The President of the Mortgage Insurers of America issues a statement on private mortgage insurance – InsuranceNewsNet

WASHINGTON, July 14 (TNStalk)(TNSres) — The US The mortgage underwriters issued the following statement to July 13, 2022by the chairman Adolfo Marzol:

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It has been a little over a month now that I have had the privilege of once again serving as USMI President. I was proud to have played a role in founding this organization and watched it grow for almost a decade. Entering this role after several years of public service in Federal Housing Finance Agency (FHFA) and Department of Housing and Urban Development (HUD) gives me additional insight into the current status of US the housing finance system and the challenges it faces.

The private mortgage insurance (MI) industry remains rightly focused on promoting affordable and sustainable homeownership opportunities, particularly for minority and traditionally underserved communities. This includes playing an important role in closing the racial gap in homeownership and working with FHFA, Fannie Mae and Freddie Mac – the government-sponsored enterprises (GSEs) – to implement their fair housing finance plans. At the same time, after witnessing numerous cycles over the past 40 years in housing finance, 2022 is clearly a year of shifting economic winds for the housing market and overall US economy. Our actions to reach more borrowers and close the racial gap in homeownership must continue to be mindful of the broader environment, because true success means borrowers and their families stay in their homes.

Like US the housing market experience has seen high home price appreciation (HPA), largely driven by the severely limited supply of affordable housing, homebuyers – particularly first-time buyers, low-to-moderate income (LMI) and minority borrowers – face significant challenges in securing housing. This reality leaves many potential homeowners locked out of the market. In light of the hot housing market and rising mortgage rates, it is critical that affordable, sustainable, low-down-payment mortgages remain available to meet the needs of borrowers.

Private MI improves the ability of first-time, minority, and LMI homebuyers to purchase homes in an affordable and sustainable manner. It allows them to achieve housing stability and build wealth for generations by allowing them to buy a home earlier with less than a 20% down payment – a goal that is progressively moving further out of reach due to rising mortgage rates, inflation and record high house prices. In fact, USMI’s recent MI in Your State report revealed that it can take potential homebuyers 14 years to save for a 20% down payment—significantly longer than buying with 5% down and a conventional mortgage backed by a private MI.

The report also found that in its 65-year history, private MI has enabled more than 37 million people to gain access to affordable and sustainable mortgages with low down payments. In the last year alone, Private MI has helped nearly 2 million homeowners purchase or refinance a mortgage. Nearly 60% of private MI purchase loans were to first-time buyers, representing nearly 900,000 new homeowners, and more than 40% of private MI borrowers had annual incomes below 75,000 dollarswith an average loan size of $310,000.

Private MI is a proven part of the affordable housing solution, representing a small cost that allows homebuyers with smaller down payments to access the dream of home ownership. Working paper from Fannie Mae revealed what drives home buying costs, highlighting that the biggest contributor has consistently been ongoing non-mortgage costs, which together account for about half of total home ownership costs. The paper notes “[t]fees charged to cover the borrower’s credit risk that are part of the mortgage price, GSE g-fees (approximately four percent) and PMI [private MI] (roughly one to three percent) are a relatively small portion of the cost of owning a home.” Additionally, while other housing and mortgage costs have increased in recent years, average private MI pricing has declined by more than 30% over the past four Meanwhile, GSE rates remain stable, with g-fees averaging 53-56 basis points (bps) for 2017-2020.

One potential barrier to home ownership noted by some is high closing costs. It is important to note that a borrower-paid private MI, the predominant form of MI used in today’s market, requires only a small monthly payment. There are no significant upfront costs for borrowers. The facts are clear: a private MI facilitates borrowers’ ability to obtain a home at a bargain price, with far less money needed at the closing table than putting 20% ​​down.

Private MI is a proven part of the affordable housing solution, representing a small cost that allows homebuyers with smaller down payments to access the dream of home ownership. Working paper from Fannie Mae revealed what drives home buying costs, highlighting that the biggest contributor has consistently been ongoing non-mortgage costs, which together account for about half of total home ownership costs. The paper notes “[t]fees charged to cover the borrower’s credit risk that are part of the mortgage price, GSE g-fees (approximately four percent) and PMI [private MI] (roughly one to three percent) are a relatively small portion of the cost of owning a home.” Additionally, while other housing and mortgage costs have increased in recent years, average private MI pricing has declined by more than 30% over the past four Meanwhile, GSE rates remain stable, with g-fees averaging 53-56 basis points (bps) for 2017-2020.

One potential barrier to home ownership noted by some is high closing costs. It is important to note that a borrower-paid private MI, the predominant form of MI used in today’s market, requires only a small monthly payment. There are no significant upfront costs for borrowers. The facts are clear: a private MI makes it easier for borrowers to get a home at a bargain price, with far less money needed at the closing table than putting 20% ​​down.

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REPORT: https://www.fanniemae.com/media/document/pdf/cost-housing-working-paper-0322.pdf https://www.usmi.org/wp-content/uploads/2022/05/USMI -2022-MI-in-your-State-Report.pdf

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Original text here: https://www.usmi.org/blog-private-mortgage-insurance-serving-the-us-housing-finance-system-for-over-65-years/

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