Piggyback loans threaten PMI industry

Insurers fight back with new products

Newlyweds Michelle and Samuel Riccobono knew that without a 20 percent down payment for a house they’d face the added expense of private mortgage insurance. They weren’t sure they could afford that.

A mortgage broker, however, showed the Philadelphia couple how they could avoid the cost of private mortgage insurance and cut their monthly payments: a piggyback loan. Instead of going with a 100 percent mortgage as they’d originally planned, they opted for an 80 percent first mortgage with a second mortgage for the remaining 20 percent “piggybacked” on.