On April 17, 2015, Fannie Mae and Freddie Mac (GSEs), at the direction of the Federal Housing Finance Agency (FHFA), published the updated private mortgage insurer eligibility requirements, or PMIERs. While we would have desired more balance in the rule, we are pleased that the eligibility requirements, including their financial requirements, have been finalized, and we look forward to being fully compliant with the eligibility standards on their effective date, December 31, 2015(1).
MGIC and the other USMI member companies are united in support of this important effort. Like us, the other MIs have each expressed that they expect to fully comply with PMIERS. Finalizing PMIERs is an important milestone for the MI industry. We have learned some tough lessons during the financial crisis, but we are stronger for it. Mortgage insurers have been recapitalized and have successfully implemented a new master policy; and now they have modernized GSE eligibility requirements under which to operate. With all of that behind us, mortgage insurers are well positioned to do what we were designed to do: increase access to credit and reduce homeownership costs for consumers.
Given the conservative nature of the financial requirements set forth in PMIERs, it is now time to accelerate the discussions regarding proposals that would allow private mortgage insurers to further reduce the risk that Fannie Mae, Freddie Mac, and taxpayers currently take.
I recently outlined four distinct possibilities for how mortgage insurers can play a greater role in the marketplace for Mortgage Banking magazine’s Executive Suite column:
- GSE deeper cover and front-end risk-sharing
- FHA modernization and risk-sharing
- GSE reform using MI and Ginnie Mae as an end state
- FHA reform with FHA becoming a reinsurer as an end state
The full article is available in the April issue and provides detail to substantiate how each of the ideas could work, but the point is that the mortgage insurance industry is ready, willing and able to expand our market presence.
It’s time to shape the future of private mortgage insurance, and as the founder of this industry, MGIC can and will lead those discussions.
(1) This is a forward looking statement. Among others, statements regarding the potential impact of the PMIERs or alternatives that MGIC could pursue to achieve compliance with the PMIERs, and statements that include words such as “believe,” “anticipate,” “will,” or “expect,” or words of similar import, are forward looking statements. We are not undertaking any obligation to update any forward looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward looking statements or other statements were made. No investor should rely on the fact that such statements are current at any time other than the time at which this posting was made.Mortgage Industry, Mortgage Insurance, PMIERs, Top Content