Mortgage Insurers' Losses Mount

Washington Post (08/14/08) P. D1; Merle, Renae
Large mortgage insurers insist that they are adequately capitalized, although their losses have grown to $2.6 billion so far this year and they have paid more than $6 billion to cover claims on foreclosed homes. The industry is tightening its standards to stem its losses, meaning that buyers might need to have a larger down payment--up to 10 percent--and higher credit score as well as pay a steeper mortgage premium. The Federal Housing Administration could benefit if private mortgage insurers collapse, as the government entity requires only as little as 3 percent down, or the market could return to a 20-percent down payment standard. There are also concerns whether Fannie Mae and Freddie Mac will continue to buy their loans, as several insurers have been downgraded by credit-ratings agencies and have fallen out of compliance with the mortgage finance giants' requirements for doing business with them.