The private mortgage insurance industry is set to launch a multimillion-dollar national print and radio ad campaign to improve its image, a move some see as overdue.
Starting this month, the industry's trade group, the Mortgage Insurance Companies of America, will take out advertisements in such national consumer newsmagazines as Time, Newsweek, and U.S. News and World Report. The ads will also appear in specialty publications read by policymakers, such as Congressional Quarterly and Roll Call, and there will be spots on local talk radio stations in Washington.
Executives said the ads attempt to impress upon consumers and "opinion leaders" that private mortgage insurance - often slammed as an unfair burden on low-income homebuyers - is in fact a good thing, because it enables people to become homeowners without waiting years to save for a large down payment. The campaign's slogan: "Today. Not someday."
"Our goal is to make everyone aware of the value we bring to the marketplace," said Frank P. Filipps, chairman of Radian Guaranty in Philadelphia and president-elect of the trade group. Mr. Filipps chairs the association's industry marketing committee and will take office as president in July.
Critics said it's about time the insurers did something to communicate the importance of their role in the housing finance system.
"It's a good idea, but it's probably a decade late and a dollar short," said Kenneth A. Posner, an analyst at Morgan Stanley Dean Witter who has been bearish on mortgage insurers since 1998, in part because of consumers' negative perceptions.
The mortgage insurers' image matters because in recent years they have had to contend with competing forms of credit enhancement, such as piggyback mortgages, which banks have marketed to consumers as a better deal.
Porter Novelli, a prominent public-relations firm that the insurance trade group retained late last year, developed the campaign. The ads, which Mr. Filipps described as "backyard-homey," are designed to tug at the heartstrings.
A print ad depicts a child lying in bed holding a puppy, with the caption: "3 bedrooms. 2 baths. 1 retriever. You dream of owning a home someday. Why not sooner?"
In a radio ad, a mother and child thumb through a photo album, reminiscing about the child's early birthday parties. "What's the value in owning your home sooner?" says the announcer. "Nothing less than living your dreams sooner."
Mr. Filipps would not disclose the cost of the ad campaign, but other industry officials said the budget is in the millions. Mr. Filipps said that if the print and radio ads succeed, the trade group would consider expanding into television, a much more expensive medium.
Private mortgage insurance is usually required for loans with down payments of less than 20%. The insurance protects the holder of the loan in case the borrower defaults. Last year the industry insured $189 billion of new mortgages for about 1.45 million homeowners.
The industry, which consists of only seven companies, has been a favorite whipping boy of politicians, personal-finance columnists, and consumer activists since the late 1990's, when it was revealed that some borrowers had been paying monthly insurance premiums long after they had built substantial equity in their homes. The uproar led to legislation mandating automatic cancellation once a borrower's equity reaches a certain level.
The insurers say they were unfairly depicted as villains, that they always supported automatic cancellation, and that the estimates of how many people were overcharged were grossly exaggerated. But even sympathetic observers have said that the trade group deserves some of the blame for keeping too low a profile and focusing on lobbying in Washington rather than reaching out to the general public.
"Consumer activists view the MI's as a source of unfair and high-cost fees imposed on lower-income borrowers," said Mr. Posner at Morgan Stanley. "It's going to take a lot of time and a lot of money to change that perception."
Consumers tend to resent mortgage insurance because they have little choice about it. The lender, not the borrower, chooses the insurer. In fact, this explains the companies' past reluctance to attempt to create a consumer brand identity: they consider themselves a business-to-business industry.
Mr. Filipps said that has not changed. "We're not embarking on a program by which we're going to have the borrower contact the mortgage insurer directly," he said. "We're clearly stating that they should be going to their mortgage lender for the details. We're not establishing '800' numbers."
