While a recent survey found that mortgage insurance negatively impacts borrowers’ home choices, a relative newcomer sees significant opportunity ahead for the M.I. business. In other M.I. news, the Federal National Mortgage Association is updating its mortgage insurance forms.
The outlook for the private mortgage insurance industry is bright, according to NMI Holdings Inc. President and Chief Executive Officer Bradley Shuster.
He told investors at a Sanford C. Bernstein Co. conference last month that favorable demographics, an increase in purchase financing and a shrinking share for the Federal Housing Administration signal potential growth opportunities.
Schuster highlighted how a third of GSE purchase mortgages made during the first-half 2013 were taken out by first-time home buyers — a group whose average age is 34 years old. He noted that more than 40 million Americans are expected to reach that age during the next 10 years.
In addition, the growing share of purchases is very positive given that M.I. penetration is four times higher on purchases than on refinances.
Shuster estimated that between $1.5 billion and $2.1 billion in private capital will be needed by the M.I. industry in order to keep up with the additional demand, and his firm — which is the parent of National Mortgage Insurance Corp. — raised around $0.5 billion in 2012.
Emeryville, Calif.-based National M.I. reported that it had obtained licensing to write mortgage guaranty insurance in all 50 states and Washington, D.C., as of April. Wyoming was the final state it was approved in.
The 163-employee firm opened for business in 2012.
More recently, National M.I. touted a direct integration with the BlitzDoc intelligent collaborative network. The integration promises improved efficiency through a secure, enhanced document image exchange.
National M.I. operates online at www.nationalmi.com.
A survey announced last month by TD Bank found that 43 percent of homebuyers during the past two years were required to obtain mortgage insurance. Over the past decade, the share was 37 percent.
More than 2,000 people participated in the survey.
Nearly two-thirds of the borrowers who were required to obtain mortgage insurance indicated that they wound up with a higher monthly payment than they originally expected.
TD noted that many home buyers rethink or delay their purchases because of the higher payments. More than a third of those who bought in the past two years said the home they purchased was impacted by M.I. costs, and the share was more than a quarter for those who bought in the past decade.
Fannie Mae this week said in Selling Guide Announcement SEL-2014-08 that it has worked with approved mortgage insurers to update their master primary policies and related endorsements and other forms. Most of the forms hadn’t been updated in two decades.
The project was done at the direction of its regulator, the Federal Housing Finance Agency.
The secondary lender noted that while only mortgage insurers had been responsible for ensuring that the proper forms were utilized on Fannie Mae loans, it now will also hold lenders responsible.
The new forms will become effective after state insurance regulators approve them but prior to Oct. 1.
United Guaranty reported earlier this month that it has worked with lenders to refinance more than 81,500 loans through the Home Affordable Refinance Program from April 2009 through February 2014.
The Greensboro, N.C.-based company encouraged lenders to update closing dates on HARP loans online as long as there are no M.I. changes.
More HARP information from United Guaranty is available online at ugcorp.com/HARP.
