Mortgage Insurers Find Themselves Downgraded
One of the issues that led to the housing market crisis was the fact that mortgage insurers went ahead and approved underwriting for risky home loans. Now, finally, those shenanigans are catching up with the mortgage insurers. Some of these mortgage insurers are being downgraded, reports MarketWatch:
Fitch lowered Mortgage Guaranty Insurance Corp.’s insurer financial strength to A+ from AA and MGIC Investment’s long-term issuer rating to BBB+ from A. The ratings will remain on rating watch negative, indicating that further downgrades may be in the offing. Fitch also cut PMI Mortgage Insurance’s rating to A+ from AA and PMI Group’s long-term issuer rating to BBB+ from A. The outlook on PMI and PMI Mortgage Insurance is negative.
Mortgage insurers are merely the latest in a long line of those who figured that the risky subprime mortgage boom would continue to provide a source of wealth. Unfortunately, such risk is unsustainable in the long run, and eventually it was bound to crash.
Other problems in the economy
And the housing market crisis may not be over yet. Other problems, including those indicated by this morning’s release of unemployment data, could accelerate the foreclosures. After all, increasing pressure on the job market could mean fewer people able to make their mortgage payments — even if they could originally afford their home loans.
Indeed, as the recent news of Ed McMahon proves, the housing market crisis can strike anyone, and at anytime. The current pressures on the economy — including a rebound in oil prices — are leading to a high rate of inflation, as well as a decrease in the availability of jobs. Combined, these factors are likely to continue to lead to foreclosures.
The issues of inventory on the housing market are also leading to creative solutions. Consider this, from a builder in California. It’s a buy one house, get a second house free offer:
Tags: home loans, foreclosures, home mortgage loan, mortgage loan blog,
mortgage lenders, mortgage payments, oil prices
