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Whatever happened to PMI? - 10/21/2008 11:07:54 PM
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colliefan
Posts: 2998
Joined: 4/12/2005
From: Raleigh, NC
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When I bought my first house because I had less than 20% I was forced to pay Private Mortgage Insurance until there was sufficent equity in my house. Supposedly this was to protect the lender should I default on my loan. In light of the recent crisis in the housing market, what was the role of PMI writers?
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RE: Whatever happened to PMI? - 10/22/2008 6:56:57 AM
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csl7037
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I thought PMI was insurance incase the title search missed something and you found out later there was a lein of some sort on the house. Or is that just title insurance? Are they two different things?
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RE: Whatever happened to PMI? - 10/22/2008 8:26:56 AM
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freakofnature
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PMI is Private Mortgage Insurance, yes, title insurance is the insurance against title defects. To answer the original post I believe AIG underwrote a lot of that insurance coverage however, whatever insurance company it is think of the losses they are taking at this point... My house, at the height of the "boom was appraised at $250,000, I have seen in my town now, the same model of house now going for $67,000 that is a $183,000 loss, multiply that by the millions of homes in foreclosure, that is a hefty bill. And I know for a fact, as I worked as a title insurance agent for the most of this last real estate boom that alot of the home in foreclosure now are homes bought by people for investments trying to make a quick buck, there were a lot of speculators and that is a fact. Saw it all the time, people sign as if it is their primary residence but at the closing table they are discussing what they can do with the home and how much rent they can get out of it... These are the people that we are bailing out.!
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RE: Whatever happened to PMI? - 10/22/2008 1:05:05 PM
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DeeAnnBailey
Posts: 2638
Joined: 3/23/2006
From: SC
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quote:
ORIGINAL: freakofnature
PMI is Private Mortgage Insurance, yes, title insurance is the insurance against title defects. To answer the original post I believe AIG underwrote a lot of that insurance coverage however, whatever insurance company it is think of the losses they are taking at this point... My house, at the height of the "boom was appraised at $250,000, I have seen in my town now, the same model of house now going for $67,000 that is a $183,000 loss, multiply that by the millions of homes in foreclosure, that is a hefty bill. And I know for a fact, as I worked as a title insurance agent for the most of this last real estate boom that alot of the home in foreclosure now are homes bought by people for investments trying to make a quick buck, there were a lot of speculators and that is a fact. Saw it all the time, people sign as if it is their primary residence but at the closing table they are discussing what they can do with the home and how much rent they can get out of it... These are the people that we are bailing out.!
Very true !
_____________________________
D. Ann Bailey
My Blog Dee's Delights and Delusions
<<<<<<The love of my life - precious Erin!
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RE: Whatever happened to PMI? - 10/22/2008 2:31:30 PM
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GroupW
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To answer the OP, most subprime loans were originated without PMI. Some originators obtained pool-level policies, but pool PMI is very expensive and not widely offered.
PMI for the most part is related to prime loans.
Personally, I don't think the PMI companies played a huge role in the current crisis. At leas not that I can tell.
Certainly, however, they are paying a big price as even prime loans are defaulting at a faster pace.
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RE: Whatever happened to PMI? - 10/22/2008 4:41:09 PM
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colliefan
Posts: 2998
Joined: 4/12/2005
From: Raleigh, NC
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quote:
PMI for the most part is related to prime loans.
Now I understand. Thanks.
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