Tim Travis'  Instablog

AIG CEO Robert Benmosche continues to show his leadership stripes by looking to get more aggressive into the mortgage market. In this FT article Benmosche suggests that the company is looking to buy the mortgages that their subsidiary United Guaranty Corp is insuring. United Guaranty has modified risk based pricing and is reviewing each loan that they are insuring now as opposed to relying on representations from lenders. This is the time when you want to be making loans and insuring mortgages because the collateral is cheap and is likely to be worth more over the next few years. Lenders are far more diligent in their underwriting standards due to the fallout of the financial crisis, so it is likely that mortgages being originated now are likely to be much better bets than the prior 2005-2008 vintages. When the market get's hot and lending standards decline is when companies should start pulling out of the market to avoid taking the steep losses that were endured in the "Great Recession."

http://www.ft.com/cms/s/0/f301dd7a-7bea-11e1-af2b-00144feab49a.html

Disclosure: I am long AIG.