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cover story was put out externally. Some thought the entire MI industry would not make it through the downturn," he explained. "We spent time with our employees to prevent discouragement." Two things that helped Genworth survive were the facts that the company had one of the lowest-risk books and a lower number of delinquencies, accord- ing to the company's CEO. In addition, Gupta said, "Genworth is part of a larger insurance company and had access to more capital than other companies." He said he doesn't think there is any way to "shelter" MI companies from losses. "We had a duty to pay legitimate claims, and we've paid more than $6 billion in the last six years. Fortunately, we were able to replace our capital from other sources in our parent company." Disputing Claims S ometimes fraudulent claims are submitted, and MI com- panies will, of course, refuse to pay them. Claims like these saw a jump during the housing crisis. "While lenders fundamentally understood what was covered in the MI policy, not all submitted claims were legitimate. Fraudulent loan activity was more widespread in the years leading up to and dur- ing the crisis because there were fewer controls." Gupta said. He emphasized that today, the process is much more rigorous and the terms are very clearly defined in the policy. "Working with lenders and the industry, we collaborated to learn from the mistakes of the past. However, if we find fraud in a claim, we will return the premium," he explained. MGIC CEO Sinks believes the financial crisis led everyone involved in the loan origina- tion process to focus on rescis- sions. Sinks said, "We cannot live through this process again of having fights with customers about what is and is not insured." Sinks added, "As a result, all of the private mortgage insurance companies created a new master policy to avoid this fight and offer greater rescission protection for their customers." FHA Lowers MI Premiums and Down Payments T o more effectively serve their mission, the FHA recently lowered the cost of their mort- gage insurance. Beginning in January, MIP on 30-year loans with LTV more than 95 percent was reduced from 1.35 percent to 0.85 percent plus 1.75 percent up front. Other types of loans had similar reductions. According to a Whitehouse fact sheet, the reduction is expected to help more than 800,000 borrowers each year save an average of $900. That means millions of households will save billions of dollars in mortgage payments in the coming years. Reducing premiums helps homeowners and is consistent with FHA's goal to strengthen its A New CompANy INfuses New LIfe IN the mI INdustry More capital and new ideas bring strength and refreshing change While the housing crisis led to the failure of some household names, it also presented new opportunities for entities that wanted to enter the MI business, such as Arch Mortgage Insurance. Arch MI was born out of Arch Capital Group Ltd.'s acquisition of CMG Mortgage Insurance Company from CUNA Mutual Group and PMI Mortgage Insurance Co. in January 2014. With its creation, Arch MI brought fresh capital and greater claims-paying ability, according to CEO David Gansberg. "CMG had been offering mortgage insurance for loans made through credit unions," he said. "We expanded the business to insure loans originated by everyone, not just credit unions." Now, he said, the new company has expanded into serving small community banks, as well as regional and national banks. Gansberg said that Arch's business plan is a two-pronged approach. "Our company wants to provide a great level of service and make it as seamless as possible," he added. "Arch also has great financial strength and has strong ratings by both Moody's and S&P." One thing that differentiates Arch from some other MI companies is that, in addition to providing the usual mortgage insurance services, they also serve lenders who keep loans in their portfolios. This would include jumbo loans and other loans that don't meet QM requirements. "We created a type of mortgage insurance for these types of loans," Gansberg explained. "Lenders may feel that these are good quality loans and want to hold onto them." He said that another thing that makes Arch different is that they are not a mono-line, publicly traded MI company. "We are part of a larger group, making us more diversified," he explained. "Back in the crisis, some companies had a hard time accessing new capital because they didn't have other businesses to generate profit. Our mortgage insurance is part of a larger group. We have other entities that gen- erate capital that we can use for our business." As for the future of the MI Industry, Gansberg said he is always looking for ways that the MI industry can play a more active role. According to him, the industry as a whole could become more active in better protecting taxpayers. "I think we can serve the market for less than 80 percent loan-to-value and provide deeper coverage," he said. "There is a greater role for MI companies to fulfill." the mortgage insurance industry played the role it was meant to play. —rohit Gupta, president and Ceo of Genworth Th e M Rep o RT | 19

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