Straightly put

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3 Comments

    • Tue Feb 19th 01:07 AM | Rating: 0 0
      Commented on:
      Why I'm Buying More MFA Mortgage
      How sure are you that these "cheap" bonds are not cheap for solid reasons? Maybe their underline cash flows are in jeopardy? I do not know, but do you know?
      View article »
    • Tue Feb 19th 00:55 AM | Rating: 0 0
      Commented on:
      Two Value Managers Sweat Out the Mortgage Insurance Sector
      I know very little of MI. When I bought my house, my reaction to MI and Title insurance was: What a rip off.

      From the other end: What a sure in business!

      Then there is all the reports on the trouble of the monolines. Even now, after a lot of searching and reading, I still do not understand why the MIs are better off than the Monolines.

      The borrower (B) borrowed 135K on a 150K house after 10% down. The lender (L) makes him to pay for MI for a 25% coverage (33750). The lender (or Underwriter?) takes the mortgage (packaged it into CBO) and sells it to the Investor (Ir) for whatever price. Ir does not feel comfortable with the mortgage, so it goes to the Monolines and purchased insurance on its investment.

      B cannot pay. So the house is foreclosed and eventually sold for 100K. Assuming B did not pay down his mortgage at all, and then the total loss is 50K. B obviously losses his 15K down pay. The MI is on the hook for the 33750. Then the monolines is on for only 1250 and the investor is made whole again: 13500 = 100000 + 33750 + 1250.

      What I don't understand are these:

      1. MI has to take the hit BEFORE the monolines: only after the MI has paid its full coverage will the investors' monoline policies even affected. Then how can MI be standing if the monolines are falling?

      2. The lenders made the borrowers pay MI. If the MI is a good deal, why the lender not just keeps the premium? If the MI is a bad deal, then the MI companies are not safe, then what is there to make the lender fell safer?

      3. I know this will sound stupid, but truly I want to know. When B cannot pay his mortgage, obviously he is not paying his MI premium either. Does that mean the MI is therefore canceled? If I don't pay the premium of my life, auto, house, medical insurance, that is what will happen.

      4. In the fourth quarter alone its claims reached $1.3 billion. How much did it pay out?

      5. When does MTG has to pay? When B did not pay for 90 days? Or when the house is foreclosed?

      Thanks a lot if any of you knowledge people would care to provide some answers.
      View article »
    • Tue Feb 19th 00:53 AM | Rating: 0 0
      Commented on:
      Mortgage Insurers: The Next Shoe to Drop?
      I know very little of MI. When I bought my house, my reaction to MI and Title insurance was: What a rip off.

      From the other end: What a sure in business!

      Then there is all the reports on the trouble of the monolines. Even now, after a lot of searching and reading, I still do not understand why the MIs are better off than the Monolines.

      The borrower (B) borrowed 135K on a 150K house after 10% down. The lender (L) makes him to pay for MI for a 25% coverage (33750). The lender (or Underwriter?) takes the mortgage (packaged it into CBO) and sells it to the Investor (Ir) for whatever price. Ir does not feel comfortable with the mortgage, so it goes to the Monolines and purchased insurance on its investment.

      B cannot pay. So the house is foreclosed and eventually sold for 100K. Assuming B did not pay down his mortgage at all, and then the total loss is 50K. B obviously losses his 15K down pay. The MI is on the hook for the 33750. Then the monolines is on for only 1250 and the investor is made whole again: 13500 = 100000 + 33750 + 1250.

      What I don't understand are these:

      1. MI has to take the hit BEFORE the monolines: only after the MI has paid its full coverage will the investors' monoline policies even affected. Then how can MI be standing if the monolines are falling?

      2. The lenders made the borrowers pay MI. If the MI is a good deal, why the lender not just keeps the premium? If the MI is a bad deal, then the MI companies are not safe, then what is there to make the lender fell safer?

      3. I know this will sound stupid, but truly I want to know. When B cannot pay his mortgage, obviously he is not paying his MI premium either. Does that mean the MI is therefore canceled? If I don't pay the premium of my life, auto, house, medical insurance, that is what will happen.

      4. In the fourth quarter alone its claims reached $1.3 billion. How much did it pay out?

      5. When does MTG has to pay? When B did not pay for 90 days? Or when the house is foreclosed?

      Thanks a lot if any of you knowledge people would care to provide some answers.
      View article »
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