1. MI and the First-Time Homebuyer PRESENTED BY: Geoffrey Cooper, Director – Customer Solutions, MGIC Helping Renters Overcome Barriers to Homeownership

2.  Mortgage Market and MI Trends  Renters and First-Timers  MI Cost Comparisons  HFA Programs: Ideal for First-Time Home Buyers AGENDA Agenda

3. BACKGROUND

5. MI TRENDS

7. Old Habits Die Hard? MI TRENDS The Facts Tell a Different Story …

8. For the first time since 2007, more loans are being insured with MI than FHA MI TRENDS MI is On The Rise

9. MI Costs Less … … and is Cancellable MI TRENDS MI - Monthly (Standard Programs) MI - Monthly (HFAs, MyCommunity® and Home Possible®) FHA Upfront MIP0.00% 1.75% Renewal Rates:760 FICO 97% LTVNA0.57%96.5% LTV – 1.25% 95% LTV0.54%0.43%1.20% 90% LTV0.39%0.29%1.20% 85% LTV0.23%0.21%1.20% Note: FHA premiums increased effective April 9, 2012, HUD Mortgagee Letter 12-04. Scenario assumes 30-year fixed-rate mortgage. 0.77% less than FHA!

10. MI Costs Less … … and is Cancellable MI TRENDS MI - Monthly (Standard Programs) MI - Monthly (HFAs, MyCommunity® and Home Possible®) FHA Upfront MIP0.00% 1.75% Renewal Rates:680 FICO 97% LTVNA0.80%96.5% LTV – 1.25% 95% LTV0.89%0.67%1.20% 90% LTV0.57%0.39%1.20% 85% LTV0.33%0.29%1.20% Note: FHA premiums increased effective April 9, 2012, HUD Mortgagee Letter 12-04. Scenario assumes 30-year fixed-rate mortgage. 0.53% less than FHA!

11. MI Costs Less … … and is Cancellable MI TRENDS MI - Monthly (Standard Programs) MI - Monthly (HFAs, MyCommunity® and Home Possible®) FHA Upfront MIP0.00% 1.75% Renewal Rates:640 FICO 97% LTVNA0.94%96.5% LTV – 1.25% 95% LTV1.15%0.74%1.20% 90% LTV0.71%0.47%1.20% 85% LTV0.39%0.33%1.20% Note: FHA premiums increased effective April 9, 2012, HUD Mortgagee Letter 12-04. Scenario assumes 30-year fixed-rate mortgage. 0.46% less than FHA!

12.  39% of First-Time Home Buyers used FHA financing in 2013, down from 56% in 2010 (National Association of Realtors)  This means Conventional lending with MI has picked up among First-Time Home Buyers  Fannie and Freddie loans with down payments of less than 20% require MI  The use of First-Time Home Buyer programs, such as Fannie Mae’s MyCommunity®, Freddie Mac’s Home Possible®, and programs offered by Housing Finance Agencies are on the rise MI TRENDS First-Time Home Buyers Are a Major Driving Force Behind MI Growth

13. RENTERS Source: National Association of Realtors Profile of Home Buyers and Sellers

14.  Millennials  Born between 1985-2003 (age 11-30)  Children of Baby Boomers  28% of Nation’s population (88 million people)  Gen Xers  Born between 1965-1984 (age 30-49)  28% of Nation’s population (88 million people) RENTERS Who Are Today’s First-Time Home Buyers?

15. RENTERS Millennials and Gen Xers hardest hit by Great Recession

16. RENTERS Source: Fannie Mae National Housing Survey Topic Analysis, May 2014 Young Renters Believe Buying a Home Will be Too Difficult For Them Right Now

17. Source: Fannie Mae National Housing Survey Topic Analysis, May 2014 RENTERS Young Renters See Credit, Lack of Savings, and Income as Primary Barriers to Buying Now

18. RENTERS

21. Source: Fannie Mae National Housing Survey Topic Analysis, May 2014 The Myth of the Renter Generation: Young Renters Want to Buy At Some Point

22. The Cost of Waiting: Purchasing Power Falls as Interest Rates Rise COST COMPARISONS 6.00% $1,109 $1,140$1,171$1,202$1,232 5.75%$1,082$1,112$1,142$1,172$1,202 5.50%$1,055$1,084$1,114$1,143$1,172 5.25%$1,028$1,056$1,086$1,114$1,142 5.00%$1,002$1,029$1,058$1,085$1,113 4.75%$976$1,003$1,031$1,057$1,084 4.50%$950$976$1,004$1,030$1,056 Purchase Price $180,000 $185,000 $190,000 $195,000 $200,000 MGIC Estimate includes P&I + MI payment, assuming 760 FICO and 5% down

23. Monthly Payment Comparison: 760 FICO, 95% LTV, Standard Coverage COST COMPARISONS Source: MGIC online calculator, https://content.mgic.com/calculators/servlet

24. Monthly Payment Comparison: 720 FICO, 95% LTV. Standard Coverage COST COMPARISONS Source: MGIC online calculator, https://content.mgic.com/calculators/servlet

25. Monthly Payment Comparison: 680 FICO, 95% LTV, Standard Coverage COST COMPARISONS Source: MGIC online calculator, https://content.mgic.com/calculators/servlet

26. Monthly Payment Comparison: 660 FICO, 95% LTV, Standard Coverage COST COMPARISONS Source: MGIC online calculator, https://content.mgic.com/calculators/servlet

27. Other Considerations: 660 FICO, 95% LTV, Standard Coverage COST COMPARISONS Source: MGIC online calculator, https://content.mgic.com/calculators/servlet Note: Monthly MI cancelled in Month 62 based on 3% annualized home price appreciation

28. Give Me the Lowest Cash-to-Close Option Available 720 FICO, HFA Preferred, Conventional 97% LTV vs. FHA 96.5% LTV HFAs Source: MGIC online calculator, https://content.mgic.com/calculators/servlet

29.  97% LTV / 105% CLTV  Reduced MI coverage  Gifts and grants may be used to reduce borrower own funds required to close, subject to NM MFA requirements  Best secondary market product available for overcoming the barriers to homeownership cited by renters HFAs HFA Preferred is Available Through New Mexico Mortgage Finance Authority

30. Geoffrey F. Cooper Director – Customer Solutions 414.347.2738 Geoff_cooper@mgic.com QUESTIONS?