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FOR IMMEDIATE RELEASE

WHITE PAPER ADDRESSES REGULATORY FRAMEWORK AND HOUSING FINANCE SYSTEM

ATLANTA (Aug. 13, 2012) - The National Association of Insurance Commissioners (NAIC) today released a white paper on the evolution of the housing finance system and explores insurers' role in investing in private land ownership.

Written and developed by the NAIC's Center for Insurance Policy and Research (CIPR), "Financing Home Ownership" evaluates whether the current insurance regulatory framework provides adequate safeguards with regard to insurers' investments in residential mortgages and residential mortgage-backed securities (RMBS).

"Given the important role that insurers have played historically in residential real estate markets, the insurance sector and insurance regulators have a keen interest in policy developments in this area," said Dr. Therese M. (Terri) Vaughan, NAIC Chief Executive Officer. "Our hope is that this paper will contribute to an understanding of historical events shaping the current environment as well as proposals for improving the RMBS markets."

The white paper details four instances where investments similar in nature to mortgage-backed securities have triggered economic crises in the U.S. As a practical matter, the authors concentrated on residential housing rather than including commercial real estate, although they believe many of the insights applicable to RMBS will also apply to other securitized assets.

Suggestions for policymakers to improve real estate and investment markets include:

  • Improvements in risk modeling; 
  • Observable event reporting; and 
  • Development of a transaction system to address the information asymmetry advantage of deal originators.

Click HERE to view the complete white paper from CIPR.

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About the NAIC

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit www.naic.org.

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