Radian Gathers Mortgage Industry Experts to Explore Options for Supporting First-time Homebuyers

  Radian Gathers Mortgage Industry Experts to Explore Options for Supporting
  First-time Homebuyers

Industry panelists discuss striking appropriate regulatory balance to protect
borrowers while supporting housing market growth

Business Wire

PHILADELPHIA -- March 13, 2013

According to a recent panel of housing and mortgage experts, first-time
homebuyers in today’s market face a distinct set of challenges, but the
opportunity for growth within the segment exists if new regulations are shaped
carefully. This consensus was a focus of the fourth annual homeownership
panel, hosted by Radian Guaranty on February 15, 2013, in Washington, D.C. The
event on Capitol Hill entitled “Homeownership: Supporting First-Time
Homebuyers,” brought together industry experts to examine the impact of
pending regulations and key legislation, as well as the importance of
supporting first-time homeownership for the health of the housing market as a

Ken Harney and Teresa Bryce Bazemore get caught up before the start of the
panel discussion. (Photo: ...

Ken Harney and Teresa Bryce Bazemore get caught up before the start of the
panel discussion. (Photo: Radian Group Inc.)

The panel included an audience of congressional, federal agency and
association staffers, and was moderated by Teresa Bryce Bazemore, president of
Radian. Award-winning and nationally syndicated Washington Post real estate
columnist Ken Harney provided opening remarks. The featured panelists included
four notable experts in the housing and mortgage industries: Mark Calabria,
director of financial regulation studies for the CATO Institute; Mark Fleming,
chief economist for CoreLogic; Michael Fratantoni, vice president of
single-family research and policy development for the Mortgage Bankers
Association; and Barry Zigas, director of housing policy for the Consumer
Federation of America.

Overall, the panelists agreed that the first-time homebuyer segment is not
recovering at the same rate as other segments of the housing market, and it is
crucial to keep this group of buyers in mind when developing housing policy.
According to Mr. Harney, “The first-time homebuyer market is essential to the
function of the system as a whole. Based on historical norms, we have a net
deficit of homebuyers now, with underwriting standards becoming very tough and
student debts serving as a major obstacle.”

Mr. Fratantoni stated, “The most important thing to look at moving forward is
household formation. We had a period of decline as young 20-somethings moved
back in with their parents and households doubled up. Now those people are
turning to rentals, just as rents are going through the roof, which means
market dynamics are favorable for a rebound in first-time buyers.”

Central to the panelists’ discussion was the impact of the Qualified Mortgage
(QM) rule on lenders and consumers, as well as the implications of the pending
Qualified Residential Mortgage (QRM) standards aimed at risk retention. In
general, the panelists were in agreement that aligning the QRM standards with
the recently released QM standards and ending an ongoing period of uncertainty
would be most beneficial to the market.

Notably, panelists expressed concern that strict downpayment requirements as
an element of the QRM rule would create a barrier for otherwise-qualified
homebuyers, since coming up with a significant downpayment is the biggest
obstacle for many first-time buyers, while not effectively minimizing the risk
of default. As Mr. Calabria pointed out, “Delinquencies result from a number
of factors, not solely the downpayment, but usually a combination of
downpayment and very poor credit quality.” Mr. Fleming agreed with this
sentiment, adding, “We have to understand there is a risk in not requiring a
big downpayment, but mitigate that risk by making sure on the front end that
borrowers have a good chance of making their mortgage payment even if
something bad happens in their life, like a job loss.”

“There’s a level of fear that we’re creating what will become a standard in
the underwriting system that makes it harder for consumers to get a loan,”
noted Barry Zigas of the Consumer Federation of America. “We should be more
concerned with consumer access to credit than a requirement for down payment.
We have to weigh the benefits of these requirements against the cost to the
system and decide how far we’re willing to go in closing off credit to many in
order to prevent foreclosure for a few.”

“For four years, Radian has had the privilege of gathering some of the
brightest minds in the industry in one room for a collaborative discussion of
the most pressing issues in the housing market,” said Ms. Bazemore. “Right
now, policymakers are faced with the challenge of striking the delicate
balance between protecting mortgage lenders and encouraging safer lending
decisions, and ensuring eligible borrowers can still secure a mortgage. It’s a
highly complex process that requires bipartisan coordination across all

Additional information and photography may be found at:

About Radian

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private
mortgage insurance and related risk management products and services to
mortgage lenders nationwide through its principal operating subsidiary, Radian
Guaranty Inc. These services help promote and preserve homeownership
opportunities for homebuyers, while protecting lenders from default-related
losses on residential first mortgages and facilitating the sale of
low-downpayment mortgages in the secondary market. Additional information may
be found at www.radian.biz.

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Radian Group Inc.
Emily Riley, 215-231-1035
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