Good for 7 days –
“But while consumers have to get the
insurance, they have virtually no bargaining power over its price. Meanwhile,
it’s the lenders who benefit. These days, lenders sell loans to mortgage
investors in a secondary market, and the lenders need the insurance to make
those sales.
“But while consumers have to get the
insurance, they have virtually no bargaining power over its price. Meanwhile,
it’s the lenders who benefit. These days, lenders sell loans to mortgage
investors in a secondary market, and the lenders need the insurance to make
those sales.
“Insurers are
not competing for the borrower, they’re competing for the lender, homebuilder or
realtor who is overseeing the sale, so there’s no pressure on prices,” says Jack
Guttentag, professor of finance emeritus at the University of Pennsylvania’s
Wharton School. “A situation like that is ripe for abuse and almost never to the
benefit of the consumer.”
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