A leading investment house is touting mortgage insurance companies as hot stocks for 1997, an assessment that shows confidence in the mortgage industry as a whole.

The home buying market will improve "throughout the 1990s," wrote Goldman Sachs & Co. analyst Robert G. Hottensen in a yearend report on mortgage insurers.

The report, titled "A Bullish 1997 Outlook," said more immigrants and consumers in the middle-income range will buy homes in the next few years, strengthening an already solid market.

Mortgage insurance companies, whose coverage protects lenders against defaults, are well positioned to benefit from a strong market, Mr. Hottensen said.

Who does Goldman Sachs prefer among the 10 mortgage insurers that dominate the industry? CMAC Investment Corp., Philadelphia; MGIC Investment Corp., Milwaukee; and PMI Group, San Francisco.

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