Is the end of Private Mortgage Insurance for conventional mortgages near? The question begs to be answered after recent events of the last few weeks.
On Friday, the New York Stock Exchange delisted The PMI Group, Inc. Later in the day, they were informed that August 19, 2011 was their last day to issue new MI policies.
This comes after the August 3, 2011 announcement from Republic Mortgage Insurance Company (RMIC) that they will cease issues new MI policies on August 31, 2011. That is after Fannie Mae announced on July 27, 2011 that they would no longer purchase any mortgages with MI issued by RMIC. Freddie Mac following suit on August 2nd.
Triad Guaranty Insurance Corporation ceased writing new MI policies on July 15, 2008. There are only a handful of mortgage insurance companies that issue MI for conventional mortgages. This is now three that are no longer writing new policed.
With the recent changes, Genworth Financial, MGIC, Radian, and United Guaranty are now the primary remaining players in the MI market. Since all conventional mortgages with less than 20% down require MI, that may lead to fewer qualified buyers. Each MI company sets its own underwriting guidelines and they can be more restrictive than Fannie Mae/Freddie Mac requirements.
All of this will ultimately lead to making it more difficult for conventional borrowers to obtain a mortgages with less than 20% down. This will be of greater impact to borrowers who do not have FHA or other financing options.
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