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MI to 89.99% Premium Plan

Minimize capital requirements while maximizing borrower affordability.

Our MI to 89.99% Premium Plan is designed to optimize bank capital under Basel III regulatory requirements.

Proactively manage capital and protect your portfolio with our LPMI single premium plan.

  • This plan was developed as a solution for banks that wish to hold high-LTV loans in portfolio and need to balance capital management with borrower affordability
  • Unlike other LPMI singles premiums that provide coverage for the life of the loan, MI to 89.99% coverage expires when the loan is paid down to less than 90% of the original property value
  • Coverage levels are less than standard Agency coverage
  • Because it’s a thinner, shorter-term layer of coverage, MI to 89.99% premium rates are significantly lower than MGIC’s standard LPMI single premiums

Why would lenders want a thin layer of coverage with a short duration?

  • Banks (not credit unions, not mortgage companies) are subject to Basel III risk-based capital requirements
  • For mortgage loans held in portfolio (i.e., on the bank’s balance sheet), Basel III requires the bank to hold 8% capital against loans with an uninsured LTV ratio of 90% or more – but only 4% capital if these loans are insured to less than 90% exposure
  • With MGIC’s MI to 89.99% product, the coverage level (e.g., 6% cover at 95% LTV) is just enough to result in an uninsured LTV ratio of less than 90%, allowing the bank to hold half as much capital as it would for the same loan without MI
  • Credit unions may also derive similar benefits from this plan

Resources

Overview

MI to 89.99% Rate Card

How to submit your loan to the Loan Center

Explore our other Portfolio Playbook products

Portfolio Playbook™ is an MGIC trademark.

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