Even if the White House can pull off a large scale refinancing program to help troubled homeowners it likely won't help the mortgage insurance industry much, according to a new report from FBR Capital Markets.
FBR says it continues to doubt the “prospects of implementing” such a program and if one comes off “we see limited direct benefits for the mortgage insurance industry unless seriously delinquent borrowers are eligible for any programs, which at this point is uncertain at best.”
Over the past month two MI firms – including the nation's second largest, The PMI Group – moved closer to shutting down their pipeline of new policies because of capital and secondary market problems.
FBR says it is “generally positive on the risk-reward for the mortgage insurance space given current valuation” and notes that “expectations are running fairly high” concerning a public announcement next week on a White House-backed refi plan.
It says a refi program should help stabilize the housing market and slow future delinquencies, but will not “mitigate losses on existing delinquent inventory,” which means mortgage insurers likely will not be “direct beneficiaries” of such a program.
