Two large mortgage insurance (“MI”, also “PMI”) companies face a deadline from the state of North Carolina, which if breached would mean that they would no longer be able to write MI in the state.

North Carolina imposes capital requirements on mortgage insurers. In general, they want an MI company to have a very sound financial position.

There are only 8 active mortgage insurance firms in the United States. One, CMG, is primarily focused on (more…)

The Dodd-Frank bill requires lenders to retain a five percent risk-retention in loans sold to the secondary market.  It is an idea driven by the lessons that we learned from the financial crisis. Give banks a moral hazard by making them hold some skin in the game. It is hoped that they would then respond by not making unsustainable loans.

The bill gives regulators some time to decide how to implement that requirement. The Dodd-Frank bill does offer some guidance. The Merkley Amendment sets an expectation that lenders will hold a five percent stake in any ”qualified residential mortgage.”   A “QRM,” as it known, needs risk retention.  An exempted loan does not.

First Thoughts

This is a classic example of a rule that could have unexpected consequences. At first glance, it seems like common (more…)

The latest delinquency survey from the Mortgage Bankers’ Association re-states the story that everyone has know for some time – that late payments and foreclosures are still high and that many of them are for prime loans made to borrowers that are now unemployed.

The New York Times read the report, which states the both delinquencies and foreclosures dropped by a matter of a few basis points, and concludes that “Foreclosures Fall, but Rise in Delinquencies Causes Some Concern.” True enough, there is a rise in delinquent loans relative to one year ago, but we’re off by 21 bps from last quarter.

More than a few people have told me that banks are putting off on putting loans into foreclosure. This could be attributed to a number of things. Most often, I hear that both (more…)