MBS: Prospect of rising mortgage defaults drives down S&P outlook on mortgage insurers
admin | April 3, 2020
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Mortgage insurers face the prospect of much higher credit losses due to the sudden increase in unemployment and anticipated mortgage delinquencies. Most borrowers that lose their jobs are likely to stop making mortgage payments, and many may not be able to recover after the crisis passes. Mortgage insurers are better capitalized today than they were ahead of the 2008 financial crisis but there is significant uncertainty regarding the ultimate number of borrowers that will go delinquent and the losses that will result. Higher refinancing rates on loans that have experienced home price appreciation can also hurt mortgage insurers by reducing the insurance premiums those borrowers pay. The S&P report is here. Source: S&P Global Ratings, APS
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