Mortgage Biz: Fewer choices, fewer deals ahead as insurers cut off third party originators

In what they say is an effort to reduce risk, private mortgage insurers plan to cut off or curtail third party originated loans beginning in early March, DailyFinance has learned. That decision will make it much harder to get a loan through an independent mortgage broker, where banks compete for customers by offering various loan programs that can be originated through a third party.

By reducing the competition and forcing people who want to put less than 20% down to work with a bank, anyone who needs private mortgage insurance will likely be forced to apply directly through a major lender. Cutting out competition is a sure way to guarantee higher rates for those still able to play in the mortgage lending marketplace.