We’ve been following developments in the mortgage insurance (MI) industry for a while now, documenting the reasons why the industry has practically disappeared from the marketplace, questioning why it wasn’t being assisted to a greater degree by the government, and declaring that mortgage credit conditions won’t improve without the resurrection of MI.

About four months ago we, along with National Mortgage News (NMN), thought that billionaire investor Wilbur Ross’s interest in United Guaranty Inc (UGI) was a sign that, among other things, the private market was once again gaining an interest in the mortgage market.

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Perhaps the words “more action” are slightly overstated; maybe the words “more interest” would be better suited to describe the recent occurrences in the mortgage insurance (MI) market.

Last Friday we wrote a post titled “Resurrection of MI Could Lead to Easier Credit” — if you need a brief history lesson on the downfall of mortgage insurance, this is the article to read. The theme for that post was that ‘if the mortgage insurance market continues to attract private capital (private investors), it may soon become easier for borrowers to attain a home loan.’

An article by Paul Muolo in the latest issue of National Mortgage News titled “Genworth Adds ‘Risky’ Products,” further bolsters “Resurrection’s” over-arching theme. Muolo writes that Genworth Financial, typically a very conservative MI firm, has begun to do what no other MI firm has done by “sticking its toe back into the water on two somewhat risky product types: second homes and cash-out refinancings.”

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It hasn’t been easy for any class of borrowers to get approved for a home loan recently. Since the housing market collapsed at the end of 2006/beginning of 2007, lenders have incorporated strict underwriting standards in order to weed out less-qualified consumers. By today’s lending standards, borrowers must have stellar credit, job security and be willing and able to put down a lot of money upfront.

Years ago, when credit conditions were more relaxed, borrowers who couldn’t afford to make a 20% downpayment were simply required by the lender to purchase mortgage insurance (MI). MI is an insurance policy designed to protect the lender in case the borrower defaults.

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It has been a rough couple of years for the private mortgage insurance (PMI) industry. First off, from about 2003 to 2006, the increasing presence of piggyback loans — a loan structure that allows borrowers to finance a down payment by taking out a second mortgage — severely diminished PMI’s presence and influence in the marketplace. Secondly, the housing crisis which began at about 2006, resulted in the failure of countless PMI loans. The combination of PMI’s decreased market share and failed loans crippled the industry.

Lately, the PMI industry is being stunted by tight lending restrictions. Many (perhaps most) lenders refuse to lend money unless borrowers can put 20% down (which naturally negates the need for PMI). If you’re at all still curious to why thousands of homes across the country sit unsold and vacant, a 20% down payment on a $200,000 loan is $40,000. “That’s a huge nut to cover,” says HSH VP Keith Gumbinger.

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Frustration is mounting among struggling homeowners who haven’t been able to take advantage of Washington’s refi or loan modification programs. Whether their lender isn’t returning their phone calls, is swamped with similar requests, or isn’t participating, homeowners are desperate for new solutions to help them achieve a more affordable mortgage.

Aleksandra Todorova of SmartMoney.com says there may be another source to turn to for help. Private mortgage insurance (PMI) companies may be able to help struggling homeowners get back on track with their mortgage payments: Read the rest of this entry »

Federal interaction and incentives combined with the dismal conditions of the housing market have concocted the “perfect storm” for eager first-time homebuyers shopping for a great deal. Mortgage rates are at historic lows, first-time buyers can take advantage of an $8,000 tax credit, home prices are tumbling, and home owners are eager to sell. Could the time be any more right?

Before you jump in with both feet, here are a few important factors to first consider: Read the rest of this entry »

Thousands of Americans are flooding mortgage lenders’ offices hoping to save money by refinancing their mortgage to a new lower rate.

Yet there are several refinancing fees that could end up costing you. SmartMoney.com has compiled four refinancing costs to look out for:

1. Processing Fees: While they are a given part of the refinancing process, Smart Money warns that “While charging an application fee of several hundred dollars is normal, adding several other charges for the same amount of work is not. Be sure to compare several lenders’ fees — and question anything that seems redundant.”

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Financial Experts Ken and Daria Dolan have a website that’s literally overflowing with priceless financial information for consumers. Since April 15 is growing closer, why not focus on some all-to-important tax information.

Common Tax Mistakes:

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A reader contacted HSH about a problem she was having regarding the Private Mortgage Insurance (PMI) that was tacked on to her monthly mortgage payment. The reader commented how she desperately wanted the payments removed, as they were beginning to eat into her monthly budget. Insisting she was never late with a mortgage payment in all her years of owning homes, the reader was confused to why it was included in her loan in the first place.

First off, PMI is an insurance policy which protects the lender in the event that you, the borrower, will fail to make your mortgage payments. Generally, if you can not come up with a 20% down payment on your home, you will be required to purchase PMI as part of your loan.

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