RICHMOND, Va., Sept. 9, 2014 /PRNewswire/ -- Genworth U.S.
Mortgage Insurance ("Genworth"), a unit of Genworth Financial, Inc.
(NYSE: GNW), submitted its response to the Federal Housing Finance
Agency (FHFA) regarding the draft Private Mortgage Insurance
Eligibility Requirements (PMIERs), which Fannie Mae and Freddie Mac
("Enterprises") would use to approve private mortgage insurers that
provide mortgage insurance on loans owned or guaranteed by them. In
addition, Genworth filed a response and shared recommendations for
the FHFA's request for public input regarding the current state of
Guarantee Fees ("G-fees").
"Genworth appreciates this thorough effort to increase the
financial strength of the private mortgage insurance industry and
reinforce the vital role of private mortgage insurance in the U.S.
housing finance system," said Rohit
Gupta, Genworth MI's president and CEO. "We remain
committed to working with the FHFA and the Enterprises to implement
progressive and transparent reform for strengthening the MI
industry. We aim to strike a balance between implementing reform
that enhances credit risk protection while ensuring affordable
access to mortgage credit for first-time homebuyers,
low-to-moderate income borrowers and members of underserved
communities."
Outlined below is an overview of the key issues addressed in
Genworth's response to the current PMIERs and G-fees proposals as
well as recommendations for consideration:
PMIERs
Appropriate Credit for Future Premiums – Genworth
recommends inclusion of 210% of prior year's premiums in the asset
calculation for loans insured after 2008. This is the same
methodology the Enterprises applied to the 2008 and prior year
vintages.
"Seasoning" Factors – Loan seasoning is a material factor
in assessing the probability that a loan will go into default. The
longer a mortgage loan remains performing, the lower the
probability of future default. As a result, the asset test should
be revised to recognize the impact of loan seasoning on probability
of default for newer books.
Counter-Cyclical Asset Test – Genworth supports an asset
test model that acts counter-cyclically -- building capital during
strong markets in order to use a portion of that capital to pay
claims during downturns while continuing to write new business to
support the housing recovery.
Capital Factor Granularity and Transparency – More
transparency into the development, as well as granularity of, the
capital factors used in the PMIERs is essential for appropriate
capital and business planning purposes. Specifically,
Genworth is recommending changes to the capital factors applied to
2005-2008 vintages and non-performing insured loans, and adding
more granularity for LTVs below 85%.
Governance Provisions – Genworth would like more details
provided and documented regarding how changes to an MI's status or
proposed restrictions will be imposed. In an effort to assist
with this issue, Genworth has provided a redlined version of the
PMIERs that includes revisions that address its concerns.
Guarantee Fees
Today also marked the comment period close of the request by the
FHFA for public input regarding Enterprise G-Fees. As such,
Genworth's response to the request included the following
recommendations:
- Formally withdraw the G-fee increases proposed by former Acting
Director DeMarco
- Discontinue the existing adverse market fees without
implementing offsetting increases elsewhere
- Existing loan level fees based on FICO scores and LTV
percentages should give full and transparent recognition for the
credit loss mitigation from private MI and so should be eliminated
or materially decreased
- Require GSEs to provide sufficient transparency into their
pricing models
Following are links to the full materials issued by
Genworth:
Genworth PMIERS Comment Letter
Genworth G-fees Comment Letter
About Genworth Financial
Genworth Financial, Inc.
(NYSE: GNW) is a leading Fortune 500 insurance holding company
committed to helping families become more financially secure,
self-reliant and prepared for the future. Genworth has leadership
positions in long term care insurance and mortgage insurance and
competitive offerings in life insurance and fixed annuities that
assist consumers in solving their insurance, retirement and home
ownership needs.
Genworth operates through three divisions: U.S. Life Insurance,
which includes life insurance, long term care insurance and fixed
annuities; Global Mortgage Insurance, containing U.S. Mortgage
Insurance and International Mortgage Insurance segments; and the
Corporate and Other division, which includes the International
Protection and Runoff segments. Products and services are offered
through financial intermediaries, advisors, independent
distributors and sales specialists. Genworth, headquartered in
Richmond, Virginia, traces its
roots back to 1871 and became a public company in 2004. For more
information, visit genworth.com. From time to time, Genworth
releases important information via postings on its corporate
website. Accordingly, investors and other interested parties are
encouraged to enroll to receive automatic email alerts and Really
Simple Syndication (RSS) feeds regarding new postings. Enrollment
information is found under the "Investors" section of genworth.com.
From time to time, Genworth's publicly traded subsidiaries,
Genworth MI Canada Inc. (TSX: MIC) and Genworth Mortgage Insurance
Australia Limited (ASX: GMA), separately release financial and
other information about their operations. This information can be
found at http://www.genworth.com.au and http://genworth.ca.
SOURCE Genworth Financial, Inc.