One of the integral parts of the US housing market has become mortgage insurers. Mortgage insurance is what allows borrowers to go ahead and buy a home, even without a 20% down payments. They purchase mortgage insurance to be paid to the lender in the event that they become unable to make their payments.
With the housing market crisis and the mortgage market crash, insurers are finding that they are paying out more and more in terms of insurance claims to lenders. And this means losses are mounting. And, CNN Money reports, mortgage insurers are likely to continue to see problems:
At the same time, credit rating agencies have downgraded several mortgage insurers in recent weeks including MGIC and Republic Mortgage Insurance Company, a division of Old Republic International Corp. (ORI), amid fears that rising mortgage delinquencies and defaults will mean more losses in the future for these insurers.
If mortgage insurance becomes harder to get, it adds one more hurdle to the ability to buy a home.
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