The number of mortgage borrowers with down payments of less than the standard 20 percent who opted for private mortgage insurance rose to 118,214 in February, up from 108,980 in January and 104,146 year over year.

During the housing boom, many borrowers sidestepped mortgage insurance by combining a first loan with a “piggyback” home-equity loan or line of credit that served as the down payment. But rising interest rates have made these variable-rate second mortgages less attractive to borrowers, and some are choosing to pay mortgage insurance simply to avoid having to sign two sets of loan documents. Read more

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Mortgage insurers are having a great year, thanks to borrowers who want to avoid piggyback mortgages with a variable rate, according to David H. Katkov, president and chief operating officer of PMI Mortgage Insurance Co.
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A coalition of housing activists and civil rights groups has called for a six month moratorium on foreclosures to provide time for financially troubled homeowners with time to solve their problems.

The Leadership Council on Civil Rights, The Center for Responsible Lending, The National Council of LaRaza, and the NAACP called on lenders to voluntarily adopt such a moratorium in the wake of reports of increasing mortgage delinquencies and the bankruptcies and/or failure of some 30 subprime lenders.

At a Washington, DC news conference on April 4, spokespersons for several of the organizations predicted a wave of foreclosures would soon result from what they called “reckless and unaffordable loans.” They laid the blame for the current situation at the feet of lenders, real estate agents, and the investors who purchased the subprime loans. Read more

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California is the home base for many of the country’s biggest subprime lenders, including Countrywide Financial and Wells Fargo; and with 22 percent of its total mortgages considered “risky,” it leads the nation in terms of lending to borrowers with flawed credit.

Even so, California’s foreclosure rate for the fourth quarter of 2006 came in at just 0.43. On the other hand, Midwestern states like Indiana, Michigan, and Ohio all crossed the 1-percent threshold.

Economists attribute the Golden State’s resilience to a robust economy that continues to create jobs - which in turn allows residents to remain in their homes, supports housing prices, and allows home owners to use equity to refinance out of adjustable loan terms and into fixed loans. Read more

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Option ARMs remain an option. Despite problems in the mortgage market, brokers say lenders are still willing to make risky loans - including those that allow borrowers to make monthly payments that don’t even cover the interest (so-called “option ARMs”). Also still widely available are “no-doc” loans, which require no income verification, and mortgages with no downpayment. All of those loans fall into the so-called Alternative-A or Alt-A mortgage market, which caters to people with average credit scores who want riskier mortgages and has been one of the fastest growing segments of the home loan business in recent years. Read more

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