Mortgage insurers are streamlining their procedures to capitalize on the refinance boom.
Mortgage insurers, like mortgage bankers and other lenders, lose market share when borrowers refinance with a competitor.
Many lenders are trying to simplify the refinance process so they will stand a better chance of keeping loans in their portfolios. To help in these efforts, several mortgage insurers are reducing the paperwork required in refinance applications.
"Volumes are off the scale, and lenders are struggling trying to process all of it," said Roy Kasmar, chief operating officer of Chicago-based Amerin Corp., a mortgage insurer. Amerin is one of several insurers that have rolled out streamlined applications.
Lenders have greeted the insurers' streamlining with enthusiasm, expecting it to help them process loans faster.
"You really don't want to see backlogs occur," said Stephen J. Rotella, executive vice president of national operations and technology at Chase Manhattan Mortgage.
In many cases verification of the income, credit history, and other financial information about the borrower are no longer required. Fannie Mae and Freddie Mac have introduced similar streamlined programs for loans sold directly to them.
"The last thing we wanted was mortgage insurance to be an impediment to a successful refinance for lenders," said David Katkov, vice president of marketing for PMI Group, San Francisco.
The ease of approval is yet another sign of the intense competition in the industry. Insurers are not only battling each other but are also competing against lenders that are offering so-called piggyback, or 80-10- 10 loans, which enable a borrower to forgo mortgage insurance by taking out two loans.
"There is stiff competition out there and we're cognizant of that," Mr. Katkov said.
Other insurers, such as MGIC Investment Corp. and GE Capital Mortgage Insurance Co., are also making it easier for lenders to submit refinanced loans. Most of these insurers are automatically approving loans that have already been approved by either Fannie Mae or Freddie Mac.
Some insurers are even approving loans that were originally insured by competitors.
There is some concern that quick, easy approval of refinances could cause problems from a credit standpoint. But insurers are quick to point out that they are limiting the streamlined process to borrowers that are refinancing at a lower interest rate. Some observers argue that these refinanced loans are less risky because borrowers will have more available cash since the monthly mortgage payment will decrease.
"We are doing this prudently," Mr. Kasmar said. "These are safe loans from a credit risk standpoint."
