PMI Insurers Going After High Quality Borrowers

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Posted To: MND NewsWire

Are low-down payment buyers beginning to benefit from a price war? The Urban Institute says that the Federal Housing Market has had an edge with homebuyers who lack the 20 percent down payment required for Fannie Mae and Freddie Mac (GSE) loans, but private mortgage insurers are ramping up the competition. FHA and companies providing private mortgage insurance (PMI) provide guarantees to lenders that they will recoup at least some of their losses should loans where borrowers have put as little as 3.5 percent down default and require foreclosure. While it is the lender who is insured, it is the home buyer who pays the premium. FHA guarantees require the borrower to pay both an upfront charge and an annual premium (billed monthly) and after FHA was burned by rampant foreclosures during the housing…(read more)

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