Barriers to Entry? Not in Mortgage Insurance

American Banker (05/12/08) P. 1; Terris, Harry
Experts say investors are providing capital to start-up companies in the mortgage insurance industry, believing that the absence of problem loans on their books increases their chances of success at a time when 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 remains to be seen how potential losses at these companies will pan out, experts point out 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.