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The mortgage industry faces a new hurdle as PMI insurers pull coverage


The housing market gets hit with another punch as it tries to recover.

The housing market has been dealt a number of blows over the past twelve months with foreclosures and values continuing to decline. The market faces a new challenge with continuing pressure on the underwriting of mortgages. The latest news involves the secondary market that offers private mortgage insurance (PMI) for home owners who can not afford to put down the normal 20% down payment. Mortgage insurance has been a key component in allowing lenders to offer financing to home buyers with less than a 20% down payment and was key in lenders offering financing options to purchase a property up to 100%. The major PMI companies are publishing lists of areas, via zip codes, that have seen home values decline sharply over the past twelve months. These areas will now require larger down payments and equity positions for home owners and some transaction types, such as investment properties or second homes may be completely in eligible unless the home owner has the necessary 20% down. This is troubling news for the housing market as it greatly limits the number of potential buyers. Home owners who are in the market may look to alternative products such as FHA mortgages for loan financing up to 100% of the homes value for a primary residence. The market is continuing to evolve, the risk tolerance grew very quick as wall street lined up to buy mortgage securities. Today's market is vastly different from twelve months earlier, but will continue to evolve as lenders gain more confidence in loan performance.

3-21-2008 ? LoanNetwork.com





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