tag:blogger.com,1999:blog-14162253.post1496482344582192841..comments2024-03-28T18:57:15.124-06:00Comments on Wash Park Prophet: The Dog That Didn't Bark: PMIAndrew Oh-Willekehttp://www.blogger.com/profile/02537151821869153861noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-14162253.post-46046295972127828542008-11-24T21:46:00.000-07:002008-11-24T21:46:00.000-07:00Buyers usually have to make a down payment of at l...Buyers usually have to make a down payment of at least 3% to 5% to qualify for PMI loans. Major investors in mortgages, namely Fannie Mae and Freddie Mac, which provide liquidity in the mortgage market by buying home loans, require insurance on loans with less than 20% equity. A private mortgage insurance company typically guarantees the portion of a bank's mortgage loan in excess of 80% of the purchase price of the property, in exchange for a substantial fee that is passed on to the home owner. <A HREF="http://www.ampminsure.org/start/pmi.html" REL="nofollow">Private mortgage insurance</A> premiums were not tax deductible prior to the 2007 calendar year, and this tax deductibility remains temporary and subject to limitations. And, the private mortgage insurance tax deduction is a huge subsidy to the private mortgage insurance industry that makes its product more affordable now. Similiarly, the absolute numbers are encouraging. PMI Group, Inc. had a book value at the end of the second quarter of 2008 of $3.76 billion. Its losses so far in the financial crisis have been about $1 billion, and as explained above, those losses are likely to be fairly short lived.Anonymousnoreply@blogger.com