WALNUT CREEK, Calif., March 29, 2011 /PRNewswire/ -- The PMI Group, Inc. (NYSE: PMI) today commented on the proposed definition of a qualified residential mortgage (QRM) released by the Federal regulators as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The regulators stipulate that QRM mortgages will be required to have 20 percent down payment, however, the rule is open-ended and they are seeking comment on other alternatives. Importantly, the regulators, recognizing that the GSE's retain 100 percent of the risk of the loans they securitize, appropriately exempted them from the risk retention requirement. This will insure a stable flow of mortgage credit to qualified borrowers and continue to allow prudently underwritten, low-downpayment mortgages with private mortgage insurance to be offered to the market.
"While we are disappointed that the regulators chose a very narrow and restrictive definition of QRM, we are encouraged that they are seeking comment on an alternative QRM definition that would involve a 10 percent down payment and more reliance on private mortgage insurance. Additionally, we believe that prudentially underwritten mortgages with less than a 10 percent down payment and private mortgage insurance should also be included in the definition," said David Katkov, PMI's Executive Vice President and Chief Business Officer.
PMI supports the objective of establishing a class of mortgages that are carefully and prudently underwritten that will be exempt from the risk retention provisions outlined in the Dodd-Frank law. "We believe that a requirement for an appropriately sized downpayment combined with private mortgage insurance provides a balance of positively influencing lender and borrower behavior while bringing private capital back to the residential real estate market." Katkov stated. "However, we are concerned that an overly restrictive cash downpayment requirement will negatively impact otherwise qualified borrowers and may have unintended consequences that could dampen the nation's housing recovery."
The rule that was proposed today invites public dialogue and allows for a 60 day comment period. PMI intends to actively engage in the rulemaking proceeding and will be presenting its views to regulators and policymakers throughout this process.
For over 35 years, PMI Mortgage Insurance Co. has offered residential mortgage insurance. Private mortgage insurance is primarily used by first time homebuyers and enables qualified low-to-moderate income borrowers the opportunity to finance a home purchase years sooner than without mortgage insurance.
About The PMI Group, Inc.
The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, provides credit enhancement solutions that expand homeownership while supporting our customers and the communities they serve. Through its wholly and partially owned subsidiaries, PMI offers residential mortgage insurance and credit enhancement products. For more information: www.pmi-us.com.
SOURCE The PMI Group, Inc.