ValueInsured offers innovative homebuyer-first solution to FHFA’s credit risk transfer RFI
DALLAS, Nov. 21, 2016 – ValueInsured, the only provider of down payment protection, submits a response to the Federal Housing Finance Agency’s (FHFA) Single-Family Credit Risk Transfer Request for Input (RFI). The RFI was issued to “assist FHFA and the Enterprises in their ongoing analysis of font-end credit risk transfer transaction structures in which a portion of the credit risk is transferred prior to Enterprise acquisition of the underlying mortgage.”
In its submission, ValueInsured outlined why down payment protection could be one of the most effective and far-reaching credit risk transfer (CRT) solutions, citing:
- Down payment protection (DPP) represents an additional up-front risk transfer mechanism not currently in use;
- DPP is the only upfront risk transfer mechanism designed to modify borrower behavior so as to avoid defaults;
- In contrast with other CRT mechanisms that only deal with default scenarios, DDP-related loans would be de-risked before getting onto the GSE’s balance sheets;
- For the period just prior to and during the housing crisis (1999 through 2008), DPP covered transactions would have provided approx. $2.2 billion of coverage toward borrower down payments on loans that ultimately went into foreclosures, and an additional $37.24 billion to cover borrowers’ home equity losses;
- DPP-related loans backed by major reinsurers represent an efficient use of capital that positively impacts the cost structure of residential mortgage loans.
According to Joe Melendez, CEO of ValueInsured, down payment protection makes the entire life cycle of mortgage lending safer. “Nine years after our country’s worst housing crisis, many wonder how we would deal with the next crisis. Instead of waiting to cope, we now have the solution to prevent the next crisis from happening at all. As home buying evolves, so should mortgage lending, borrowing and how we manage credit risks.”
By giving homeowners the ability to sell in a down market and move on with their credit intact, down payment protection not only eliminates defaults before they occur, it also makes home loans more affordable by reducing lending risks and costs to lenders. By reducing all downstream risks, it benefits lenders, mortgage insurers, GSEs, and institutional investors, propelling growth in the entire housing industry.
PVI Agency, LLC dba ValueInsured, is the only provider of down payment protection for modern homebuyers, giving them greater control, confidence and flexibility in a volatile real estate market – all for the cost of a lunch per month. ValueInsured's +PlusSM down payment protection is easy, affordable and backed by one of the world's largest re-insurance companies, with over $8 billion in capital. Based in Dallas, ValueInsured is led by a team of professionals experienced in every part of the home buying process.
The information contained herein does not constitute a solicitation nor an offer of insurance in any jurisdiction in which it would be unauthorized or unlawful to do so, including, but not limited to the State of New York.
Chief Marketing Officer, ValueInsured