The new lobbying group for mortgage insurers says its top priority is to make sure whatever system replaces Fannie Mae and Freddie Mac uses at least as much private coverage.
"We shouldn't settle for less protection than we have now," Rohit Gupta, the president and CEO of Genworth Mortgage Insurance said on a conference call Monday to announce the formation of the trade group USMI.
During the downturn, "the MI industry paid $42 billion of claims against [loans sold to the] government-sponsored enterprises that inured to the benefit of taxpayers," said Gupta, a co-chairman of USMI.
The new group's membership consists of six of the seven active underwriters. It replaces the Mortgage Insurance Cos. of America, which stopped operating in late January after its membership had dwindled. USMI officials on the call would not discuss why the predecessor organization unraveled.
The Corker-Warner housing reform bill calls for standard coverage levels equivalent to those currently in place, which USMI considers the minimum acceptable level.
Policymakers need to recognize the benefit of the private capital mortgage insurers bring to the market, said Adolfo Marzol, the executive vice president of Essent and USMI's other co-chairman.
The industry insured over $200 billion in mortgages last year. A substantial portion of the loans, over 40%, were to first time homebuyers or buyers with annual incomes under $75,000.
Privately insured mortgages rose to 11% of all mortgages originated in 2013, from 8.5% in 2012 and 4.4% in 2010, and the industry believes it can make further gains, said Teresa Bryce Bazemore, the president of Radian Guaranty. In many cases private mortgage insurance is a more affordable option than Federal Housing Administration mortgage insurance and the industry is working to educate lenders about that. The main reason for this is that the government has increased FHA premiums in an effort to dial back usage.
The other focuses for USMI are: the rolling out of new master policies which better spell out contractual provisions; and negotiations with regulators over new capital standards.
At the end, only three companies belonged to MICA: Radian Guaranty, Genworth and Mortgage Guaranty Insurance Corp. USMI includes those three, plus the two de novo MI companies, Essent and National MI. Arch MI, the expanded operations of CMG which recently came under new ownership, also belongs to the new group.
United Guaranty Corp., a subsidiary of AIG declined to participate in the new group. USMI says it is open to all active participants in the industry.