Thus, we expect that PMI companies are more likely than government-sponsored institutions (the FHA, the VA, Fannie Mae, and Freddie Mac) to insure borrowers who have higher incomes, who are either white or Asian, and who are purchasing homes in higher-income neighborhoods or in neighborhoods with fewer minority residents.
Some factors, however, suggest that PMI companies may be more likely than Fannie Mae or Freddie Mac to insure a higher proportion of mortgages extended to lower-income borrowers.
Profit-oriented purchasers or insurers of mortgages, such as Fannie Mae, Freddie Mac, and PMI companies, guard against adverse selection by setting stricter underwriting standards than they would if they had full information about the risk of the mortgages they buy or insure and by closely monitoring the adherence of mortgage originators to these standards.
The FHA cannot insure mortgages that are larger than legislated limits.
Thus, if one could "weight" mortgage loans by the actual credit risk they pose to the institutions that insure, hold, or purchase mortgages, the FHA and the PMI companies presumably would bear a proportion of the credit risk that is higher than we calculate.
22) Portfolio lenders can also exercise considerable flexibility when applying their underwriting standards if they plan not to sell or insure a mortgage.
In total, these companies acted on 1,483,576 applications for insurance: 1,176,044 to insure home purchase mortgages on single-family properties and 307,532 to insure mortgages for refinancing an existing mortgage (table A.
Information about who originates, holds, purchases, or insures a mortgage in a given year is available from HMDA in combination with PMI data.
This result was to be expected because the FHA generally insures the mortgages of borrowers who currently have few assets available for down payments and closing costs and who do not usually qualify for a mortgage with PMI.