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Replies (6)
- joannab3884866
- Contributions:204
I know that many were 80/20 to avoid the PMI, but certainly not all of them. I guess I'm talking about those 2/28's or the one month adjustables.
Who are the PMI cpmanies anyways? I guess I never though about investigating it since it's never been an issue for me personally. I think I will write my loan officer. No one seems to be responding.
Who are the PMI cpmanies anyways? I guess I never though about investigating it since it's never been an issue for me personally. I think I will write my loan officer. No one seems to be responding.
- ELender
- Contributions:1479
There's PMI Mortgage Insurance Company, MGIC (Mortgage Guaranty Insurance Corporation), RMIC (Republic Mortgage Insurance Company)...
- SirEbral
- Contributions:1
Sub-prime loans typically have "insurance" built into the rate; that is, there's typically no additional charge for Private Mortgage Insurance, the lenders jacked up the rates to offset the perceived risk. The question we should all be asking is "Where are the profits that they made in the interim, and why aren't these lenders in better financial shape after 6-7 years of record profits?"
- Morgan Brown, "morganb"
- Contributions:5
The PMI companies pay insurance on the homes that have insurance included. They are not there to bail out the entire company. If you look at the PMI companies (PMI, MGIC, Radian) they are all struggling under the weight of this fall out as well.
Plus PMI only covers the amount above 80% of the property value, not the entire loan amount; and has very specific guidelines that lenders must follow in order for the PMI not to be voided. So, for example, there was an article recently about foreclosed homes in San Diego going for 67% of their market value - the lender is still taking a 13% loss (above and beyond their PMI coverage) on each dollar below the PMI coverage amount.
Also, as far as I know there isn't a lender-based bail out from the government yet; except for the opening of the Fed discount window for lenders to borrow additional money.
Plus PMI only covers the amount above 80% of the property value, not the entire loan amount; and has very specific guidelines that lenders must follow in order for the PMI not to be voided. So, for example, there was an article recently about foreclosed homes in San Diego going for 67% of their market value - the lender is still taking a 13% loss (above and beyond their PMI coverage) on each dollar below the PMI coverage amount.
Also, as far as I know there isn't a lender-based bail out from the government yet; except for the opening of the Fed discount window for lenders to borrow additional money.
- Bobb
- Contributions:50
Private mortgage insurance is a type of insurance that helps protect the mortgage company against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows mortgage companies to accept lower down payments than would normally be allowed.
Private mortgage insurance also enables mortgage companies to grant loans that would otherwise be considered too risky to be purchased by third party investors like the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The ability to sell loans to these investors is critical to maintaining mortgage market liquidity, which in turn, allows mortgage companies to continue originating new loans.
Private mortgage insurance also enables mortgage companies to grant loans that would otherwise be considered too risky to be purchased by third party investors like the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The ability to sell loans to these investors is critical to maintaining mortgage market liquidity, which in turn, allows mortgage companies to continue originating new loans.
Private Mortgage Insurance
Isn't that coverage supposed to insure the lender in the event that the borrower defaults? If so, then why aren't those PMI companies being called upon to bail out the lenders first instead of the governmnet?
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