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Private mortgage insurance companies are making a comeback amid rising FHA premiums, and companies like Arch MI are gaining more market share by offering attractive risk-management solutions. HousingWire sat down with Arch MI CEO David Gansberg to find out how his company is helping lenders expand their origination opportunities.
HousingWire: Why did Arch MI decide to develop its Portfolio Power mortgage insurance solution for portfolio lenders?
David Gansberg:Arch MI continues to deliver unique and innovative mortgage insurance solutions to our customers, including the first and only master policy offering “Day 1” rescission relief. The creation of Arch Mortgage Guaranty (AMG) and its Portfolio Power product represent a major step forward in the MI industry. Portfolio Power supports our customers' product expansion in today's evolving mortgage marketplace and positions us to support their goals in confidently exploring new and niche markets — generating more homeownership opportunities.
HW: How does Portfolio Power help lenders reduce their risk exposure?
DG: The mortgage insurance coverage placed on a loan determines the amount paid out in claim. For example, on an 80% portfolio loan without mortgage insurance, the lender has an 80% risk exposure and in the event of default the lender could realize a significant loss. Using AMG’s Portfolio Power to provide standard MI coverage, the lender could approve a 90% loan for the borrowerand reduce their own risk exposure to 68%.
HW: Which part of this solution do you expect to be most popular?
DG: Because AMG is a separately capitalized entity and not subject to GSE requirements it's uniquely positioned to insure various types of prime, standard and non-standard mortgages, including jumbo, non-QM and portfolio mortgages on an individual, bulk, or pool basis.
With AMG receiving Moody’s highest IFS rating in the U.S. mortgage insurance industry, its unique master policy and the ability to insure a wide range of mortgages, Arch MI is introducing another superior and innovative value proposition to the mortgage insurance marketplace. Lenders definitely appreciate having greater flexibility to expand their scope in a highly competitive environment, so we expect activity in all loan product segments.
HW: How does Day 1 rescission relief on non-delegated loanshelp your clients?
DG: The AMG master policy is unique compared to the GSE master policies, including Arch MI’s, in that it provides AMG customers with true “Day 1” rescission relief for value, underwriting and borrower misrepresentations with absolutely no requirement to send post-closing documents. The AMG master policy also relieves the customer of any risk of a rescission for a first-party misrepresentation after five years. Finally, the AMG master policy does not permit a rescission of coverage on loans for any reason based on an innocent mistake by the customer.
HW: How does Portfolio Power enable mortgage originators to expand lending opportunities?
DG: We believe in the value of mortgage lending, and providing our lending customers with products and services to help their borrowers achieve homeownership. The robust AMG Master Policy, coupled with Portfolio Power’s ability to insure loans that are “outside the box,” gives lenders fresh opportunities and opens up new markets. For example, our newest product innovation addresses the millennial borrower, who tends to have little money for down payment and high debt due to student loans. Our solution is the Millennial Mortgage, which supports up to a 97% LTV, 50% DTI on 5/1 or 7/1 ARMs and an option for extended loan terms.
HW: Originating Portfolio Power loans requires an approved AMG Master Policy with Arch MI. Is there a different origination process?
DG: No. Once the Master Policy is approved, originating Portfolio Power mortgage insurance for a loan is as straightforward as originating any other Arch MI product. The lender will use our ArchMIConnect platform, an online system that’s already among the easiest to use in the industry. We’ve also added a Live Support via Chat feature, so customers can communicate with us in the way that works best for them. Arch MI’s goal is to provide innovative product solutions supported by fast, efficient technology – meeting our customers’ demand for a true business partner.
