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Question: Where are these policies?????? Where are the reserves and premiums???? Which companies hold the risk???

http://www.themoneyalert.com/mortgageinsurance.html

For many homebuyers, private mortgage insurance may not be the most celebrated form of insurance, but,
for some, it’s an absolute must. For those individuals who wouldn’t typically be able to afford a large 20
percent down payment, it’s a “foot in the door,” allowing for homeownership with as little as a 0-5 percent
down payment.

Private Mortgage Insurance (PMI) is insurance that protects your lender against non-payment should you
default on your loan. It’s important to understand that the primary and only real purpose for mortgage
insurance is to protect your lender—not you. As the buyer of this coverage, you’re paying the premiums, so
that your lender is protected. PMI is often required by lenders due to the higher level of default risk that’s
associated with low down payment loans. Consequently, it’s sole and only benefit to you is a lower down
payment mortgage.

Yes, this is difficult to comprehend and very distasteful, but they really did not have a choice. When the banks stopped lending over night to each other and the system is “frozen”, the downside risk is just too great.

What I think happened is the banks finally said enough. They said we have $700B in non performing loans, we cannot absorb these, you made us write these loans, so you Feds either step up or we take everyone down.

They have played hot potato with this junk (sub prime MBS) for the last year or more. It was really just a matter of time. The real culprits are the Congress and regulators who wrote the laws and regulations that forced banks to write the loans that are worthless.

schu