The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac (the GSEs) are issuing updates to the Private Mortgage Insurer Eligibility Requirements (PMIERs)–the financial and operational standards that private mortgage insurance companies must meet to provide insurance on mortgage loans acquired by the GSEs.
“Financially sound private mortgage insurance companies play a critical role in a healthy residential mortgage market that helps borrowers, including first-time homebuyers, achieve their homeownership dreams,” said FHFA Director Sandra L. Thompson. “These updates represent an ongoing commitment to the safety and soundness of the Enterprises, ensuring that their private mortgage insurer counterparties have the necessary financial strength to pay claims in a wide range of economic environments.”
Since the GSEs first issued the aligned PMIERs in 2015, they have periodically reviewed their standards with the goal of ensuring counterparties can meet their obligations through the economic cycle, thus improving the safety and soundness of the GSEs and the housing finance system. The GSEs reviewed the standards for Available Assets held by mortgage insurers to pay claims to ensure that these assets are high quality, highly liquid, and readily available when needed.
“PMIERs has been a valuable capital framework for our industry, promoting the consistent, transparent, and reliable financial strength of private mortgage insurers through various credit cycles,” said Rick Thornberry, CEO of private mortgage insurer Radian Guaranty. “We are pleased that our relationship with the GSEs and the FHFA helps us to increase access to mortgage credit and support our customers in providing affordable, sustainable homeownership opportunities.”
The updated standards differentiate between bonds based on credit quality and liquidity. The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress. The updated standards will improve the Enterprises’ counterparty risk management and better prepare them to withstand a future stress situation while fulfilling their mission to serve as a reliable source of liquidity for equitable and sustainable housing finance throughout the economic cycle.
“We are proud of the critical role PMI plays in the housing finance system. PMIERs operational and risk-based capital requirements provide a strong foundation to serve low down payment borrowers while protecting the GSEs and taxpayers from undue mortgage credit risk and private MIs continue to be strong, well-capitalized counterparties,” said Tim Mattke, CEO of Mortgage Guaranty Insurance Corporation (MGIC). “We appreciate the collaboration with the GSEs and support prudent PMIERs changes.”
The FHFA’s updated standards to the PMIERs operational and risk-based capital requirements will be implemented through a 24-month phased-in approach, with a fully effective date of September 30, 2026.
“Based on the strength of our PMIERs sufficiency ratio today and our high quality and well diversified investment portfolio, we are well positioned to comply with the updated PMIERs,” said Mark Casale, Chairman and CEO of Essent Group Ltd. “We commend the FHFA and the GSEs for their continued efforts to enhance PMIERs, which further solidifies the role of the private mortgage insurance industry in serving the U.S. housing finance system and supporting affordable and sustainable homeownership.”
Click here to read Fannie Mae’s full PMIERs Update, and click here to view Freddie Mac’s full PMIERs Update.
