joker

Big New Housing Problem: Mortgage Insurers Back Off

The entire mortgage industry, especially mortgage insurance industry is a bust without government's backing/subsidizing. Think about it: with default rate as high as above 10%, the basic logic for insurance is that, an insurer has to charge 10% and above of insured amount to at least break even, not to mention to make a profit - mortgage lenders could a little lower since there is residual values.

However, MI rates are set by statement governments, and currently their charged rates are no way near the required break-even points. Therefore all MIs are in losing / bankruptcy positions.

Charging 10% and above - no home buyers could afford that, even if they want. Therefore it only leaves one way for the keeping housing markets alive: government and GSEs step in to take all the lending and insuring responsibilities, even if it is obviously by doing so, they're going to lose tons of money.