MGIC Investment Corporation

We have summarized all of our ILN transactions in the quarterly supplement that is on our website. In closing, I would like to mention that each of our sources of capital has its own strengths and weaknesses that must be considered. We believe that a balanced approach using our own balance sheet, using forward commitment quarter share treaties, and accessing the capital markets is important to maintaining a strong balance sheet and maximum flexibility for both the writing company and the holding company. And with that, let me turn it back to Tim.

Thanks, Nathan. Before moving to questions, let me address a few additional topics. As I mentioned in prior quarters, the FHFA has re-proposed a rule setting forth a capital framework for the GSEs. The agency is currently reviewing public comments that are received on a re-proposed rule. The FHFA director has stated that he would like it to be finalized yet this year. Since we don't know how or if any of the comments will shape the final rule, it is hard to say at this point what impact the final rule will have on the MI industry. That said, we do believe that the FHFA appreciates the benefits that an insurance company structure can provide to the housing finance system relative to capital markets and other less regulated solutions. The FHFA is also continuing the review of all GSE activities, and it recently proposed revisions to a rule for the GSEs that has been in effect since 2009. The proposal would require the GFCs to provide advance notice to FHFA of new activities to obtain prior approval before launching new products. The proposed rule establishes revised criteria for determining whether a new activity requires notice to FHFA and for determining if that activity is a new product that merits public notice and comment. This seems to be further evidence that the FHFA wants the role of the GFCs to be more clearly defined than it is today. Earlier this year, the CFPB proposed changes to the definition of qualified mortgage and the so-called GFC patch. The revised definition would replace the borrower's debt-to-income ratio in the definition with a pricing threshold. The comment period for the CFPB proposal ended September 8th, and the proposed changes have a targeted publication date of April 2021, and they would be effective six months later. The CFPB recently said they would extend the GFC patch which was set to expire in January of 2021 until the effective date of the new QM rule, perhaps Q4 2021 or Q1 2022, or when the GSEs exit conservatorship, whichever occurs first. While other market options for credit enhancement can be scarce or unavailable at various points in the economic cycle, our company and our industry continues to provide credit enhancement solutions to lenders, borrowers, and the GSEs in all economic environments. While we are focused on prudent responses to the current environment, we continue to be actively engaged in discussions regarding housing finance policies for the future. We continue to advocate for the increased use of private capital, including private mortgage insurance. Long term, we remain encouraged about the future role that our company and industry can play in housing finance, but it continues to be difficult to gauge what actions may be taken by the FHFA, CFPB, and the legislature in the timing of any such actions. Private mortgage insurance offers many solutions and a great value proposition for lenders and consumers to overcome the number one barrier to home ownership, the down payment. We are navigating this period of uncertainty with a book of business that has strong underlying credit characteristics, and we are supported by a balance sheet that has a low debt to capital ratio, an investment portfolio of nearly $7 billion, contractual premium flow, and a robust reinsurance program. As I mentioned at the beginning of my remarks, In addition to the well-being of our employees, we are focused on, one, continuing to provide critical support to the current housing market, and two, positioning our company to prosper over the long term. In closing, I want to remind listeners that since our founding in 1957, we have successfully navigated many economic cycles and have continually provided borrowers and lenders with affordable and prudent low-down payment options. I am confident that we have the right team in place to continue to deliver the quality products and service our customers have come to expect. from MGIC. With that, operator, let's take questions.

Again, if you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. And your first question comes from the line of Sam Chod, from Credit Suisse. Your line is now open.