The PMI Group, Inc is all about considering risk when it comes to the housing market and mortgages. Why? Because The PMI Group, Inc. provides “private mortgage insurance” for lenders that is the fill-in for losses if a borrower defaults on a mortgage. They care a lot about risk. When I talk to clients about the lending process we cover the idea that banks are much like insurance companies – they care about mitigating risk. So, if a borrower doesn’t have a strong down payment, like a 20% equity stake, then the lender is going to offset their risk by requiring mortgage insurance.
For a many years we saw very few loans with PMI attached because all manner of alternate loan programs and products were available. But, no more! Most of those programs have now disappeared because of last summer’s mortgage meltdown pushed to a higher frenzy level by the media.
The good news and silver lining of today’s post? The PMI Group, Inc does regular forecasts of the areas they believe to be the lowest and highest risk within the nation. Take a look at their 2008 summer forecast and you’ll see that the Seattle-Bellevue-Everett area is considered by them to be a low risk area for housing price devaluation.
Update 10/20/2008:
Even Yahoo Real Estate is promoting the results of PMI’s research into the various markets and Seattle is part of this story. Check it out here at this link.
