Comment Detail

Comment

Enclosed please find our response to the FHFA, Division of Housing Mission and Goals, Single-Family Credit Risk Transfer Request for Proposals, dated June, 2016. As noted therein, we believe: 1. In addition to the CRT’s currently under discussion, down payment protection insurance (“DPP”) represents an additional up-front risk transfer mechanism not currently in use. 2. DPP is the only up-front risk transfer mechanism designed to modify borrower behavior so as to avoid defaults 3. In contradistinction to other CRT mechanisms which only deal with defaults scenarios, DPP-related loans would be de-risked before actually getting on the GSE’s balance sheets. 4. For the period just prior to, and during, the housing crisis (i.e., 1999 thru 2008), DPP covered transactions would have provided approximately $2.2 Billion of coverage toward borrower down payments on loans that ultimately went into foreclosure, as well as an additional $37.24 Billion to cover borrowers’ home equity losses. 5. DPP-related loans backed by major reinsurers represent an efficient use of capital that positively impacts the cost structure of residential mortgage loans.

We look forward to discussing this matter with you in greater detail at your convenience.