During a House Financial Services Capital Markets Subcommittee hearing yesterday, Marti Rodamaker, president of Iowa-based First Citizens National Bank, stressed that private mortgage insurance (PMI) is critical to the nation's housing recovery and that any reform of it must be made in coordination with other elements of housing finance reform. Rodamaker testified on behalf of the Independent Community Bankers of America.
‘Our nation's nearly 8,000 community banks are critical to the housing recovery because we offer prudent, common-sense loans with properly managed risk,’ Rodamaker said. ‘Appropriate risk management, coupled with a functional market for PMI will be key to America's housing and economic recovery."
Community banks need PMI to access funding, she said.
"The only practical means of making high-loan-to-value (LTV) loans, whether they're sold or held in portfolio, is with the credit enhancement provided by PMI,’ Rodamaker told lawmakers. ‘If lenders don't have the flexibility to make high-LTV loans, the housing recovery will take longer.’
PMI companies are prepared to bring private capital back into the market, testified Patrick Sinks, president and chief operating officer of Mortgage Guaranty Insurance Corp. Sinks testified on behalf of the Mortgage Insurance Companies of America, a trade association that represents PMI companies.
‘Today, the [mortgage insurance (MI)] industry is well positioned to help expand affordable housing opportunities in a responsible manner,’ Sinks said. ‘Under strong capital rules from state insurance regulators, the MI industry has sufficient capital to increase their total insurance exposure by $261 billion a year for the next three calendar years. If this additional volume is realized, it would mean that approximately 1.3 million additional mortgages would be insured in each of the years.’