| Where did the PMI dollars go? |
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Raptor
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Cash: $ 14.50
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Location: Missouri
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| Where did the PMI dollars go? |
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During the Banking crisis and the bailout I never hear the term Private Mortgage Insurance (PMI). Anyone that owns a home with less than 20% equity pays PMI. This insurance is to protect the lender if the borrower should default on the loan. The banking crisis, housing bubble bursting, and the recession have taken a toll on the borrowers and many are defaulting. However instead of hearing how PMI is covering these losses, we only here about how tax payer dollars are being spent to cover. The government keeps rolling out programs that provide direct relief to borrowers. Why do I pay PMI and where is it really going. I'll speculate and just say it is just another fee to pay and it goes directly into someone's pocket. It appears not a single penny of PMI remains in reserves to pay claims and at the end of the day the tax payer is paying for what PMI should be paying for.
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Wed Apr 07, 2010 3:11 pm |
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Jennytic
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There were some changes in the PMI requirements from 1998. according to the new federal law, The Homeowner's Protection Act (HPA) of 1998, which requires certain disclosures for loans secured by consumer’s primary residence obtained on or after 29th July of 1999. It also provides disclosure clauses for mortgage loans that closed before that date.
As of 5th April Mortgage insurance premiums on FHA-backed loans has been increased to 2.25% of the total loan amount on Monday, from 1.75%. PMI helps the ordinary people a lot and as I read in most cases they helped to hurdle about 20% of down payment. (at least, hopefully, through 2010 we could be able have this)
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Thu Apr 08, 2010 5:43 am |
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Raptor
Full Member
Cash: $ 14.50
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Joined: 15 Nov 2009
Location: Missouri
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I found some info on PMI, it is normally not available for purchase in conjunction with subprime loans. However it is commonly available and required for VA, FHA, and conventional loans. Armed with this info, it would indicate even if the economy cause borrowers of these loans to default the impact on the economy will not be as large compared to the subprime collapse, due to PMI covering defaults of A-rated loans. The collapse of the housing market is near bottom. There are 2 primary factors remaining that can affect housing. First tight credit and increased requirements reduce the potential buyers and / or reduced their available credit. Second, interest rates will climb, again reducing the amount a borrower can secure. For these reasons, small houses in and around the $150k are already recovering. Homes above $200K will continue to be in surplus and will continue to decline due to the lack of qualified borrowers. It will take some time to reduce the surplus inventory of these homes
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Tue Apr 13, 2010 8:22 pm |
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