NEW KID ON THE BLOCK

As existing mortgage insurance companies face financial troubles, experts say investors are providing capital to start-up companies. Since start-ups don't have existing problem loans on their books, it increases their chances for success because existing players are hampered by rising claims and lack of capital. Nevertheless, MGIC Investment Corp. and PMI Group Inc., among other top players, are not willing to give up market share and are looking for additional funding. While it's unclear how potential losses at these companies will pan out, experts say that the government-sponsored enterprises Fannie Mae and Freddie Mac still are doing business with them and offering greater flexibility. Furthermore, new mortgage insurers lack the capacity to pick up the slack for the bigger players and also must complete the time-consuming licensing process.

Source: American Banker (05/12/08) P. 1; Terris, Harry
© Copyright 2008 INFORMATION, INC. Bethesda, MD (301) 215-4688