|
Special Reports
In this section of BrokerUniverse we examine a subject of key importance
for mortgage originators every month, based on special reports that run in our sister publication, Origination News.
Mortgage Insurance
Good Times/Bad Times
Mortgage insurers are riding high when it comes to new business volumes but loan
performance issues are biting into their finances, making these both good and bad times for the industry.
And the same market forces are behind both, creating the kind of environment where
both opposite but co-existing conditions exist. A great literary classic makes reference to it being both "the
best of times" and "the worst of times" and right now, for the mortgage insurance industry, that
might be true.
These are good times because the amount of primary mortgage insurance written
has picked up after three years of staying around the same level. This Special Report features a story that goes
into the numbers for the industry for 2007.
The mortgage insurance companies have benefited because higher rates have led
to fewer refinancings, leading to increased persistency, or the number of loans that the insurance remains in force
on from one year to the next.
Higher rates have also led to reduced competition from 80-10-10 or piggyback loans.
With these loans, the borrower took an 80% loan-to-value first, used 10% of their
own money to make part of the downpayment and took a 10% second mortgage to pay the rest.
Higher interest rates have made that second loan more costly for borrowers.
But these are bad times for mortgage insurance companies due to higher rates have
also contributed to increased delinquencies, especially from loans of more recent vintage.
The need to set aside loss reserves has led to the mortgage insurers reporting
financial losses for 2007, and the projection is that this will happen in 2008 as well.
This Special Report contains a rundown of the financial results of the four standalone
mortgage insurance companies.
|
