By Leslie Scism and Nick Timiraos | The Wall Street Journal
The latest hot play on a housing recovery is a beaten-down sector that nearly went extinct during the financial crisis: the mortgage-insurance business.
Hedge funds including John Paulson’s Paulson & Co. have collectively invested hundreds of millions of dollars in the industry this year, joining big banks including Goldman Sachs Group Inc. GS +0.34% in their bullish bets on the sector.
While private mortgage insurance is one of the lower-profile corners of the financial world, $710 billion worth of coverage is in force in the U.S., protecting mortgage investors and lenders. In general, home buyers putting less than 20% down are required to obtain the coverage. If a house is foreclosed on, the insurer takes the first loss.
