The loan-to-crisis spread to the U.S. mortgage insurer compulsory preservation of government actions

While the United States and the insurance industry to do all the growing losses and face the risk of lower credit ratings, the original mortgage insurance company is not interesting in the same severe attack. With the reduction of funds on hand, these companies may be unable to meet some of underwriting requirements, thereby enabling the real estate market is down more worse.

The mortgage insurer Triad Guaranty Inc. Last week announced a 75 million U.S. dollars loss for the quarter. , In the U.S. market share of first place in MGIC Investment Corp. Also said that fourth-quarter loss of funds a total of 1.47 billion U.S. dollars.

The so-called mortgage insurer, is for those who pay less than 20% of housing property rights of the first payment, provide a "mortgage insurance", the general mortgage payment agencies hope that these loans to purchase such insurance, because once they are unable to meet repayment obligations, Insurance companies will be responsible for reimbursement of part of loans, the loan amount is usually 25% to 35%.

Now, the mortgage insurer in the U.S. housing market boom of the underwriting business is more and more to bear the burden of insurance claims. Analysts point out that the available assets of insurance companies continue to weaken, the insurer may be unable to meet demand, thereby affecting demand for consumer purchases, inhibit the housing market recovery.

Sub-loan-to-crisis environment of the problems in the mortgage insurance companies will force insurers to raise the threshold. To MGIC example, some states will no longer purchase the urban areas of the first payment Fangkuan less than 5% of the total mortgage loan borrowers to offer insurance. This allow more people to buy housing. "Insurance is raising the threshold consumers face another negative factor", housing research firm Zelman & Associates, chief executive of (Ivy Zelman) said.

Fortunately, the Federal Housing Loan Mortgage Corporation (Freddie Mac, Fannie short) last Thursday announced that preparations for the interim adjustment for private mortgage insurance companies to the relevant provisions, the goal is to retain more mortgage insurance premiums for the insurance company claims , As well as the restoration of their asset base.

Freddie said that if the mortgage insurance company's credit rating was lowered to AA grade or below the same level, it would not be in accordance with the regulations of these companies in raising capital adequacy ratio and other requirements. Freddie also provides insurance premium income in mortgage loans to so-called professional captive to transfer part of not more than 25 percent in order to leave more premium income, increased at a faster rate of capital.

Freddie and the Federal National Mortgage Association (Fannie Mae) the establishment of two government-sponsored company acquired many of the claims of mortgage loans, they rely on mortgage loans to help insurance companies to share part of their mortgage loan risks.

These mandatory mortgage insurance companies protection initiatives will help mortgage insurer faster cumulative capital and reduce the impact on consumers underwriting, thus easing the effect of the real estate market.