I just read a blog on MGIC raising it's credit requirements.  In this post, the letter that MGIC wrote explaining this move was included.  It said that this move was in response to market conditions and loan performance.  Well, this got me thinking.....

Is it really that bad for the PMI companies?  At least in terms of the high LTV, bread and butter Fannie Mae/Freddie Mac loans?  

From what I understand and according to Realtytrac that slightly more than 1% of homes nationwide are in some stage of foreclosure.  That means that slightly less than 99% of homes nationwide AREN'T in some stage of foreclosure.  When you take out the loans that were considered "sub-prime" (which didn't directly have PMI coverage), how did the rest of these mortgages perform?  

I guess my question is, is this really about the PMI companies losing money on regular bread and butter types of loans or is it more about the bond reinsurers losing money on other investments and simply blaming it on foreclosures?

My next question would be, "Should today's buyers be penalized for bad investment decisions made by the PMI companies and the bond reinsurers that stand behind them?" 

I can't say that I'm an expert on this subject, but I would love to hear from somebody who does know more about it that I do.  If you are one of these people, drop me a line.

R. B. "Bob" Mitchell

ValueList Real Estate Services, Inc. 

Bob Mitchell is the president of ValueList Real Estate Services, Inc., St. Louis' largest discount/full-service real estate and mortgage company.  To find out more about Bob, ValueList or our flat-fee listing program please feel free to visit our web page, valuelistre.com