Newly aggressive FHA puts squeeze on private mortgage insurers

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By SwetMortgage_Forms_Keysa Singh and Tanya Agrawal | Reuters

Private mortgage insurers in the United States may have to cut premiums to better compete with the Federal Housing Administration, which plans to reduce premiums in the government’s latest attempt to encourage first-time homebuyers.

Companies such as MGIC Investment Corp and Radian Group Inc have been regaining market share over the last year after the FHA was forced to raise premiums to replenish its dwindling cash reserves.

Now, with the White House announcing this week the agency will cut annual mortgage insurance premiums by 0.5 percentage points, the market share of these companies is under threat.

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