U.S. Mortgage Insurers: Private Mortgage Insurers Helped Nearly 2 Million Low Down Payment Borrowers in 2021

WASHINGTON, April 22 (TNSfund) -- The U.S. Mortgage Insurers issued the following news on April 21, 022:

U.S. Mortgage Insurers (USMI), the association representing the nation's leading private mortgage insurance (MI) companies, today announced the industry helped nearly 2 million low down payment borrowers secure mortgage financing in 2021, similar to the industry's 2020 activity, according to data from the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The industry also supported nearly $585 billion in mortgage originations, according to public filings. More than 80 percent of this volume by loan count was for new purchases while approximately 20 percent was for refinance loans. This resulted in nearly $1.4 trillion in outstanding mortgages with active private MI coverage at year's end, underscoring the industry's critical role serving as the first layer of protection against credit risk in the conventional mortgage market backed by the GSEs.

"As the economy continues to navigate the impact of the COVID-19 pandemic, conventional loans backed by private MI kept leveling the homebuying field for millions of low down payment borrowers," said Lindsey Johnson, President of USMI. "In 2021, private MI companies continued to be well-capitalized and maintained their high volumes, allowing more families achieve the dream of homeownership."

USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers throughout the year. The organization sent letters and released statements in support of bipartisan and bicameral legislative initiatives to make permanent the ability of homeowners to deduct MI premiums from federal income; submitted comment letters on the Federal Housing Finance Agency's (FHFA) Request for Input (RFI) on its Equitable Housing Finance Plans; joined the Black Homeownership Collaborative calling the Biden Administration to focus on the critical need for housing production to address the significant deficit that continues to drive up home prices across the country; among many other actions it took in support of first-time, low- to moderate-income (LMI), and minority homebuyers.

"Skyrocketing home prices combined with record low housing supply have made homeownership unreachable for many. It is critical that affordable, sustainable low down payment mortgages are available to meet borrowers' needs," said Johnson. "Private MI assumes the first loss --limiting risk to taxpayers and the government-- while also facilitating access to sustainable and affordable mortgage finance credit for millions of people who do not have significant down payments."

Home price appreciation (HPA) reached 17.5 percent over the course of 2021, according to FHFA's House Price Index (HPI(R)). In addition, the U.S. median home price hit a record in March, reaching $375,300, according a press release issued yesterday by the National Association of REALTORS(R). At the end of 2021, the private MI industry collectively held more than $10.4 billion in excess of the capital requirements set by the GSEs, for a sufficiency ratio of over 170 percent. The MI industry has enabled more than 37 million people to access affordable and sustainable low down payment mortgages in its 65-year history. In 2021, nearly 60 percent of purchase loans backed by MI went to first-time homebuyers, over 40 percent went to borrowers with incomes below $75,000, and the average loan amount with MI was approximately $310,000.

* * *

March 8, 2022

To: The Honorable Mike Crapo, Ranking Member, Committee on Finance, United States Senate, 239 Dirksen Senate Office Building, Washington, DC 20510

Dear Ranking Member Crapo,

On behalf of U.S. Mortgage Insurers (USMI), the trade organization representing the leading providers of private mortgage insurance (MI), I encourage you to co-sponsor S. 3590, the Middle Class Mortgage Insurance Premium Act of 2022, introduced by Senator Hassan and co-sponsored by Senator Blunt. This important bipartisan legislation would expand eligibility for and make permanent the tax deduction for MI premium payments for borrowers who put less than 20 percent down to purchase their home and qualify for financing thanks to private MI or government-backed MI through the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). USMI is dedicated to a housing finance system backed by private capital that enables access to affordable and sustainable housing finance for borrowers while protecting taxpayers, and strongly supports S. 3590.

MI is a key tool in prudently expanding homeownership by enabling families to secure financing when they are unable to put 20 percent down. Since 2007, millions of hard-working families have benefited from this tax deduction, including more than 4 million annually before the enactment of the Tax Cuts and Jobs Act in 2017. The most recent Internal Revenue Service (IRS) data shows that approximately 1.4 million households claimed this deduction in 2019, for an average tax deduction of nearly $2,100. Further, almost 60 percent of taxpayers claiming the deduction have less than $75,000 of adjusted gross income and 90 percent have less than $100,000. Mortgages with MI are disproportionately used by first-time, younger, and minority homebuyers who often lack the resources for large down payments. In fact, more than 80 percent of first-time homebuyers in recent years attained homeownership using low down payment loans. These borrower statistics are generally consistent for FHA and VA borrowers, with 85% of FHA and 50% of VA borrowers being first-time homebuyers, who generally have lower incomes. To illustrate the benefit to Idaho families, immediately below is data on homebuyers with mortgage insurance in your state:

* Idaho Borrowers with Mortgage Insurance in 2020 (about 34,000 homebuyers)

- 35.6% of agency mortgages in Idaho had some form of mortgage insurance

- 14,119 Idaho households purchased a home or refinanced an existing mortgage in 2020 using mortgages with private MI. Nationwide the industry helped more than 2 million households in 2020. For 2021 Q1-Q3, private MI helped 8,651 borrowers in Idaho (1.571 million nationwide).

- Approximately 8,000 FHA loans and 12,000 VA loans to Idaho households in 2020.

* First-Time Homebuyers

- 51% of Idaho homebuyers in 2020 with purchase loans with private MI were first-time homebuyers (nationwide was 58%).

- Nationwide, approximately 85% of FHA and 50% of VA purchase mortgages went to first-time homebuyers.

- Approximately 80% of first-time homebuyers use low down payment mortgages that have some form of mortgage insurance.

* Average Loan Amount

- The average loan amount for Idaho homebuyers with private MI in 2020 was $289,459 (compared to approximately $290,000 nationwide).

- Nationwide average loan amounts for FHA and VA in 2020 were $236,100 and $317,600, respectively.

In general, taxpayers may deduct mortgage interest payments. To qualify for a mortgage loan, taxpayers who purchase or refinance their home with down payments of less than 20 percent will typically be required to have mortgage insurance, attained through private MI, the FHA, the VA, or the USDA, and will pay premiums for this insurance. The premium payments are part of the price of the loan, and therefore effectively a form of interest that should be deductible for tax purposes.

In 2006, Congress first enacted legislation allowing a tax deduction for mortgage insurance premium payments. The provision has always been temporary but, because of the importance to millions of low- and moderate-income homeowners, it has been extended every couple of years. This deduction has been limited to taxpayers under certain income levels, beginning to phase out at adjusted gross income of $100,000 for joint filers (half that for individual filers and married individuals filing separately), which were the income levels set in 2006 without adjustment for inflation and not subsequently increased. The purpose of this legislation is to make permanent this important provision for homeowners, and to adjust the income limits to $200,000 (half that for individual filers and married individuals filing separately).

It is finally time for Congress to make permanent the deductibility of mortgage insurance premiums. In addition, the income limit for taxpayers who can take the deduction for mortgage insurance premiums should be increased to take into account the erosion of the value of the dollar with the passage of time.

Thank you for your consideration and we hope you will co-sponsor this important legislation.

Sincerely,

Lindsey D. Johnson, President

* * *

March 8, 2022

To: The Honorable Ron Wyden, Chairman, Committee on Finance, United States Senate, 221 Dirksen Senate Office Building, Washington, DC 20510

Dear Chairman Wyden,

On behalf of U.S. Mortgage Insurers (USMI), the trade organization representing the leading providers of private mortgage insurance (MI), I encourage you to co-sponsor S. 3590, the Middle Class Mortgage Insurance Premium Act of 2022, introduced by Senator Hassan and co-sponsored by Senator Blunt. This important bipartisan legislation would expand eligibility for and make permanent the tax deduction for MI premium payments for borrowers who put less than 20 percent down to purchase their home and qualify for financing thanks to private MI or government-backed MI through the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). USMI is dedicated to a housing finance system backed by private capital that enables access to affordable and sustainable housing finance for borrowers while protecting taxpayers, and strongly supports S. 3590.

MI is a key tool in prudently expanding homeownership by enabling families to secure financing when they are unable to put 20 percent down. Since 2007, millions of hard-working families have benefited from this tax deduction, including more than 4 million annually before the enactment of the Tax Cuts and Jobs Act in 2017. The most recent Internal Revenue Service (IRS) data shows that approximately 1.4 million households claimed this deduction in 2019, for an average tax deduction of nearly $2,100. Further, almost 60 percent of taxpayers claiming the deduction have less than $75,000 of adjusted gross income and 90 percent have less than $100,000. Mortgages with MI are disproportionately used by first-time, younger, and minority homebuyers who often lack the resources for large down payments. In fact, more than 80 percent of first-time homebuyers in recent years attained homeownership using low down payment loans. These borrower statistics are generally consistent for FHA and VA borrowers, with 85% of FHA and 50% of VA borrowers being first-time homebuyers, who generally have lower incomes. To illustrate the benefit to Idaho families, immediately below is data on homebuyers with mortgage insurance in your state:

* Idaho Borrowers with Mortgage Insurance in 2020 (about 34,000 homebuyers)

- 35.6% of agency mortgages in Idaho had some form of mortgage insurance

- 14,119 Idaho households purchased a home or refinanced an existing mortgage in 2020 using mortgages with private MI. Nationwide the industry helped more than 2 million households in 2020. For 2021 Q1-Q3, private MI helped 8,651 borrowers in Idaho (1.571 million nationwide).

- Approximately 8,000 FHA loans and 12,000 VA loans to Idaho households in 2020.

* First-Time Homebuyers

- 51% of Idaho homebuyers in 2020 with purchase loans with private MI were first-time homebuyers (nationwide was 58%).

- Nationwide, approximately 85% of FHA and 50% of VA purchase mortgages went to first-time homebuyers.

- Approximately 80% of first-time homebuyers use low down payment mortgages that have some form of mortgage insurance.

* Average Loan Amount

- The average loan amount for Idaho homebuyers with private MI in 2020 was $289,459 (compared to approximately $290,000 nationwide).

- Nationwide average loan amounts for FHA and VA in 2020 were $236,100 and $317,600, respectively.

In general, taxpayers may deduct mortgage interest payments. To qualify for a mortgage loan, taxpayers who purchase or refinance their home with down payments of less than 20 percent will typically be required to have mortgage insurance, attained through private MI, the FHA, the VA, or the USDA, and will pay premiums for this insurance. The premium payments are part of the price of the loan, and therefore effectively a form of interest that should be deductible for tax purposes.

In 2006, Congress first enacted legislation allowing a tax deduction for mortgage insurance premium payments. The provision has always been temporary but, because of the importance to millions of low- and moderate-income homeowners, it has been extended every couple of years. This deduction has been limited to taxpayers under certain income levels, beginning to phase out at adjusted gross income of $100,000 for joint filers (half that for individual filers and married individuals filing separately), which were the income levels set in 2006 without adjustment for inflation and not subsequently increased. The purpose of this legislation is to make permanent this important provision for homeowners, and to adjust the income limits to $200,000 (half that for individual filers and married individuals filing separately).

It is finally time for Congress to make permanent the deductibility of mortgage insurance premiums. In addition, the income limit for taxpayers who can take the deduction for mortgage insurance premiums should be increased to take into account the erosion of the value of the dollar with the passage of time.

Thank you for your consideration and we hope you will co-sponsor this important legislation.

Sincerely,

Lindsey D. Johnson, President