What is private mortgage insurance

The mortgage insurance (Eng. "Mortgage Guaranty Insurance"Or"Private Mortgage Insurance”) Insures the risk that a lender will suffer losses from the settlement of a distressed mortgage loan.

This insurance therefore pays in favor of the creditor, while the one common in Great Britain "Mortgage Payment Protection Insurance”In favor of the debtor if he becomes unemployed for reasons for which he is not responsible.

Private mortgage insurance is particularly important as an additional means of security for mortgage loans with a high loan-to-value ratio (above 80 percent of the loan-to-value ratio). The claims experience in this insurance is, however, extremely cyclical.

Private mortgage insurance was first offered in the Kingdom of Saxony in 1858 (the Sächsische Hypothekenversicherung zu Dresden was founded by the statistician Ernst Engel). In Germany, however, this branch of insurance has never got beyond a niche existence. After the end of World War II, German insurers did not resume business. The real home country of private mortgage insurance is the USA, where this insurance is now an indispensable component of the national real estate financing system.

Private mortgage insurance is now offered in a number of countries (including Great Britain and Germany). Intensive market penetration has so far only been achieved in a small number of countries. In addition to the USA, Canada and Australia should also be mentioned here.

The importance of private mortgage insurance in terms of housing policy lies in the fact that it allows families to finance the purchase of their own home with much less equity and thus much earlier in the household life cycle.


Private Mortgage Insurance Resources:

  • The Mortgage Insurance Companies of America MICA website.
  • The websites of the two insurers that write business in Germany:
    PMI Germany
    Genworth Financial - Germany
  • Blood, R .: Prospective role of mortgage insurance in support of housing finance in Poland, Report to USAID, Urban Institute 1998.
  • Canner, G. / Passmore, W. / Mittal, M .: Private Mortgage Insurance, in: Federal Reserve Bulletin, October 1994, pp. 883-899.
  • Chen, K .: The Role of Mortgage Insurance in Risk Management, in: International Journal of Real Estate Finance, Volume 1, No. 2.
  • David, P .: Mortgage insurance: What is the right model ?, Presentation at the 25th IUHF World Congress, Bruxelles, June 2004.
  • Dennis, B. / Kuo, C. / Yang, T. (1997): Rationales of mortgage insurance premium structures, in Journal of Real Estate Research, vol. 14, no.3, 1997.
  • Johnstone, Q. (2004): Private Mortgage Insurance, in: Wake Forest Law Review 2004, vol. 39, no. 4, pp. 783-838.
  • Kofner, S. (2005): Mortgage insurance opens up new avenues for buying your own home, in: Frankfurter Allgemeine Zeitung, September 16, 2005, p. 57.
  • Kofner, S. (2006): Mortgage insurance: In the fast lane to home ownership ?, in: Immobilien undfinanzierung, 57th year, issue 11, pp. 356-359.
  • Kofner, S. (2007a): Mortgage insurance: In your own home with a minimum of equity ?, in: Taschenbuch für den Wohnungswirt 2007.
  • Kofner, S. (2007b): Hedging mortgage default risk with mortgage guaranty insurance: A model for Europe? Paper presented at the European Mortgage Federation / European Network of Housing Research Joint Seminar on European Mortgage Markets, Brussels, Belgium 29th March 2007.
    The presentation to download.
  • Kofner, S. (2007c): Mortgage insurance is returning to its country of origin, in: Real Estate & Financing, Vol. 58, Issue 11, pp. 385-387.
  • Kofner, S. (2007d): Hedging mortgage default risk with mortgage guaranty insurance: A model for Europe ?, in: Housing Finance International, vol. 21, No. 4, June 2007, pp. 3-15.
  • Liu, D .: Exporting Mortgage Insurance Beyond the United States, in: Housing Finance International 2000.
  • Merrill, S. (2004): Expending lending downmarket: the role of mortgage guarantee insurance, THE URBAN INSTITUTE, Eradicating Poverty Through Profit, San Francisco, December 2004.
  • Mortgage Insurance Companies of America: 2007-2008 Fact Book & Membership Directory.
  • Song, H. (2005): Risk management on the housing market - with a focus on low income households, Paper 2: Mortgage and home equity insurances for home owners and rental insurance for tenants, Report 5:67 Building and Real Estate Economics ( Licentiate Thesis), Department of Infrastructure, Royal Institute of Technology Stockholm.
  • Struyk, R. / Whiteley, D .: Mortgage default insurance in the U.S .: Implications for Russia, Prepared for the Institute of Urban Economics, March 2002.
  • Van Vliet (ed.): Encyclopedia of housing, keyword “Mortgage Insurance”.
  • Whitehead, C. / Holmans, A. (1999): Why Mortgage Payment Protection Insurance ?, report for the Council of Mortgage Lenders and the Association of British Insurers.