San Jose Mercury News (CA) (07/28/08); McAllister, Sue
California home buyers with down payments under 10 percent will not be able to obtain mortgage insurance from MGIC beginning on Aug. 4. MGIC is among the mortgage insurers strengthening their standards to offset losses from rising default and foreclosure rates, having paid claims totaling hundreds of millions of dollars since the start of the year. Mortgage insurers are worried that additional home price declines will make it difficult for owners to unload their homes and repay their mortgages if they encounter financial trouble, making a boost in rates necessary. Michael Zimmerman, MGIC's senior vice president for investor relations, says approximately 20 percent of home loans carried private mortgage insurance just a few years ago; however, that figure began to decline when borrowers with less than 20 percent down were allowed to avoid the insurance requirement with "piggyback" loans.
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