PMI & MGIC finally wake up
I wondered how long it would take before the high LTV(loan to value) mortgage insurers would wake up to their risk exposure. Something woke them from their peaceful slumber....One of the key players in the home mortgage market quietly has signaled that it believes real estate speculation in some parts of the country is approaching worrisome levels.
PMI Mortgage Insurance Co. told its network of lenders nationwide that it would no longer insure new loans made to borrowers who already have more than four mortgages outstanding or who represent more than $350,000 worth of "risk exposure" to the company.
A second large underwriter, Mortgage Guaranty Insurance Corp., confirmed that it too was carefully monitoring real estate speculation in hot housing markets, and has serious concerns about certain interest-only mortgages that investors are using to buy multiple houses or condos.
Both companies' comments came in the wake of a new study that found that nearly one out of four homes purchased in the United States during 2004 was for investment, not for owner occupancy. An additional 13% of all purchases were vacation homes, according to the National Assn. of Realtors.
LA Times: The Squeeze is On
PMI Mortgage Insurance Co. told its network of lenders nationwide that it would no longer insure new loans made to borrowers who already have more than four mortgages outstanding or who represent more than $350,000 worth of "risk exposure" to the company.
A second large underwriter, Mortgage Guaranty Insurance Corp., confirmed that it too was carefully monitoring real estate speculation in hot housing markets, and has serious concerns about certain interest-only mortgages that investors are using to buy multiple houses or condos.
Both companies' comments came in the wake of a new study that found that nearly one out of four homes purchased in the United States during 2004 was for investment, not for owner occupancy. An additional 13% of all purchases were vacation homes, according to the National Assn. of Realtors.
LA Times: The Squeeze is On
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