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Mortgage insurance: a case for qrm- eligibility.
| Content Provider | CiteSeerX |
|---|---|
| Abstract | mortgages otherwise subject to the risk retention rules, referred to as Qualified Residential Mortgages (QRM). Congress defined QRM-eligibility on the basis of risk attributes that would reduce the risk of mortgage default. Mortgage insurance was excluded from QRM-eligibility in the proposed rule and this study outlines the case for why mortgage insurance should be included in the final QRM rule. Effective risk management entails addressing both components of a mortgage loss; i.e., the likelihood of default as well as loss severity. Establishing product and borrower underwriting risk limits as described in QRM is an appropriate way of controlling risk upfront; however, managing those risks once originated is also critical. The use of credit enhancements such as private mortgage insurance (MI) is a well-accepted portfolio risk management practice for redistributing risk. As policymakers look toward private capital solutions to reduce government involvement in housing finance, private mortgage insurance controls risk while allowing many otherwise well-qualified borrowers to obtain mortgage financing at reasonable costs. Unfortunately in the proposed rule, the regulators only looked at whether MI reduces default incidence and did not find evidence that it did so despite the fact that mortgage insurance |
| File Format | |
| Access Restriction | Open |
| Subject Keyword | Mortgage Insurance Case Qrm Eligibility Appropriate Way Mortgage Default Risk Retention Rule Government Involvement Final Qrm Rule Private Capital Solution Effective Risk Management Default Incidence Well-qualified Borrower Private Mortgage Insurance Private Mortgage Insurance Control Credit Enhancement Mortgage Financing Housing Finance Well-accepted Portfolio Risk Management Practice Reasonable Cost Mortgage Loss Qualified Residential Mortgage Risk Attribute Borrower Underwriting Risk Limit Loss Severity Risk Upfront |
| Content Type | Text |
