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Tuesday, 22-Jul-2014 14:40 Email | Share | Bookmark
Mgic Investment Corporation Reports Second Quarter 2014 Results

At this point, we cannot predict with a high degree of confidence what the ultimate re-default rate will be. Eligibility under certain loan modification programs can also adversely affect us by creating an incentive for borrowers who are able to make their mortgage payments to become delinquent in an attempt to obtain the benefits of a modification. New notices of delinquency increase our incurred losses. If legislation is enacted to permit a portion of a borrower's mortgage loan balance to be reduced in bankruptcy and if the borrower re-defaults after such reduction, then the amount we would be responsible to cover would be calculated after adding back the reduction. Unless a lender has obtained our prior approval, if a borrower's mortgage loan balance is reduced outside the bankruptcy context, including in association with a loan modification, and if the borrower re-defaults after such reduction, then under the terms of our policy the amount we would be responsible to cover would be calculated net of the reduction. If the volume of low down payment home mortgage originations declines, the amount of insurance that we write could decline, which would reduce our revenues. The factors that affect the volume of low down payment mortgage originations include: restrictions on mortgage credit due to more stringent underwriting standards, liquidity issues and risk-retention requirements associated with non-QRM loans affecting lenders, the level of home mortgage interest rates and the deductibility of mortgage interest for income tax purposes, the health of the domestic economy as well as conditions in regional and local economies, housing affordability, population trends, including the rate of household formation, the rate of home price appreciation, which in times of heavy refinancing can affect whether refinanced loans have loan-to-value ratios that require private mortgage insurance, and government housing policy encouraging loans to first-time homebuyers. As noted above, the CFPB rules implementing laws requiring mortgage lenders to make ability-to-pay determinations prior to extending credit became effective in January 2014. <br>For the original version including any supplementary small business loans Australia wide images or video, visit

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