Mortgage Insurers Taking Active Role in Education, Loss Mitigation

As the mortgage insurance business reels from a growing number of borrower defaults — a trend that has cost many insurers their previously-strong financial strength ratings — some of the nation’s larger insurers have begun taking active and aggressive steps to mitigate risk and work directly with borrowers and servicers. The MI unit of Raleigh, North Carolina-based Genworth Financial (GNW) said Tuesday that it was expanding its “Counseling Saver” pre-purchase education program to include all participating borrowers’ insured loans, in an effort to better educate borrowers on their options should they find themselves facing trouble making payments. The program gives homebuyers improved pricing on standard mortgage insurance rates if they complete eight hours of pre-purchase face-to-face or classroom education by a non-profit, non-lending institution. “Many homeowners are in trouble today because they do not understand how the mortgage process works and all the options available to them when they took out their loans,” said Chris Antonello, senior vice president of marketing for Genworth Mortgage Insurance. “We know that educated borrowers are more likely to avoid default, so providing this incentive makes sense for all involved.” Radian Guaranty, the mortgage insurance subsidiary of Radian Group Inc. (RDN), last week said it had rolled out an insourcing program called the Servicer Advocacy Group that places Radian employees in the front line of decision making at key servicers. Via the program, co-located employees can personally assist in reviewing borrower financial packages and determine appropriate workout solutions, and the insurer said it will look to train servicing staff on loss mitigation programs. “The number one goal of this program is to help keep more homeowners in their homes, especially important during this turbulent time,” said Cam Melchiorre, senior vice president of loss management for Radian Guaranty. “We will work closely with mortgage servicers to make sure they have access to a wide range of products and services that can help homeowners who are struggling. “As a mortgage insurer, we have a vested interest in keeping homeowners in their homes. We also have sophisticated resources to assist with workouts. By applying a structured regional approach to the unique real estate needs of affected communities, we look forward to a win-win-win solution that benefits homeowners as well as servicers and Radian.” Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.