PMI To Require 3 Percent Down For Mortgage Insurance
The PMI Group, Inc. said in an SEC filing Monday morning that its U.S.-based mortgage insurer, PMI Mortgage Insurance Co., will no longer offer mortgage insurance on loans at 97 percent loan-to-value or greater, as part of new guidelines that go into effect March 1. Loans financed at 100 percent LTV, or near to it, have been cited as problematic by many industry sources. As housing prices continue to fall, many highly-leveraged borrowers have found themselves owing more than their house is worth, providing an incentive for some to voluntarily walk away from their homes. The move comes one week after rival mortgage insurer MGIC Investment Corp. announced dramatic changes to its underwriting programs that it said would "negatively impact" its book of new insurance written. PMI said that 32 percent of its primary new insurance written during 2007 was for loans where LTV was greater than 97 percent; 21 percent of insurance written in the fourth quarter was tied to such highly-leveraged mortgage lending. Obviously, this change will have a strong negative effect on revenues as 2008 progresses. PMI most recently reported a third quarter loss of $86.8 million, or $1.04 per share; fourth quarter results have yet to be released. For more information, visit http://www/pmi-us.com.