300 billion U.S. government pushed the mortgage insurer salvation reshuffle imminent

Who are the survivors of the loan-to-crisis »

"Mortgage insurance is the only beacon of the financial sector. This industry so far has not been a major bankruptcy, has not encountered does not work, the crisis of debts, with any investment banks, commercial banks, even the two are compared Is the best. "August 2, the U.S. mortgage insurance companies RMIC, chief economist at Tong Zhong Yi, told reporters.

With the July 30, President of the United States formally signed in 2008 housing and economic recovery bill (the Housing and Economic Recovery Act of

2008, the mortgage insurer to further strengthen the role. However, the Government's hand only to save the market, virtually the United States also promoted the mortgage insurer's reshuffle. 300000000000 "government guaranteed"

Founded in 1932 the federal residential Authority (FHA), will lead the resumption of play from the Bills in the "rescue" role.

FHA mortgage insurance is to provide the U.S. government organizations. Equally active in the mortgage insurance market, there are seven other furniture agencies, including the market ranked first in MGIC (NYSE: MTG), PMI Group

Inc. (PMI), Republic Mortgage Insurance Company (RMIC), Radian Group

Inc. (RDN), American International Group (AIG)'s mortgage insurance subsidiary of AIG United Guaranty, Genworth Financial, Old

Republic International (ORI), and Triad Guaranty Inc. (Nasdaq: TGIC).

Mainly led by mortgage insurer paid less than 20 percent of the buyers to provide guarantees that once a breach of these buyers, they will be responsible for payment for their loans to repay part of lending institutions.

"But in the housing market during the peak period, many Wall Street investment banks and a number of mercenary financial companies to bypass the" two-room ", the development of the sub-loan products and securities products, and stimulate this market to flourish. Before 2002, the loan-to-products in all housing mortgage loans in no more than 4 percent, but in 2006 this proportion reached 16 percent of the opera. "Tong Zhong Yi explained.

This is too liberal in the mode of payment loans, loan-to-grave crisis was a lesson.

Wei Yuelv housing loans and housing confiscation of the rate of increase further blow to the housing needs of the market. U.S. mortgage insurer Association (MICA) the latest data show that by the end of June, the U.S. market collateral loss of the right to redeem the mortgage loan volume has been as high as 252,000, than the same period last year increased by 53 per cent of the outstanding loans reached 67,967 in May T, surged 48 percent year-on-year.

In this context, the resumption of the Bill is not a huge amount of funding for FHA, is to strengthen its representative of the industry's position and role.

The bill just signed the restoration of that funding will be 300 billion U.S. dollars in the FHA under the management of the establishment of special funds, to a total of about 400,000 applications for 30-year fixed-rate mortgage the property to provide security, to improve its credit, to protect them Access to financing, thereby avoiding the ultimate breach occurred.

"We hope that through the FHA, to ensure that more worthy of ownership of U.S. households own homes hold their own property." White House spokesman Tony Fratto (Tony Fratto) in the Bills signed the same day issued a statement.

Conservatives against radical » Can not escape is that the mortgage insurers are facing more and more insurance claims.

The industry, the loan-to-climax, the U.S. mortgage market of about 20 percent to 30 percent of the market have been filled with secondary mortgage loans, when high-quality mortgage resources have been emptied after the snatch, the mortgage insurer will also be extended to the war in the loan-to-market.

Last qualifying mortgage insurer Triad Guaranty underwriting a lot of the secondary mortgage loan business; another positive performance of the mortgage insurer Radian

Group, for the loan guarantees, insurance share of the total assets of 10% to 15%, the highest even reached nearly 20 percent. The two companies have been because of the housing market boom radical underwriting business later suffered from.

By the end of June, Triad

Guaranty because of insufficient capital reserves, announced to stop selling new policies, the policy has only to pay the claims until all the policies expire. "Can not be said that it will go bankrupt, it has the ability to maintain existing business, but because there is no sufficient capital, unable to launch a new business. Now can do, only better to wait for opportunities, and other markets resume." Tong said.

By contrast, Radian

Group because of the larger, more adequate funds owned, is also accepted a new business, but the industry is worried that if prices continue to fall, the company will face the situation of inadequate capital reserves. In early July, Radian

Group appointed a new president of the mortgage insurance sector, by trying to reshape it the confidence of investors. This relative, conservative style of the mortgage insurer is to greatly enhance its market position.

To RMIC example, the asset ranked sixth, a mortgage insurer's profit margin to the crisis. "Unlike some companies a greater risk of mortgage insurance, our more conservative in this regard, the credit rating, from the current 6 rose to third place." Tong Zhong Yi said.

But on the other hand, the mortgage insurer underwriting more cautious attitude, in effect an increase of the housing market recovery more difficult.

Mortgage insurer to take two major initiatives, the first is to increase the credibility of scores of the requirements of the group itself should not get loans, the situation is very serious breach of the buyers excluded; Secondly, the decline in housing prices the hardest hit different Down payment requirements, the mortgage insurers now require at least 10 percent of the down payment, even in some areas will reach 15 percent, but in the past, perhaps only request is usually 3-5 percent of the down payment.

"These moves must be recognized will be an obstacle to home buyers, but the premise is that we want to keep the healthy development of industry, this is the price we must pay. This is the housing market adversely on the one hand, but if the mortgage insurance industry There are problems, take greater risks, the city will resume more slowly. "A senior U.S. housing market source said.