Special Report: Mortgage Insurance.(Brief Article)

eLenders take great pains to make sure that "bad" loans don't get in the door. Underwriting, coupled with sophisticated credit and behavioral scoring technology, allows the mortgage industry to assess default risk and set appropriate rules about what loan applications should be funded. But try as lenders might, some loans do go "bad." Usually its because loan applicants who had reasonable credit strength at the time of loan origination have suffered a setback. And in some cases, underwriting rules have been eased in an effort to boost homeownership rates. But no underwriting team can prevent every weak loan application from getting funded, and so foreclosures and the associated credit losses, will always be with us.

The private mortgage insurance industry, which complements with government mortgage programs at the Departments of Housing and Urban Development and Veterans Affairs, helps to make it possible for households to buy homes with less than a 20% downpayment. In the event ...