AgentMortgage

Borrowers, insurers would save with new mortgage insurance

Part 2: Fixing the housing finance system
Published on May 12, 2008

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by CareyBot

(This is Part 2 of a five-part series. Read Part 1, "Lenders wise to beef up default-risk reserves.")

The first article in this series pointed to a serious weakness in the way the mortgage system deals with default risk. Interest-rate risk premiums collected from borrowers that are not needed to meet current losses are paid out as income to investors and not reserved to meet future losses.

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