This is just another sign of the fact that the housing and mortgage market are still struggling. MGIC, one of the main PMI companies, is stopping writing new PMI deals. Why?
- As property values have been dropping, they are losing too much money on houses that are getting taken back.
- The premiums coming in are not enough to overcome those increasing losses.
So what does this mean going forward? A couple of potential things:
- Tighter underwriting requirements for deals that are not FHA and have less than 20% down.
- Increasing costs for PMI going forward.
It ain’t over yet……
Mortgage Insurer Halts New Business; Posts Steep Loss - Earnings * US * News * Story - CNBC.com
Mortgage insurer MGIC Investment reported a wider quarterly loss and said it will stop writing new business as losses mount in the battered housing sector, sending its shares down 14 percent in premarket trade.
The largest U.S. mortgage insurer [MTG 4.4701 0.5301 (+13.45%) ] said it will wind down its business and try to capitalize a fresh enterprise that would write new loans beginning next year.
It said it hopes to win a capital investment from the U.S. Treasury but “cannot predict whether we will be successful in obtaining capital from any external source.”
MGIC aims to begin to capitalize the new company with $500 million by the end of July and intends to have the new business, Mortgage Indemnity Corp, replace MGIC.
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- Categories: Mortgage Types
Comments
1 Comment so far
Paul Chapman
BIG PICTURE-
YOU CAN’T GET A MORTGAGE AT ALL NOW UNLESS you can fully document income, W-2, etc.
NOT EVEN if you have a huge pile of cash and/or stock, big 401(k), and other real estate that you intend to sell - even if it has NO mortgage on it, and it is in PRIME area !
No mortgage for folks w/o income ! - NOT EVEN 40-50% of purchase price at today’s reduced prices !
THIS is of HUGE importance - Lots of folks in this situation ARE potential house buyers - WOULD move- WOULD commit - but the Dumbasses in Fannie and Freddie and Congress, and FDIC examiners
and therefore the BANKS, are locked up and no money is moving !
BANKS are not lending at all, due to the need to keep liquidity due to the credit card debt and other next wave losses that are about to hit.