Certain of our mortgage insurance competitors are af filiates of much larger companies that have significantly lar ger  consolidated capital positions than we have, which could make it more likely that customers may choose to do business with  them. See “ Our mortgage insurance business faces intense competition .” Under the terms of our master insurance policies, our  customers or the parties they designate to service the loans we insure have the unilateral right to cancel our insurance coverage  at any time for any loan that we insure. Upon cancellation of coverage, subject to the type of coverage, we may be required to  refund to the insured lender unearned premiums, if any .  The economic downturn and challenging market conditions of the recent past have adversely af fected the financial  condition of a number of our lar gest lending customers. If the U.S. economy fails to fully recover or re-enters a recessionary  period, these customers could again become subject to serious financial constraints that may jeopardize the viability of their  business plans or their access to additional capital, forcing them to consider alternatives such as bankruptcy or consolidation  with others in the industry. The loss of business from a significant customer could have a material adverse ef fect on the amount  of new business we are able to write, and consequently , our franchise value.  The U.S. mortgage insurance industry is intensely competitive. Our competitors include other private mortgage insurers  and federal and state governmental and quasi-governmental agencies, principally the FHA, which has significantly increased its  competitive position in the mortgage insurance market in recent years. We compete with other private mortgage insurers on the basis of price, customer relationships, reputation, financial  strength and service. The improvement in the credit quality of new loans being insured in the current market, combined with the  deterioration of the financial positions of many existing private mortgage insurance companies (which has led insurance  regulators to take action with respect to certain companies), in part due to their legacy books of insured mortgages, is bringing  new entrants to our industry and could encourage additional new competitors. Certain of our private mortgage insurance  competitors are subsidiaries of larger corporations or are not burdened by legacy credit risks, and therefore, may have access to  greater amounts of capital and financial resources than we do and may have stronger financial strength ratings than we have. If  we are unable to compete with other providers, including new entrants that are not burdened by legacy credit risks or by loss  mitigation actions on legacy insurance portfolios, it could have a material adverse ef fect on our business position, financial  condition and operating results. We also compete with governmental and quasi-governmental entities that typically do not have the same capital  requirements or business objectives that we and other private mortgage insurance companies have, and therefore, generally had  greater financial flexibility in their pricing guidelines and capacity that could put us at a competitive disadvantage. Beginning in  2008, the FHA, which historically had not been a significant competitor , substantially increased its share of the mortgage  insurance market, including by insuring a number of loans that would meet our current underwriting guidelines, sometimes at a  lower monthly cost to the borrower than a loan that carries our mortgage insurance.  The FHA may continue to maintain a strong market position and could even increase its market position to the point that  private mortgage insurers may be perceived as less significant to the future of the housing finance market. Factors that could  cause the FHA to maintain or increase its share of the mortgage insurance market include: •  past and potential future capital constraints of the private mortgage insurance industry; •  the tightening by private mortgage insurers of underwriting guidelines based on past loan performance or other  risk concerns; •  the increased levels of loss mitigation activity by private mortgage insurers on older vintage portfolios compared  to the FHA’s practice of engaging in limited loss mitigation activities; •  the imposition of loan level delivery fees by the GSEs on loans that require mortgage insurance; •  the implementation of new regulations under the Dodd-Frank  Act and the Basel III guidelines that may be more  favorable to the FHA compared to private mortgage insurers (see “ The Dodd-Frank Act may have a material effect  on our mortgage insurance and financial guaranty businesses ” and  “The implementation of the Basel II capital  adequacy requirements and the Basel III guidelines may discourage the use of mortgage insurance” ). •  the perceived operational ease of using FHA  insurance compared to the products of private mortgage insurers; and 71 Our mortgage insurance business faces intense competition.