In the ongoing debate over whether it's prudent to make 3% down payment mortgages, Curt Culver takes a long view. The outgoing chief executive at Mortgage Guaranty Insurance Corp. was present when the mortgage insurance industry and government-sponsored enterprises developed 3% down payment loans 20 years ago. He liked them then, and he likes them now.
"A 3% down mortgage is not much different than a 10% down," he said in a recent wide-ranging interview that covered his nearly 40 years in the MI business and his plans for what he will do after he turns over the CEO reins of MGIC parent MGIC Investment Corp. to Patrick Sinks on March 1, 2015.
The 3% loans "have performed just marginally worse than 10% down, and have been very profitable," he said. The down payment does play a role in producing claims, he acknowledged, but the more important factors are the underwriting behind the loan, the documentation, the FICO score, and the debt-to-income ratios.
Reminded that the 3% loans were derided 20 years ago, he was asked if the instruments had, in fact, turned out to be "toxic waste" or "instant real estate owned" as the naysayers predicted.
"Not at all," he said.
And going forward? "They'll be very successful if we maintain the underwriting criteria. And I see that happening."
In the meantime, "what we need is a housing czar," Culver said. Someone who might further the MGIC CEO's take on what the future of the business should be, such as bringing in more private capital and bringing some order to the government mortgage world.
"Let the private sector and the FHA work together on every loan," such as through reinsurance, he said. Another good thing would be developing more common ground for Fannie Mae, Freddie Mac and Ginnie Mae on securitizations and other matters.
But Culver said he's definitely not interested in taking on such a role in his retirement. He once dabbled in politics by considering running for the Senate, but he's no longer interested in politics, either.
Culver said he's optimistic about the industry's future, and that of Milwaukee-based MGIC's. "The books (of business) since 2009 have been some of the best the industry has ever seen," he said. And MGIC, which currently insures 1 million mortgages, has "such a bright outlook."
That outlook wasn't so bright after the market crash of 2008. MGIC's stock lost 99% of its value as the credit losses piled up. "I didn't know if the company could make it," he said. "Still, everyone stayed. We kept a great team and worked through the issues." That institutional memory will serve the company well going forward, Culver said, pointing to Sinks, who has 36 years in with MGIC.
Culver remains passionate about the corporate culture at MGIC. "It's a lonely job being CEO because the buck stops with you. Yet, you won't do most of the work." So he has had to build a team he can trust to do the right thing. "It's as close to a family business as can be for a publicly traded company," he said.
He's a little worried about the mortgage insurance business, which has been hit hard enough to see the cratering of its traditional trade group, the Mortgage Insurance Companies of America, and the formation of a new group, U.S. Mortgage Insurers.
The biggest challenge? Getting the MI industry to rally around its cumulative power. Individual MIs may be competitors but, "in Washington we were a united force. New entrants haven't quite realized that," Culver said.
Culver is a great believer in cultivating balance between work and personal lives. He has taught a real estate course at the University of Wisconsin for the past 20 years, and devotes one hour a term to his "5H" regimen humor, health, honesty, hustle, and humility.
Those aren't just platitudes. MGIC's 800 employees can get free health insurance, provided they follow healthy lifestyle guidelines that include regular exercise, physical exams and flu shots.
What will he do after March 1 of next year? Culver's an avid hiker, golfer, bicycler and kayaker. And he won't be giving up the business world entirely.
He will remain non-executive chairman at MGIC, but won't take an active role in operations. "My role is running board meetings. I'll have an office here, but I won't be around much."
Besides being on MGIC's board, he also serves on the board of the local public utility and works with several nonprofits. One group, the United Performing Arts Fund, supplies money for cultural activities in Milwaukee. Culver helps raise about $12 million a year for them.
Another of Culver's important jobs is serving on the board of his family's restaurant business. The Culver's restaurant chain was started in 1984 as a mom-and-pop shop run by his parents, and features frozen custard and specialty hamburgers called ButterBurgers. In 30 years, Culver's has expanded to more than 500 restaurants in 22 states.
How much can frozen custard and burgers bring in? That would be about $1 billion dollars in annual revenue currently. And not a lot of credit risk, either.