MI Firm, University Create Quarterly Index

Genworth Financial, Richmond, Va., has teamed up with a professor at the University of Pennsylvania's Wharton School of Economics to create the U.S. Mortgage Index, a quarterly report to look at trends in residential real estate financing.The author of the report, Susan M. Wachter, said consumers and mortgage professionals "should take a look at more traditional financing tools" in the current market environment. The first report compares monthly payments for five popular low downpayment products. In her study, the pay-option adjustable-rate mortgage has the lowest first month payment, but the highest payment in month 61. The piggyback product and the 10/1 interest-only ARM also have higher payments, while the 30-year fixed-rate mortgage with single premium mortgage insurance stays level and the 30-year FRM with monthly MI has a lower payment. Genworth is the parent of a Raleigh, N.C.-based private mortgage insurer. "It's troubling that short term, adjustable-rate mortgages remain popular, even for borrowers who might not be able to afford their mortgage payment after the interest rate adjusts. This includes piggyback loans and other mortgages that lead to little equity build up," Ms. Wachter said. "With little or no equity available, refinancing has become difficult, and foreclosures are up nationwide." The report is available at http://www.genworth.com/mortgageinfo.