Genworth Financial said the type of reinsurance product — quota share or excess of loss coverage — likely won't matter to the GSEs for the purposes of meeting new capital requirements, said the CEO of Genworth Mortgage Insurance, who added that as long as checks and balances are in place, there should not be any haircut for reinsurance.
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Here are some additional highlights from Rohit Gupta's presentation at Tuesday's Keefe, Bruyette & Woods Mortgage Finance Conference in New York:
- Besides deep coverage for loans with LTV's over 80%, there are two other options for risk-sharing: with the Federal Housing Administration and requiring coverage for loans with LTVs above 75%.
- However, deep coverage arrangements on the GSEs' risk-sharing deals will be easier to implement because the other two will require legislative action.
- The
FHA premium cut has so far had a limited impact on competition with PMI. It's more likely to affect purchase mortgage business for PMI firms, but volume hasn't grown enough for that to materialize. - Mortgage lenders have more confidence in the PMI business because of the new master policies (which show insurers' willingness to pay) and capital requirements (which shows their ability to repay), said Gupta, who's also the chair of the PMI trade group U.S. Mortgage Insurers.
- The FHFA guidelines for lender-paid mortgage insurance expected on June 30 could force the price for the product to rise; the insurers' willingness to write this business to decline; or both.
LPMI is a refinance-friendly product. The share of this business could end up declining anyhow as more purchase business is written.
