgage credit."

"Promotion of greater front end risk sharing with MI is a way to help build a stronger and more sustainable housing finance system, while ensuring the homeownership aspirations of Americans for years to come," said Gupta. "In light of the Milliman analysis, USMI will be working with interested parties to encourage concrete steps to expand front end risk sharing with MI.  The time is right to move forward to expand front end risk sharing with MI, and USMI members are ready to do more."

Published
Oct 19, 2015
Manufactured Housing: The New Affordable Alternative

While the housing market is grappling with widespread affordability and supply, manufactured homes are gaining ground as a new alternative. 

Industry News
Dec 03, 2021
Angel Oak Home Loans Opens 3 New Branches

Continues expansion in Western U.S. with new branches in California, Nevada & Utah.

Industry News
Dec 02, 2021
Open Mortgage Names New President

Joe Stephenson, formerly of American Advisors Group, to lead daily operations.

Industry News
Dec 01, 2021
Homepoint Expands Refinance Program Offerings

Now offers Freddie Mac’s new refinance option, Refi Possible, making it easier for many homeowners with a Freddie Mac-owned mortgage to reduce their interest rate.

Industry News
Nov 30, 2021
Non-QM Lender Deephaven Hires Business Development VP

Dallas-based Tim Fisher charged with growing Deephaven’s correspondent business In Texas and surrounding states

Industry News
Nov 30, 2021
Biden Reappoints Powell As Federal Reserve Chairman

A signal that The Fed will continue its policies as inflation surges and economic uncertainty spikes due to an emerging variant of the coronavirus. 

Industry News
Nov 29, 2021