Archive for insurance
August 15, 2008 at 2:46 am · Filed under insurance
Getting a Cheap Auto Quote can be easier than you think. There are many sources that are available to you online that can give you a great quote but make sure that you check the policy along with the insurance rate. There are some rules when searching for a cheap discount car quote that you should use so that you can find the best insurance for you.
Learn how to find: Discount Insurance
There are many discounts that you can benefit from such as if you get married there is a discount when you and your spouse get insurance together. Also if you turn 55 years of age then you can also qualify for a senior discount that can lower your insurance rate.
Get some Advice about: Types of Insurance
Make sure that when you are buying a car that you check out the rates for that car because the car itself can really affect your insurance rate. A spots car can be as much as 2-3 times that of a standard car so make sure you get quotes on the make and model of the car you are looking at.
There is also a good driver rate quote discount that you can qualify for if you have a good driving record then most insurance companies will give you a better rate on your policy.
Many people do not know that if you have several of your insurance policies with one company they will give you a discount on your rate so make sure that you check and see if it is not more beneficial to have all your insurances with one company.
About the Author
Bryan Burbank is an expert in the field of Discount Insurance.
http://www.finddiscountinsurance.com
March 5, 2008 at 10:36 am · Filed under insurance
Insurance is surely a prosperous business nowadays, when everybody gets at least two-three types of insurance every year. Only think a little bit: an average person gets a car insurance, a health insurance, a life insurance, a home insurance, and if he is an entrepreneur, he may also get a Business Insurance.
But not all insurances are the same, and the prices and conditions may vary a lot from one insurance company to another. For example, a car insurance can cost you between $700 and $1000 per year, for the same car, in the same insurance conditions, and with the same franchise.
So you see, a bit of preliminary research can save you a lot of money. Now, with this internet information explosion we witness these days, we don’t even have to go to the insurance companies or call their agents, in order to be able to compare their plans. There are websites which are specialized in comparisons, allowing you to make an informed choice. In the business sector, for example, there is Autonet Business Insurance, a website where you can get free quotes for all kind of insurance, from professional indemnity, to houses, or even to pets.
The website is easy to search, and if you prefer, you can call a toll free number and speak to an insurance consultant who will send you your quote after finding out what you need.
Isn’t this convenient?
December 7, 2007 at 3:23 am · Filed under insurance
Insurance is one of the good things of the modern age. It feels good to know that if something happens to you or to your assets, you’ll get some money to repair the damage. In my view, cars are the most exposed, and my experience surely proves this: I’ve had so many accidents which were not may fault, that without a car insurance I would have had to pay a lot of money to get my car fixed. Because of the increased accident risk, car insurance can be quite expensive. However, if you do some proper research before buying, you can find cheap car insurance which fits your needs.
Home insurance is another “must have”. It is cheaper than the car insurance, so it is really worth thinking to get one. If I think at my very old neighbor, who sometimes forgets to switch off the gas when leaving home, I really want to know that if my apartment blows away one day, I’ll be able to buy another one with money from insurance.
Recently I’ve considered a third kind of insurance as being a must for myself to have: life insurance. I want to be sure that after my death, my family will have enough money to organize my funerals and to be able to live a decent life. And in case I’ll get to be old, it feels good to know that I’ll have some money for traveling and other little pleasures, without being forced to work until I die.
What do you think about this? What kind of insurance do you have?
This is a sponsored review
December 2, 2007 at 10:31 am · Filed under insurance
There is an old saying that anybody should think to save some white money for black days. Well, this certainly is true, we all know that illness strikes by sudden, and it can catch us unprepared.
People who care about themselves and about their beloved ones just don’t let this happen. The method is simple: get yourself a health insurance. How can you do this? You can simply contact an insurance agency like Peoples Health Insurance, where specialized and well trained agents will listen to you, will ask you all questions they need to know, then will supply you the best variant of insurance for your case. Florida individual health insurance for example, offers such a variety of health insurance plans that your choice may become very difficult. In such cases, the website of Peoples Health Insurance can help you: by using the tools and resources provided, you’ll be able to determine by yourself what kind of plan you need. Amongs the factors which influence the result are your age, your gender, the country you live in, your budget, and, the most important, your health condition.
Putting al these factors in the balance, you’ll be able to find yourself a health insurance plan which fits your budget and which offers you good protection against illness.
This is a sponsored article
September 11, 2007 at 8:34 pm · Filed under insurance, mortgage
The private mortgage insurance (PMI) industry can trace its origin to the early years of this century and the activities of title insurance companies in New York State.(1) The state legislature authorized the issuance of mortgage guarantee insurance in 1904, but the law permitted insurers to guarantee the payments only on mortgages owned by the institution that originated the loan. In 1911, New York amended the law to permit mortgage insurers to purchase and resell mortgages. To enhance their ability to sell mortgages to investors, insurers guaranteed the property title as well as the loan.(2)
Until the Depression, rising real estate values made it possible for most mortgaged properties that were in default to be sold without a loss. This experience reinforced a widely held perception that insuring mortgages was a low-risk business. But the sharp decline in real estate values in the early years of the Depression–together with the low capitalization, questionable business practices, and weak regulation of the PMI industry–resulted in the collapse of the industry.
Government efforts to revive the housing industry during the Depression led to the establishment by the Federal Housing Administration (FHA) of the Mutual Mortgage Insurance Fund to provide mortgage insurance on FHA loans.(3) After World War II, the federal government’s role in providing insurance on mortgages expanded with the creation in the Veterans Administration (VA) of a mortgage insurance program for veterans.(4)
FHA and VA home loan insurance programs apply to a wide range of prospective homebuyers, but both programs have significant limitations. The FHA, for example, limits the size of the mortgages it will insure. The VA programs guarantee only a portion of the loan amount up to a congressionally established ceiling and are available only to veterans. In addition, the property and credit underwriting standards of both the FHA and VA exclude some prospective borrowers.
Among the steps lenders can take to mitigate credit risk is the requirement that borrowers whose mortgages have high loan-to-value ratios obtain private mortgage insurance.(8) PMI reduces credit risk by insuring against losses associated with default up to a contractually established percentage of the claim amount (see box, “Claims under Private Mortgage Insurance”). Defaults on these loans may result in a loss to the insurer; therefore PMI companies address credit risk in many ways in pursuing their business strategies:
* First, a PMI company may simply not insure a particular type of mortgage contract or a mortgage secured by a specific type of property, ceding that business to competitors.
* Second, in determining whether to insure a particular loan in a chosen line of business, PMI companies act as a review underwriter, evaluating both the creditworthiness of the prospective borrower and the adequacy of the collateral offered as security on the loan. They will deny insurance to prospective borrowers judged to impose undue credit risk on the insurer and lender; lenders, of course, are free to extend credit to such borrowers, but they must do so without the protection of PMI.
* Third, insurers may underwrite some mortgages more strictly than others and thus limit their exposure to losses.
* Fourth, they may charge a higher premium to insure riskier mortgages, although state regulation can limit or set the premiums charged for different types of mortgage insurance.
* Fifth, the PMI companies can limit the extent of their coverage of losses, either directly (by limiting the proportion of the mortgage insured) or by using reinsurance or pooling arrangements.
* Sixth, PMI companies can mitigate credit risk through credit counseling and early intervention once a borrower falls behind on payments.
In assessing the risk of the borrower, PMI companies evaluate both the ability and the willingness of the borrower to repay the mortgage loan. In determining the borrower’s ability to repay, insurers examine sources of income, debt-to-income ratios, asset holdings, employment history, and prospects for income growth. Insurers gauge willingness to repay primarily by reviewing the borrower’s credit history, including rent and utility payment records in some cases.
PMI companies also evaluate the characteristics of the property securing the mortgage. For example, because insurers generally perceive condominiums, manufactured homes, and properties with two, three, or four units as riskier sources of collateral than single-family detached dwellings, they usually treat them more stringently.
In addition, insurers consider the use of the property securing the mortgage. Dwellings to be used as vacation homes, second homes, or investment properties are generally underwritten to standards that are more strict than those for owner-occupied, primary residences. For example, the maximum loan-to-value ratio allowed for second homes is often lower than that for primary residences. In the extreme, some PMI companies have chosen not to offer insurance for particular uses of property, such as investment.
Furthermore, insurers examine the characteristics of the mortgage itself and adjust the price of insurance coverage accordingly. The loan-to-value ratio on the mortgage is a primary indicator of default risk; hence, the higher the ratio, the higher the premium.(9) Insurers also generally assess higher premiums on adjustable rate mortgages because these mortgages can potentially impose larger payment burdens on borrowers and because they have historically exhibited an inferior payment record.(10) Finally, insurers assess lower premiums on shorter-term mortgages because such mortgages result in a more rapid accumulation of equity by the borrower and therefore impose less risk of loss.
The PMI companies often use the credit underwriting guidelines of the two large government-sponsored mortgage agencies, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), when deciding whether to approve an application. Many lenders desire to sell their mortgages to these agencies, and both Fannie Mae and Freddie Mac require PMI before they will consider purchasing a low-down-payment mortgage. Thus, PMI companies have a strong motivation to assure lenders that mortgages insured by PMI companies conform to the standards set by these organizations.
When examining the risks described above, many PMI companies rely heavily on automated underwriting systems to identify and quickly approve applications that are acceptable for insurance. PMI employees further evaluate applications that fail the automated review. Computer automation of underwriting thus allows PMI companies to focus their efforts on applicants with marginal or unusual credit histories and other special circumstances and is generally perceived to have widened the availability of PMI.
A fundamental strategy of insurance underwriting is to diversify risk.(11) In the case of PMI companies, risk diversification means limiting geographic concentrations of insurance, dealing with numerous lenders, and restricting the insurance written for any one particular project. The importance of these tactics is illustrated by the large losses in the 1980s of PMI companies that had significant concentrations of insurance in “oil patch” states.
An integral part of the PMI business is the management of problem mortgages. Foreclosing on properties is both time-consuming and costly, and insurers attempt to avoid it. Insurers try to work with delinquent borrowers, mostly through lenders, but sometimes directly with borrowers. Insurers often stress counseling as a way of helping borrowers overcome payment difficulties. Insurers will try to determine the prospects for bringing the mortgage back to scheduled payments and may work out a plan with the borrower to do so. In some cases, however, encouraging borrowers to sell their properties may be the least costly method, for both insurer and borrower, of resolving problems.
September 3, 2007 at 6:49 am · Filed under insurance
AIRLINE INDUSTRY INFORMATION-(C)1997-2002 M2 COMMUNICATIONS LTD
The inquest into the death of a disabled woman who died after she fell from a platform designed to lower wheelchair-bound passengers from aircraft, has found the death to be accidental.
Elizbeth Moffatt Anderson, aged 62, died from a brain haemorrhage after she fell on a runway at Alicante Airport in Spain. Peter Anderson, the woman’s husband, said the accident occurred when he tried to help his wife off the hydraulic platform.
The platform, carrying four wheelchair-bound passengers, was lowered to within 1.4m from the ground and the three others were taken, one at a time, on to a second platform that lowered them to the ground. Mr Anderson said a safety chain at the door of the first platform was not in place when he heard airport staff - employed by the Spanish national carrier Iberia - talking to him in Spanish which he did not understand. Assuming it was his turn to move his wife on to the second platform, which unknown to him was on the ground, he pulled her wheelchair towards it and fell backwards, dragging Mrs Anderson with him.
Mrs Anderson hit her head on the runway and suffered a brain haemorrhage. She was flown back to England where she died from her injuries on 6 April last year. Mr Anderson was also severely injured by the accident, reported PA News.
((Comments on this story may be sent to aii.feedback@m2.com))
COPYRIGHT 2002 M2 Communications Ltd.
COPYRIGHT 2002 Gale Group
August 19, 2007 at 8:52 am · Filed under insurance
TORONTO - A coroner ’s jury ruled Jan. 16 that a patient’s death, which occurred more than two weeks after receiving an adjustment to her neck, was an accident. While the five-member jury investigating the death of Lana Dale Lewis was unable to find any direct evidence linking chiropractic adjustments to a stroke she suffered six days after being treated, the ruling of “accident” suggests that the manipulation performed by Etobicoke chiropractor Philip Emanuele on Ms. Lewis may have played a part in hastening her demise, and allows Ms. Lewis’s family to proceed with a civil suit against Dr. Emanuele.
Lana Lewis was admitted to Queensway General Hospital in Toronto on Sept. 1, 1996, six days after receiving an upper neck manipulation from Dr. Emanuele. Prior to suffering the stroke, she had seen Dr. Emanuele for approximately 18 months, primarily for treatment of migraine headaches and musculoskeletal pain. At Queensway, she was diagnosed as having suffered a minor stroke and was hospitalized briefly, then released. However, approximately 10 days after suffering the first stroke, she suffered a second, larger stroke that proved to be fatal. She was readmitted to Queensway, where she died Sept. 12. The initial coroner’s report did not cite the adjustment as the cause of death, and at that time, the Toronto coroner’s office decided not to hold an inquest into the cause of Ms. Lewis’ death.
Nevertheless, more than three years later, in November 1999, the Lewis family called for an inquest to determine the cause of her death. In January 2000, the family also filed a $ 12 million civil lawsuit against Dr. Emanuel and a number of chiropractic organizations, citing that they had not advised the public properly about the dangers of neck adjustments. Representing the Lewis family at the time was Murray Katz, MD, a longtime opponent of the chiropractic profession and founder of the National Association of Chiropractic Medicine (NACM). In early 2001, however, Dr. Katz was removed from the case after threatening to end the professional career of a Canadian coroner, Dr. Murray Naiberg.
After the family’s request for an inquest was denied twice, the coroner’s office reversed its stance and decided an inquest could proceed. Even then, however, it faced a series of delays. In addition to Dr. Katz’s removal from the case a second time, the Lewis family’s original lawyer excused himself from the proceedings, and several dozen slides of Ms. Lewis’ artery vanished, delaying the start of the inquest an additional six months.
The inquest into the cause of Ms. Lewis’ death finally began in April 2002. The coroner’s jury was charged not with assigning blame, but determining whether Dr. Emanuele’s adjustment played a role in the death, and was given the option of five possible findings: homicide, suicide, accident, natural causes, and undetermined.
The position of the chiropractic profession was that Ms. Lewis died of natural causes, exacerbated by her poor over all health - being overweight, a heavy smoker and drinker, and suffering from high blood pressure - all of which put her at increased risk for stroke At the trial, several medical experts testified that Ms. Lewis’ stroke was caused not by the chiropractic adjustment, but by advanced end-stage atherosclerosis that, in the words of Dr. Harker Rhodes, a neuropathologist at Dartmouth University Medical School, had “virtually completely destroyed” her left intracranial vertebral artery and blocked 70 percent of the right vertebral artery intracranially. Dr. Rhodes also stated “it was simply a coincidence” that Ms. Lewis received a neck adjustment a few days prior to her stroke.
Witnesses called by the coroner’s office and evidence presented at the inquest provided differing testimony. One letter, signed by dozens of neurologists, stated that blood vessels such as the vertebral artery can tear if a person’s neck is rotated improperly. Other witnesses testified that Dr. Emanuele’s adjustment was “the probable source of injury” to Ms. Lewis, and that there was only minimal to moderate atherosclerosis in her vertebral arteries.
In addition to ruling Ms. Lewis’ death an accident, the coroner’s jury made 17 recommendations, including:
* That the Ministry of Health work with the Canadian Chiropractic Association (CCA) and the Canadian Memorial Chiropractic College (CMCC) to provide funding for a study to assess the relationship between high-neck manipulation and stroke/injury and/or serious complications.
* That practitioners obtain written, informed consent from their patients prior to performing high neck manipulation, and that they provide patients with an information sheet outlining the possible risks associated with neck manipulation.
* That the Ontario Ministry of Health consider creating an internal database, into which chiropractors, medical doctors, hospitals, physiotherapists, the coroner’s office, and other health practitioners would report all cervical manipulations. A separate section of the database would document adverse events related to the manipulations.
* That a standard practice of recordkeeping be established, whereby chiropractors would report the type and specific location of any manipulation performed on a patient, along with the type of technique used to perform the manipulation.
* That after receiving a neck manipulation, patients remain in the practitioner’s care for “an appropriate amount of time” prior to leaving, so that they can inform the practitioner of any abnormalities or disturbances.
* That the Clinical Guidelines for Chiropractic Practice in Canada be upgraded every two years to keep practicing chiropractors up to date.
* That chiropractic schools, associations and regulatory agencies ensure all of their members maintain their skills by taking mandatory courses.
The decision in the Lewis case will allow the family to pursue its multimillion-dollar lawsuit against Dr. Emanuele.
Lawyers for the CCA and the CMCC expressed disappointment with the jury’s verdict, saying it “represents a massive miscarriage of justice.” In a statement to the media, attorney Tim Danson said the chiropractic profession would appeal the decision on the grounds that there was “a complete failure of justice in the conduct of the inquest.” he also alleged that the coroner’s office suppressed evidence that would have helped the chiropractic profession’s position.
“The public should know, as should the jury, that two of the most distinguished and respected neuropathologists in the world, Dr. David Graham of Glasgow, Scotland, and Dr. Francesco Scaravilli, of London, England, were prohibited from testifying at the inquest [even though] the coroner was aware that as leading world authorities, their opinions commanded great respect, and would have carried considerable weight,” said Mr. Danson. “… Dr. Graham and Dr. Scaravilli formed the opinion that this was the clearest case they have ever seen of a person dying as a result of natural causes, and any other explanation would be grossly speculative and unscientific.”
This decision marked the first time in Ontario, and only the second instance in Canada, in which chiropractic manipulation of the neck was the subject of a coroner’s inquest. The first inquest examined the death of Laurie Jean Mathiason, a 20-year-old woman from Saskatoon, Manitoba, who died in February 1998, three days after suffering a stroke while being adjusted. The jury in that inquest ruled that more research was needed to determine the risks and benefits of neck adjustment, and that the public be better informed.
Even before the jury ruled the death of Lana Lewis an accident, however, Canadian chiropractors were beginning to feel the backlash of the inquest. According to an article in the Toronto Globe and Mail, the Lewis inquest “subjected the chiropractic industry to terrible publicity,” and some practitioners have reported a drop in billings and the number of patients treated by more than 20 percent.
But the battle does not end here, as Mr. Danson made clear in his comments to the media: “Wc have instructed our counsel to bring an Application for judicial Review before a three judge panel of the Superior Court of justice (Divisional Court) to quash the verdict on the grounds that it is perverse, and on the grounds that there has been a complete failure of justice in the conduct of the inquest.”
Resources
1. Bonnell G. Death of chiropractie patient in 1996 an accident, coroner’s jury rules. Canadian Press, Jan. 16, 2004.
2. Marshall E, Cuthbertson D. Chiropractie procedure blamed in death. Can West News Service, Jan. 17, 2004.
3. Chiropractie treatment needs safety review: jury. CBC News, Jan. 16, 2004.
4. Coroner’s inquest in Canada. Dynamic Chiropractic, Aug. 16, 2002. www.chiroweb.com/archives/20/17/05.html
5. Information Bulletin from the Chiropractic Communications Working Group, Jan. 16, 2004.
6. Katz denied standing in Canadian inquest … again. Dynamic Chiropractic, Nov. 4, 2002. www.chiroweb.com/archives/20/23/13.html
7. Lana Dale Lewis Inquest. Notable points of testimony & evidence to date. Submitted to Dynamic Chiropractic by Jonathan Bennett, Canadian Memorial Chiropractic College, Jan. 21,2004.
8. Legal counsel Tim Danson media statement. Submitted to Dynamic Chiropractic by Jonathan Bennett, Canadian Memorial Chiropractic College, Jan. 21, 2004.
9. Toronto coroner disqualified Murray Katz, MD, from inquest. Dynamic Chiropractic, May 21, 2001. www.chiroweb.com/archives/19/11/18.html
Copyright Dynamic Chiropractic Feb 26, 2004
Provided by ProQuest Information and Learning Company. All rights Reserved
August 15, 2007 at 4:57 pm · Filed under insurance, mortgage
Before extending a mortgage, lenders typically require borrowers to make a sizable down payment to reduce both the risk of default on the loan and the amount they stand to lose if a foreclosure is necessary. Moreover, borrowers often pay significant closing costs. Together, the down payment and closing costs can be substantial relative to the borrower’s savings, particularly for first-time homebuyers and households with lower incomes.
Mortgage lenders usually require a down payment of at least 20 percent of the appraised value of a home. But they will accept smaller down payments if repayment of the mortgage is backed by a type of insurance, paid for by the borrower, known as mortgage guarantee insurance. Mortgage insurance for low-down-payment loans is available from the federal government, primarily through programs administered by the Federal Housing Administration and the Department of Veterans Affairs, and from the private sector.
Insurance on a mortgage comes into play when the homeowner defaults on the loan and the proceeds from the subsequent sale of the mortgaged property fail to cover the remaining debt plus the costs associated with the sale. In such a case, the mortgage insurer reimburses the lender for the shortfall, generally in full if the insurance is governmental but only up to certain limits if the insurance is private. Because insurers bear at least part of the risk of loss on home loans, they must carefully review the qualifications of prospective borrowers and the value of the collateral provided by the property being purchased.
Early forms of mortgage insurance arose in the private sector around the turn of the century and developed until the onset of the Depression. The private mortgage insurance industry then collapsed, and its function was assumed by the federal government, which was the only source of mortgage insurance from the mid-1930s through the late 1950s. Today, mortgages backed by government insurance continue to play a significant role in the home finance market, but mortgage insurance offered by the private mortgage insurance industry is also widely used by homebuyers and those refinancing their existing mortgages. Private mortgage insurance backed nearly 1.2 million single-family home loans extended in 1993, representing about 45 percent of all the insured mortgages granted that year.
This article reviews some of the history of the mortgage insurance industry, outlines the way the mortgage insurance business is conducted, examines the financial implications for a borrower choosing between governmental and private mortgage insurance, and discusses the disposition of recent applications submitted to private mortgage insurers. Little information has been available heretofore about the disposition of applications. This year, however, the private mortgage insurance industry released data on the disposition of the cases that private insurers acted on during the fourth quarter of 1993 and on the characteristics of the households in those cases (see box, “Data Disclosed by the Private Mortgage Insurance Industry”). The article summarizes the new information and draws some comparisons with data on applications for government insurance and with mortgage applications generally.
August 8, 2007 at 7:36 am · Filed under insurance, mortgage
From the lender’s perspective, the mortgage insurance provided both by private mortgage insurers and by government agencies such as the FHA and the VA reduces credit risk, but the level of protection varies. PMI companies typically limit coverage within a range of 20 percent to 25 percent of the claim when a mortgage defaults, whereas the FHA, for instance, covers 100 percent of the unpaid balance of the mortgage to the lender as well as some, but not necessarily all, of the costs associated with foreclosure and the sale of the property. For marginally qualified borrowers, some lenders might prefer the added protection afforded by FHA insurance and they may encourage borrowers to apply for these mortgages. Lenders may have other incentives to encourage applicants to apply for one loan program over another. For example, FHA-insured mortgages provide lenders with greater income from loan servicing than do the mortgages covered by PMI. On the other hand, the origination of mortgages insured by PMI often requires less paperwork.
From the perspective of homebuyers, the costs and availability of the insurance offered by FHA, VA, and private companies can differ markedly. The homebuyers’ knowledge of these alternatives varies with their experience, their willingness to shop among lenders, and the extent of information provided by real estate agents and others. Real estate agents, as well as others, sometimes encourage homeowners to select one type of insured mortgage product over another.
Incentives for Using Government Insurance
Most households are able to purchase homes or refinance an existing mortgage without mortgage insurance and thus avoid the added cost of the insurance. Many households, however, lacking the assets necessary for a sizable down payment and closing costs, can qualify only for a mortgage with a high loan-to-value ratio and thus must purchase mortgage insurance. In addition, some households prefer making a small down payment toward a mortgage even if they have the funds for a larger down payment; they, too, are normally required by the lender to purchase mortgage insurance.
The eight private mortgage insurance companies recently made data publicly available that, for the first time, describes the disposition of applications for insurance by the characteristics of the mortgage borrower. These data are comparable to those supplied by mortgage lenders under the Home Mortgage Disclosure Act (HMDA). The PMI data cover applications for mortgage insurance acted on only during the fourth quarter of 1993. The companies limited their 1993 data to this quarter to allow themselves adequate time to develop procedures for receiving, tracking, and reporting activity in a manner consistent with the requirements of HMDA. Information about the PMI industry indicates that fourth-quarter activity accounted for nearly 30 percent of all 1993 PMI commitments written on home mortgage loans.(18) The nature of the fourth-quarter mortgages and their disposition may or may not be representative of the rest of the year.
For applications pertaining to properties in metropolitan statistical areas (MSAs), the PMI companies identified properties by census tract number. Lenders covered by HMDA, in contrast, currently identify property location by census tract only for loans in metropolitan areas where they have, or are deemed to have, a home or branch office.(19)
For the eight PMI companies, the Federal Financial Institutions Examination Council prepared disclosure statements detailing a company’s activities for each MSA in which it had business. In total, the FFIEC prepared disclosure statements relating to 1,894 MSAs, an average of 237 MSAs for each PMI company. In contrast, the typical lender covered by HMDA in 1993 received a disclosure statement that included information on an average of only 3.7 MSAs.
Volume of Applications for PMI
In the fourth quarter of 1993, PMI companies acted on roughly 456,400 applications for insurance: 265,400 for insurance to back home-purchase mortgages on single-family properties and 191,000 to insure refinancings of existing mortgages (table 5). Most applications dealt with mortgages of less than $150,000. The average size of the home-purchase mortgages was $116,200.
The mortgage size distribution and the average mortgage size for home-purchase mortgages are only slightly different from those for refinancings. This relationship is somewhat surprising because of the large proportion of first-time homebuyers in the home-purchase category; such homebuyers typically have lower incomes than other homeowners and consequently take out smaller loans than homeowners who are refinancing.
Characteristics of Applicants for PMI
In 1993, more than two-thirds of the PMI applicants seeking home purchase mortgages had incomes that exceeded the median for the MSA in which the property securing the loan was located (table 6). The distributions of PMI applicants by income differ between those seeking loans to purchase homes and those applying for insurance to refinance an existing loan. In particular, the proportion of insurance applicants in the highest income group (income greater than 120 percent of the median family income in their MSA) was significantly larger for refinancings than for home-purchase mortgages. Once again, this difference probably reflects the high proportion of first-time, and perhaps younger, homebuyers in the home-purchase category.
The racial and ethnic characteristics of PMI applicants were similar to those of mortgage applicants covered by the HMDA data. Most applicants for loans backed by PMI were white, and about half were seeking insurance for mortgages to be secured by properties located in neighborhoods in which the nonwhite and Hispanic population was less than 10 percent of the total.(20) Overall, about three-fifths of the applicants were seeking insurance to help buy a home or refinance mortgages on properties located in the non-central-city portion of MSAs.
A Comparison of Applicants for PMI and for Government Insured Mortgages
The vast majority of mortgages insured by the FHA and VA have high loan-to-value ratios at the time of origination. For example, among all FHA single-family mortgages originated in 1993, 94 percent had a loan-to-value ratio exceeding 80 percent, and 78 percent had a ratio exceeding 90 percent.(21) The vast majority of mortgages backed by PMI also have high loan-to-value ratios, but the pool of FHA-insured mortgages includes many with loan-to-value ratios that exceed PMI limits. Because PMI companies, the FHA, and the VA all serve households applying for mortgages with low down payments, comparisons of the characteristics of the applicants applying for insurance under each program are appropriate.
We conducted such a comparison, using data on FHA and VA lending activity drawn from information filed for 1993 by lenders covered by HMDA. The comparisons are limited to applications for mortgages secured by properties in MSAs. In addition, the samples of applications used for the comparison was restricted to mortgages that fell within the size limits established by the FHA for single-family mortgages.
Our comparison indicates that the majority of applicants for both government-backed and privately insured home-purchase loans had incomes that were below the median family income for their MSA (table 7). Applicants for the governmentbacked programs, however, were relatively more likely to have modest incomes: for example, for home-purchase loans, 68 percent of FHA applicants and 65 percent of VA applicants had incomes that were below the median family income for their MSA, compared with 54 percent of the applicants for PMI.
A comparison between applicants of the different insurance programs based on neighborhood income finds a smaller difference. For example, 16 percent of the PMI applicants sought insurance for home-purchase mortgages for properties in low- or moderate-income census tracts, compared with 18 percent of the FHA applicants and 16 percent of the VA applicants. Thus, the insurance programs seem to have a similar distribution of applicants across neighborhoods grouped by income, but the FHA and the VA generally serve a lower-income clientele.
The distribution of applicants by racial or ethnic characteristics indicates that the FHA and VA received a higher proportion of requests for insurance from black applicants than did PMI companies, whereas the latter had a higher proportion of Asian applicants. Relative to the VA, the FHA and the PMI companies both had a larger proportion of Hispanic applications, a result that perhaps reflects a lower proportion of Hispanic veterans. The government insurance programs were also more likely to receive applications secured by properties in census tracts where minority residents exceeded 10 percent of the population and in census tracts in central cities.
Disposition of Applications for Mortgage Insurance
PMI companies approved most of the applications for insurance that they acted on during the fourth quarter of 1993–roughly 85 percent of applications for insurance to back home-purchase loans and 87 percent to back refinancings (table 8). The insurers denied about 12 percent of home-purchase applications and about 10 percent of refinancing applications; in a relatively small percentage of cases, applications were withdrawn by the lender or files were closed after additional information needed by the insurer to make a decision was not provided.
Most applications for PMI were approved in 1993, but the approval rate varied substantially across metropolitan areas. In particular, applications for insurance for home-purchase mortgages secured by properties located in all California MSAs and in most Florida MSAs had relatively high rates of denial. Denial rates in California were as high as 33 percent in some areas, including Los Angeles. In California, the aggressive pursuit of customers by mortgage originators and a weak housing market may have led to higher proportions of marginally qualifed applicants for mortgage insurance. The explanations for high denial rates in Florida are less certain, but suggestions range from a high proportion of condominiums and second homes to a local economy that is prone to greater volatility in housing prices. In contrast, many MSAs in the Midwest–including Chicago, Detroit, and St. Louis–had denial rates well below the national average.
Multiple Applications
In general, the relatively high approval rates for PMI are to be expected; lenders submitting applications for insurance know the prospective borrower’s credit circumstances and the credit underwriting guidelines used by the PMI companies.(22) However, unlike mortage lenders, who charge a fee to applicants, PMI companies do not charge for the submission of applications; consequently multiple PMI applications are potentially more common than multiple mortgage applications and may skew the statistics.
