Who Pays for Poorly Underwritten Loans?
Posted by Ryan Ward on Monday, February 8th, 2010 at 5:53am.Bank of America has filed suit against MGIC, one of the nations largest mortgage insurance companies. MGIC has rescinded many of its obligations to pay saying that they aren't contractually obligated to pay for loans that weren't properly underwritten. According to a Bizjournal story, MGIC cut 1.2 billion dollars in payments and Bank of America has filed a lawsuit as well as discontinued using MGIC for its mortgage insurance. Bank of America has also discontinued using MGIC to insure loans.
If you have a loan with less than 20% down, you or your lender has paid for mortgage insurance on your loan. If the loan goes bad, the mortgage insurance company is supposed to pay up. However, with so many bad loans, mortgage insurers are pointing the finger back at the bank in many cases saying that the loans were not underwritten properly. In these cases, the insurance companies won't pay out and in my opinion, shouldn't.
What was missing during the housing boom was accountability. I don't see a problem making sure that the right entity pays for loans going bad unless its another taxpayer bailout.
Hi, and welcome to our Atlanta real estate blog. Whether you are a consumer, journalist or another real estate professional please feel free to share your thoughts by leaving a comment. You will find relevant local and national real estate information as well as market statistics, insight and information about various neighborhoods and listings. If you would like more information about something in particular, please use the contact form and I will be glad to help.
Ryan Ward, Principal
Premier Atlanta Real Estate
Phone: 404.630.3187
Print
Share3 Responses to "Who Pays for Poorly Underwritten Loans?"
I completely agree, banks were writing loans left and right for people who should have never qualified. No common sense was applied when approving the loans. Ultimately, the banks need to be held accountable for their poor decisions.
Posted on Friday, February 26th, 2010 at 2:51 PM.
Fantastic article, thanks for sharing it. The government provided loose lending terms and the industry followed suit. If we did not have the Real Estate bubble after the dot com bubble we still would be hurting today. I am sure there is another bubble in the making, Dow at nearly 11k and 10% unemployment... go figure.
Posted on Tuesday, March 9th, 2010 at 5:16 PM.
Leave a Comment
My Account
Log in, to view your saved searches and add to your favorite listings.
... So You Can:
- View detailed property information
- Print detailed property flyers
- Save your searches & favorite homes
- Inquiry about a private showing
- Map individual property locations
- Share your favorite homes with friends
Well written article. I agree with you about a lack of accountability. Don't forget greed. Everybody in the industry was riding a wave of prosperity that in hindsight was propelled by greed, right down to the originator.
Posted on Monday, February 15th, 2010 at 6:02 PM.