Private mortgage insurance helping the return of jumbo loans
Insurers rush in to meet the demand
Jumbo originations are at their highest level since 2007, and private mortgage insurance is on the rise.
With home values still rising, lenders are starting to loosen mortgage requirements and open themselves up to more private jumbo loans. Insurers are following along.
Jumbo loans are those greater than $417,000 in less expensive markets and greater than $625,500 in high-cost markets. Consequently, insurers are lowering costs and increasing the size of mortgages they will cover.
Genworth Mortgage Insurance raised the maximum mortgage amount it will cover to $850,000 in October, up from $625,500. In December, Mortgage Guaranty Insurance Corp. (its parent is MGIC Investment Corp - MTG), followed suit and raised its own cap to $850,000, from $750,000.
Both companies said they will look at even bigger mortgages on an individual basis.
United Guaranty, a subsidiary of AIG, which already insures mortgages up to $850,000, offered a limited program for loans of up to $1 million. Radian Group (RDN) is considering breaching the $850,000 watermark.