MarketWatch: Freddie Mac loosens PMI rules to aid mortgage insurers (taxpayers bailout RE con men)

[El Pinko]

http://www.marketwatch.com/news/story/freddie-mac-loosens-pmi-rules/story.aspx?guid=%7B44D35769%2DDF36%2D4209%2D8ED4%2D59439AE7A99F%7D


Freddie Mac loosens PMI rules to aid mortgage insurers
By Greg Morcroft
Last update: 7:44 a.m. EST Feb. 14, 2008
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NEW YORK (MarketWatch) -- Government sponsored mortgage giant Freddie Mac said Thursday that it is temporarily changing its rules for private mortgage insurance companies to allow them to retain more capital and rebuild there balance sheets, which have been damaged badly by the housing and credit crises. "Triggered by the ongoing decline in home prices and poor performance of subprime, Alt A and other higher-risk mortgages", Freddie Mac said, "the temporary change is intended to allow mortgage insurers to retain more insurance premiums to pay current claims and re-build their capital base." Freddie also said it is suspending certain rules that automatically trigger new requirements for insurers that are downgraded by rating agencies below a certain level. The new rules take effect on June 1, the company said.

[Phoebe Loosinhouse]

1. This is actually pretty damn scary

These guys insure the banks against their mortgage losses. They are the safety, security and SOLVENCY firewall.

In 1991 Rhode Island had it's own little bank failure nightmare when all the credit unions in the state failed simultaneously.
The links below are 2 short articles from the NYT from those days.

http://query.nytimes.com/gst/fullpage.html?res=9D0CE3DF153FF937A35752C0A967958260

http://query.nytimes.com/gst/fullpage.html?res=9D0CE7D8163FF937A35752C0A967958260&sec=&spon=&pagewanted=all

It wasn't the credit unions that failed, it was the INSURER of the credit unions, RISDIC (Rhode Island Share Indemnity Corporation) that failed, when they could not cover the losses of one rinky dink Rhode Island credit union embezzler - revealing that the whole "insured deposits" meme was an illusion - causing a run on the credit unions, and THEN causing a subsequent failure.

They closed the credit unions on New Years Day 1991. In one day, the Rhode Island economy was turned into a moonscape.

People lost homes, businesses, money. For real. They were denied access to THEIR money. It went on forever. It drove Rhode Island into a depression that I don't believe it ever pulled out of.

That's why when I read about private mortgage insurance being in trouble, I am ALARMED. When I read about the insurers of municiple bonds being in trouble, I am ALARMED.

[salin]

2. thanks for the perspective/information per RI

it is indeed very alarming.