Wednesday, December 12, 2007

Where is the mortgage insurance in this mess?

What ever happened to mortgage insurance? We paid it until we had 20% equity in our old place.

I wonder if there has been an increase in claims? I don't seem to hear much about it, except for some excerpts that the insurers started refusing to do business with some lenders. If a person takes out an equity line of credit, can the 1st lien holder then require them to pay mortgage insurance, if the borrower no longer has 20% equity?

I'm sure this has been covered somewhere....but I don't read the national housing blogs. Anyone know of a link that covers this subject?

Marketing tip of the day: If the home is worth 520k - 530k, then price your home at $521,000, which is $417,000 plus 20% down so the buyer doesn't have to take out a jumbo loan.

13 comments:

AgentBubble said...

I can't remember the last time I heard of someone with mortgage insurance. Lenders typically do two loans (80/20) to get the borrower in a position to not have to pay the insurance. This also helps the borrower qualify for more....

Cmyst said...

When I bought my condo in 2001, I had to pay mortgage insurance. I refinanced it in 2004 to get rid of the insurance, because the market had priced the condo up to the point I didn't need it.

Do lenders STILL do 80/20 loans?

semloh said...

not sure about mortgage insurers... but bond insurers are getting crammed.
http://calculatedrisk.blogspot.com/2007/12/fitch-security-capitals-aaa-rating-may.html

AgentBubble said...

cmyst--The main reason they still do it is because that extra $125+ a month can sometimes cause the borrower not to qualify...Very prevalent.

big n rich said...

Is anyone still doing 100% financing out there? I did an 80 / 20 and did not have to have PMI.I guess PMI is designed to protect the lender for high ltv loans but seems everyone gets around it one way or another.Time for another brewski!!!!!!!!!!

Sippn said...

There's still 100% if your credit scores are high enough and the loan is conforming.

AB - how about paying 21% down? or having the seller carry back 1%. Get creative, put down 15 % have the seller carry 15% for the first year w/o interest 6% thereafter, take out a 70% loan!

AgentBubble said...

I think you'd have more luck finding a needle in a haystack than a buyer with 21% down or a seller that is willing (or able) to carry anything.

Sippn said...

Bubble, I'm dissapointed.

Seller carry back is how a lot of more expensive homes are selling now since the banks won't take all the risk.

Its a classic bet. . . "seller, if you believe your home is worth $500K?, I'll put 75 down, you carry 75 and I'll borrow 350K. If its worth at least 425 in a year, you're bet is OK".

norcaljeff said...

If you look at the Mortgage Insurance stocks, they are getting killed. They are paying out claims and are bleeding from the eyes. I'm sure there will be a tax payer funded bailout yet again.

sacramentia said...

The insurers have been hammered this year. look at PMI, etc..

lol..."I did an 80 / 20 and did not have to have PMI."...guess I shouldn't believe all the handles I read on the internet. big n rich ... that's funny. But as Gywnster always points out - I assume too much.

Anybody that can carry probably won't sell right now. I have a couple properties I'd be happy to carry on..but why bother competing against all the people that have to sell?

Buying Time said...

I've never heard of this "seller carrying". Sounds interesting.

We got out of our PMI by paying for an appraisal a year later. Another indicator that the whole appraisal thing was corrupt (appraisals are much more conservative when lender financing is not on the line).

Gwynster said...

Mentalia,

Wanna bet his name is Richard and he's over 6'2"?

sacramentia said...

Gwynsters - ok - so what is the logic behind 80/20 financing if you are rich? I don't like it, but that'll probably just start a whole new discussion about how to define rich.

What do you want to bet?