1. Today’s Private Mortgage Insurance Industry
NMI Holdings, Inc. (NMIH)
Today’s Private Mortgage Insurance Industry
New Opportunities to Drive Production Volume
July

2. Decline Of Private MI
The Private MI industry was under attack during the Great Recession
3 of 7 providers were forced into runoff, with remaining providers on life support
Survivors pulled back heavily on guidelines, and increased pricing
Credibility was diminished as the industry’s ability, and willingness, to pay claims was called into question
Into the breach stepped the FHA, supporting the low down payment housing market

3. Revenge of the FHA

4. A New Hope As the crisis subsided, new entrants joined the MI industry
Survivors re-capitalized
The GSEs increased oversight of the industry, introducing new policy requirements and new financial standards
The GSEs themselves introduced greater transparency around repurchase demands
Conventional w/ MI became a viable solution for low down-payment transactions, and market share recovered

5. Private MI Strikes Back

6. MI Awakens
From 2008 through 2015 the MI industry had no detailed capital requirements on which to base pricing
In 2015 the GSEs released the Private Mortgage Insurer Eligibility Requirements
PMIERs includes loan-level capital charges
These charges give the industry the constraints to which to price
Starting in fall 2015 National MI started pricing to these capital charges, with others following in early 2016
These changes create tremendous opportunities for mortgage lenders and their borrowers!

7. Opportunity: High Balance Mortgages
The MI industry has historically increased rates above the conventional loan limit (that is, the mainland $417K)
With new rates, the industry has raised that level to $625,500.
National MI has removed the adjustors entirely! We have no loan amount adjustors at any level (especially important for high cost areas like HI).

8. Opportunity: Short Term Mortgages
Often the barrier to homeownership is not income, but down-payment
For borrowers with good credit, good income, but low down-payment, new MI pricing on 15 year mortgages can be attractive
Monthly payments can be higher, but interest and MI costs lower
At today’s rates, borrower paid MI can be cancelled very quickly under HOPA (amortization down to 78 LTV)
In the example below, the loan amortizes to 78 in 41 months (3.4 years)

9. Opportunity: Low Down Payments
Most FHA borrowers put down less than 5%
Of these, nearly 1/3 have FICO scores of 700 and above
Nearly 12 percent have FICO scores 740 and above
With new MI pricing, many of these borrowers may find conventional with MI a more attractive option

10. Additional Private MI Benefits
Besides being stronger counterparties with an increased willingness to pay claims, the Private MI industry brings other benefits:
Willingness to insure programs outside the GSE credit box (e.g. Doctor loan programs, portfolio jumbo programs)
Credit and regulatory loss relief for portfolio products
Education and training for underwriters, loan officers, etc (e.g. marketing to Millennials)
For borrower-paid mortgage insurance, termination of insurance at 78 LTV

11. Join The Alliance Private MI has risen from the ashes
Greater certainty of coverage, improved financial strength, and more rational pricing position the industry to better serve the needs of its customers
Additional benefits for both you and your borrowers
Now is the time to take advantage of these changes to qualify more customers and drive more volume