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The key to turning around the housing market could be mortgage insurance companies


The housing market could get a boost if mortgage insurance companies reverse course with some of the guidelines they have implemented.

Home equity has all but disappeared for millions of home owners. The opportunity for consumers to refinance into a new mortgage has a number of variables that a year earlier almost never entered the picture. Home owners with good credit and payment histories could get shut out of a refinance even if they have equity in their homes and a lender willing to provide them with a mortgage loan. The variable that is preventing hundreds of consumers from qualifying for new mortgage loan today is the lack of companies willing to insure their transaction. Twenty years ago it would have been extremely difficult to obtain a mortgage without a twenty percent down payment. This issue became less of a challenge as companies emerged willing to insure the borrower to the lender in the event of a default, thus allowing for less than a twenty percent down payment. With the surge of foreclosed homes that have hit the market, mortgage insurance companies have lost billions of dollars. In doing so, they have implemented new guidelines relating to coverage and much stricter guidelines for loan to value, declining markets and borrowers credit scores. The dilemma is that by tightening the guidelines, they are suppressing the demand and helping to further spiral down the markets. The companies need to examine ways to qualify more borrowers into new homes as this will be critical in bringing stability back into the real estate market.

6-8 2008 ? LoanNetwork.com





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