Households often choose mortgages backed by the FHA or the VA instead of those backed by private insurers because the agencies insure mortgages that require considerably less cash at closing and use more liberal underwriting guidelines when evaluating the creditworthiness of the applicant.
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.
When it was legal to own slaves, before the Civil War, it would have been legal for owners to insure
slaves, just as they may have insured other "property.