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Comment

Summary of Comments
We are pleased to provide input and share perspectives in response to the Mortgage Insurance Eligibility Project.
As authors of the letter that follows, Mike Molesky brings many years of risk analytics and modeling and Mark Goldhaber has years of housing and mortgage policy expertise and has worked for years on affordable housing initiatives to responsibly expand access to credit.
In designing a claims capacity model one needs to be sure that the model accurately portrays what really happens to all of the various components of the business during a severe housing market recession. Making sure you have the right stress losses for the newest exposures is only a small part of the issue. The model needs to recognize the benefits of seasoning and measure the actual losses of loans that are older and have greater equity cushions from borrowers who are now better equipped to handle a mortgage than they were years earlier. The model needs to be able to measure the actual higher survivorship rates of high LTV loans under stressful conditions, so that the appropriate flow of premium income may be credited to MI capacity to cover claim losses. All model results need to be compared to actual outcomes of real stress conditions to be sure that the model has accurately captured how the companies actually perform under such conditions. The goal is a credit enhancement that protects lenders and investors and facilitates a robust and vibrant low down payment conventional market that is also affordable for the consumer.