Struggling Mortgage Insurers Important For Any Housing Recovery
Mortgage insurers have struggled mightily since the housing market collapsed. Hit by record foreclosure rates across the nation, they have taken considerable losses, while at the same time, new business is being hurt by the credit crunch which has put a crimp in housing demand.
However with so much of the economy struggling they are clearly in the back of the line waiting for any type of government bailout. That being said, they will need to play a large role if there is to be any chance of a housing recovery.
Lockhart, who spoke to reporters after addressing a conference of the Association of Government Accountants, said he would like to see mortgage insurance companies receive a capital injection under Washington’s financial market rescue plan. His voice, however, is just one among policy-makers debating how to stabilize financial markets without burdening taxpayers with more costly bailouts.
“The right step is to get them some more capital so they can get back in the game,” Lockhart said.
Whether they get that infusion of capital remains to be seen but they services will be in high demand if and when the housing market starts to pick back up. With banks having much tighter lending standards these days, they are not likely to favor giving out “piggy back” mortgages like crazy like they used to do.
That leaves prospective home buyers who are short of the standard 20% down payment with the option of getting mortgage insurance. Unfortunately mortgage insurers have also tightened their standards, due to the above mentioned, record foreclosures.
A lot of things need to fall in place for the housing market to recover and mortgage insurance is one of those pieces. How long it will take the government to recognize that fact and how much it will cost, remains to be seen.
Unfortunately with no one willing to take risks anymore, it’s the government which has had to step in and spend a lot of money to try to get the wheels turning again.
