ShoreBank Exec Cites MI Problems

ShoreBank is having problems originating affordable mortgages with private mortgage insurance that meet Fannie Mae's and Freddie Mac's tighter underwriting standards, according to Ellen Seidman, an executive vice president at the Chicago bank. "That is a serious problem because we have to portfolio the loans," Ms. Seidman told a Community Reinvestment Act conference sponsored by the Consumer Bankers Association. "It is virtually impossible to get mortgage insurance" for borrowers with a credit score under 620, "and it is very expensive between 620 and 680," she said. Ms. Seidman is also a director at the New America Foundation. Michael Shea, executive director of the Association of Community Organizations for Reform Now, noted that the only loans available in many communities are Federal Housing Administration loans. He is particularly critical of Fannie's and Freddie's policies of requiring higher downpayments in markets with declining house prices. "If that is not redlining, I don't know what is," Mr. Shea said.