First-time homebuyers face a plethora of challenges in today's tight credit market. We sat down with Jay Hughes, SVP of national sales at MGIC, to find out how his company, which pioneered mortgage insurance 60 years ago, continues to innovate new products and partner with lenders to ensure sustainable homeownership.
HousingWire: There are still many potential borrowers on the sidelines of the housing market. How is MGIC helping them achieve homeownership?
Jay Hughes: Our company was founded in 1957 on the idea of providing better options for potential homebuyers. Working with lenders to get interested buyers into sustainable homeownership sooner has always been our goal.
More specifically, we continue to address the down payment challenge by offering coverage for loans with as little as 3% down. For the last five years we have allowed the down payment to come in the form of a gift without some of the more onerous FICO restrictions.
The student loan hurdle is one of the more recent challenges keeping potential first-time homebuyers from buying. We developed a new product development group this year to work in concert with lenders to address these and similar challenges. They will look at criteria such as debt to income ratios and repayment periods while never losing sight of the terms mentioned above: sustainable homeownership.
As would be the case with any generation of new potential homeowners, there is a need for education. In the case of the Millennials, there is an added element of unwinding some of the perceptions that were born out of the bubble era.
MGIC is working with our partners to help better educate consumers through homebuyer education, infographics loan officers can utilize, consumer-focused marketing collateral and websites. Our first-time homebuyer kit is in high demand currently – a good sign!
HW: MGIC has been in business for 58 years. What kind of perspective does that give you on any current crises?
JH: “Crisis” is a relative term; we certainly don’t view the current era as a crisis within the context of what we’ve seen in six decades of insuring mortgages. That isn’t to say that there aren’t challenges. The housing recovery is going slower than most would like, and the compliance and regulatory requirements are well-documented. We think the best way to assist in that area is to offer simplicity and transparency so that our lenders can focus on the more complex issues that they’re faced with.
As for MGIC, we’d like to think our experience, and the perspective that comes along with it, helps to prevent us from making some of the mistakes of the past. One of the takeaways from the recent crisis is that the concept of private MI worked. The industry paid out nearly $50 billion dollars in claims since 2008 with no government assistance. Specific to MGIC, we have paid more than $14 billion in claims since 2008, with more than 95% of those being paid within two months of the lender filing.
HW: How does MGIC ensure a great customer experience?
JH: We view the customer experience as a 360-degree value proposition. From front-end sales to back-end claims and all that is in between. Our website, our mobile apps, our consistently excellent customer service group, all serve as examples. We focus equally on the simple aspects of the customer experience, like answering phone/email inquiries quickly, to the more complex, like ensuring seamless integration into our customers’ systems.
As a career-long MGIC salesperson, it all starts with listening to what customers need versus telling them how great we are. It’s alarming how often salespeople skip the most important part of the sales process! Helping our customers be more successful is the name of the game, and good things tend to happen from there.
HW: What does the future look like for MGIC?
JH: We’re excited about the future of the MI industry and of MGIC. Perhaps surviving the Great Recession and operating in the post-bubble era has provided a fresh and energized perspective. In the past year, we’ve added significant talent to the organization that, when coupled with experienced existing talent, has produced a very motivated and passionate work force.
As for mortgage insurance generally, there is a growing purchase market and a glaring need