At 6:38 pm on Friday, August 19th, I received an email from PMI Mortgage Insurance Company that they can no longer issue new private mortgage insurance policies as of Friday, August 19, 2011. Private mortgage insurance is used when you have less than 20% home equity and are not using a program such as FHA, VA or USDA.
We are writing to inform you of the very recent regulatory decisions that have impacted our ability to write new commitments. Specifically, PMI Mortgage Insurance Co. (“PMI
Wow, Rhonda!
Do they do the majority of insurance for conventional loans with less than 20% down?
This has nothing to do with FHA or VA or USDA…correct?
There are still other private mortgage insurance companies out there (knock on wood) but this is troubling — and at the same time, not surprising considering the housing market.
FHA, VA and USDA loans DO NOT have private mortgage insurance and should not be impacted by this action. FHA and USDA loans do have monthly mortgage insurance (USDA is set to start having this effective Oct 1) and all three government programs have an upfront funding fee (which goes by various names). FHA, USDA and VA loans are government programs and not “private”.
FHA has MIP vs PMI which makes it a bit confusing.
Do you know what kind of volume this particular company does, so we know how how big of a deal it is or is not?
How many PMI companies do you use, and do you use this one half the time…1/3rd of the time?
Most of my clients are either conventional with 20% or more down (or we use a second mortgage up to 85% LTV) or FHA, VA or USDA. I may have closed 1 or 2 loans that required PMI so far this year… so this won’t terribly impact my business.
Private mortgage insurance can be a pain in the rear since they’re underwriting the loan they’re insuring…often times it seems like they’re doing everything they can to find reasons NOT to approve the loan…if I’m doing a loan with pmi, I make sure I have a back up plan.
This should NOT come as a shock to anyone. http://finance.yahoo.com/q?s=PMI
What IS shocking is how long they were able to stay afloat through pure and utter insolvency.
Radian, MGIC, are the two we use for Conventioinal MI and they are saying they are well-capitalized and will weather the current financial storm.
I signed a promissory note with PMI last winter as part of terms for a short sale. When time came to begin payments on the note, PMI sent my check back with a (mostly information-free) form letter telling me that they will send regular bills when they want to collect the payments.
What happens to the note once they officially shutter their operations? It appears inevitable at this point that their stock is days from being taken off the NYSE (doesn’t meet the minimum stock price threshold).
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