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Mortgage Insurance: Mortgage Insurance Companies
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The Mortgage Insurance Companies of America represents the private mortgage insurance industry. MICA provides information on related legislative and regulatory issues, and strives to enhance understanding of the vital role PrivateMI plays in housing Americans.
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Tasker, who ... serves on the board of First American's principal subsidiary, First American Title Insurance Company, is one of the most respected executives in the mortgage banking industry. He has been instrumental in the establishment of several companies, including Mason McDuffie Mortgage Company in Walnut Creek, Calif., and All Pacific Mortgage Company in Concord, Calif. He currently serves as vice-chairman and managing director for Centre Capital Group, Inc.
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Mortgage Insurance Companies of America (MICA) reports that 197,169 borrowers used private mortgage insurance (PrivateMI) to buy or refinance a home in August. The number of borrowers using PrivateMI in August was 15.2% higher than the July total of 171,186.
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PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI's usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.
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Simply put, mortgage insurance protects the mortgage company against financial loss if a homeowner stops making mortgage payments. Mortgage companies usually require insurance on low down payment loans for protection in the event that the homeowner fails to make his or her payments. When a homeowner fails to make the mortgage payments, a default occurs and the home goes into foreclosure. Both the homeowner and the mortgage insurer lose in a foreclosure. The homeowner loses the house and all of the money put into it. The mortgage insurer will then have to pay the mortgage company's claim on the defaulted loan.
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The horizon of risk assumed under each individual mortgage insurance policy is unusually long. Home mortgages are long-term instruments, normally from 25 to 30 years. To serve its intended purpose, therefore, mortgage insurance must be noncancelable by the mortgage insurance company. As a practical matter, the premium price for the life of the loan is determined when the loan is made by the lender, despite the likelihood of changing conditions during the life of a mortgage loan.
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