Whether that happens anytime soon, however, is far from certain. Private mortgage insurers, who provide loss protection to lenders on loans with low down payments, have virtually all adopted highly restrictive policies affecting ZIP codes or metropolitan areas they designate as distressed or declining.
Mortgage Guaranty Insurance Corp., the largest-volume insurer, recently expanded its list of distressed markets along with a series of cutbacks on specific low-equity loans. As of June 1, MGIC will not insure condominium unit mortgages in the entire state of Florida. It also has abandoned cash-out refinancings.
Asked whether his firm might re-evaluate its declining markets restrictions in light of the abrupt changes at Fannie Mae and Freddie Mac, Michael J. Zimmerman, senior vice president-investor relations for MGIC, scotched hopes for any quick reversal. "We're not contemplating any changes," he said in a telephone interview. MGIC, which reported a $1.4 billion loss for the fourth quarter of 2007 and a $34 million loss for the first quarter of this year, has been hit hard by claims after foreclosures and extended delinquencies in once-booming housing markets.
