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Mortgage Insurance
An Industry Working to Restore the Dream
Primarily designed to protect lenders against the additional risk of underwriting loans for
more than 80% of a home's value, mortgage insurance also has a stabilizing and stimulating
effect on the housing market in general. Select the tabs below to learn more about the
fundamental role mortgage insurance plays in the housing industry.
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Private Capital at Risk
Legally required to put half of all premiums in a cash reserve for 10 years, mortgage insurance companies,
by design, will build capital during positive cycles so that claims can be paid in market downturns. As a
result, the industry puts vast reserves of private capital at risk, covering close to $1 trillion in mortgages
today. Being in this first-loss position motivates mortgage insurers to underwrite prudently and help
borrowers avoid foreclosure.
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Sustainable & Affordable Housing
By enabling the prudent underwriting of low down payment loans, mortgage insurance is a proven way to
stimulate sustainable and affordable home sales. For more than 50 years, mortgage insurers have been a
stabilizing force through market cycles with a record of opposing other exotic loan structures that add
unnecessary vulnerabilities.
Download these PDFs for more information:
Making Good Credit Decisions See how mortgage insurers apply their experience
to make good credit decisions.
Fully Documented Loan Files A good credit decision involves reviewing
a fully documented loan file.
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Borrower & Investor Alignment
A healthy housing industry depends on a healthy mortgage industry. Being in a first-loss position,
mortgage insurers align the interests of borrowers and investors in avoiding foreclosure. They adhere
to prudent underwriting standards and put robust programs in place to help borrowers avoid foreclosure.
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Expanding Prudent Lending
Mortgage insurance provides capital relief to lenders who underwrite low down payment home loans, which
frees up more bank capital to support more mortgage lending. This capital flexibility allows for more home
loans to happen, thus helping reduce the high levels of excess housing inventory currently in the market.
