Decisions such as the definitions for qualified mortgage and qualified residential mortgage are being made in isolation that will have unintended consequences when they are rolled out, such as limiting competition between private mortgage insurers and the Federal Housing Administration, an executive with Genworth Mortgage Insurance told attendees at the Mortgage Bankers Association’s National Secondary Market Conference in New York.
James Bennison, senior vice president of strategy and capital markets, said the proposed QM definition would exclude FHA premiums from the points and fees calculations, but not the comparable private mortgage insurance premiums.
Meanwhile, FHA-insured loans would have a full exemption from the capital requirements under the QRM, but not so for private MI. The definitions need to be adjusted in order to attract private capital, he said.
Furthermore, the government-sponsored enterprises need to coordinate their guarantee fee increases with FHA price increases. They should not see FHA increase as an opportunity to increase their fees, Bennison added.
On the good news side, the entry of Essent and potential entry of another new company into the private MI space is encouraging for the return of private capital.
Fairness remains a major issue. Bennison declared that the private MIs need a sandbox to play in. Right now, it is a bucket.