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The PMI Risk Index – What Does it Say About This Area?

If you’re a Crofton area home seller, you may be very discouraged after your home has been on the market for weeks or even months.  I’m sure it has crossed your mind to wonder how our area is doing compared to other parts of the country. 

What's the Risk of Your Neighbor Facing Foreclosure?That’s one of the reasons I did a little surfing on the website for the Office of the Federal Housing Enterprise Oversight (OFHEO) to find a comprehensive comparison of metropolitan areas around the country.  The most recent Quarterly PMI Risk Index is the one I decided to focus on for this post.

PMI is an acronym for Private Mortgage Insurance, the insurance policy which buyers purchase to protect lenders from increased risks when borrowers make less than 20% down payment.  Of course, one of the reasons lenders are in trouble today is the second and third trust mortgages they offered borrowers in lieu of PMI in the past few years.   In spite of that, the PMI 2nd Quarter Risk Index does provide an indicator of the likelihood for failed mortgages, and I think you’ll be pleased to see the rankings for Maryland cities.

There are several categories of risk:  Minimal, Low, Moderate, Elevated and High.  Let me give you a few examples of each that are located around the country:

1.  Minimal – Dallas-Fort Worth, Texas;  Bowling Green, Kentucky
2.  Low – Boise City, Idaho; Wilmington, North Carolina
3.  Moderate – Kingston, NY; Winchester, Virginia
4.  Elevated – Flint, Michigan; Myrtle Beach, South Carolina
5.  High – Las Vegas, Nevada; Coral Gables, Florida

In fact, most areas of the country ranked “minimal” or “low” risk, with high risk properties concentrated primarily in Florida and California.  Crofton isn’t big enough to be specifically rated on the PMI Risk Index, but I think we can conclude, by looking at other nearby cities, that any risk for our area is LOW:

A cautionary statement attached to the Risk Index states that these rankings are projections of future economic and market conditions, not historical figures. 

Well, the future is now, and there have been changes to economic conditions, consumer confidence, and credit since this index was published, so the numbers may change when the 3rd Quarter Risk Index is released.  However, it’s likely the (LOW) category will not change for our area because, as it been for years, Crofton remains relatively stable when measured against the rest of the country.

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