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→History
== History ==
== History ==
Mortgage insurance began in the United States in the 1880s, and the first law regulating it was passed in [[New York]] in 1904. The industry grew in response to the 1920s real estate bubble and was "entirely bankrupted" after the Great Depression. The bankruptcy was related to the industry's involvement in "mortgage pools", an early practice similar to mortgage securitization. The federal government began insuring mortgages in 1934 through the Federal Housing Administration and Veteran's Administration, but after the Great Depression no private mortgage insurance was authorized in the United States until 1956, when Wisconsin passed a law allowing the first post-Depression insurer, [[Mortgage Guaranty Insurance Corporation]], to be chartered. This was followed by a California law in 1961 which would become the standard for other states' mortgage insurance laws. Eventually the [[National Association of Insurance Commissioners]] created a model law.<ref>Jaffee D. (2006). [http://faculty.haas.berkeley.edu/JAFFEE/Papers/094lRIO2006.pdf Monoline Restrictions, with Applications to Mortgage Insurance and Title Insurance]. ''Review of Industrial Organization''.</ref> Mortgage insurance companies again suffered in the [[Recession of 2008]]. Claims against mortgage insurers were huge factors contributing to [[AIG]]'s and [[Fannie Mae]]'s insolvency.
Mortgage insurance began in the United States in the 1880s, and the first law regulating it was passed in [[New York]] in 1904. The industry grew in response to the 1920s real estate bubble and was "entirely bankrupted" after the Great Depression. The bankruptcy was related to the industry's involvement in "mortgage pools", an early practice similar to mortgage securitization. The federal government began insuring mortgages in 1934 through the Federal Housing Administration and Veteran's Administration, but after the Great Depression no private mortgage insurance was authorized in the United States until 1956, when Wisconsin passed a law allowing the first post-Depression insurer, [[Mortgage Guaranty Insurance Corporation]], to be chartered. This was followed by a California law in 1961 which would become the standard for other states' mortgage insurance laws. Eventually the [[National Association of Insurance Commissioners]] created a model law.<ref>Jaffee D. (2006). [http://faculty.haas.berkeley.edu/JAFFEE/Papers/094lRIO2006.pdf Monoline Restrictions, with Applications to Mortgage Insurance and Title Insurance]. ''Review of Industrial Organization''.</ref> Mortgage insurance companies again suffered in the [[Recession of 2008]].
In previous decades if a factory closed, whole neighborhoods were laid off and simultaneously, workers no longer could afford mortgage payments, few buyers were interested in moving to areas in economic decline, and property values fell rapidly. Foreclosure insurance theoretically guaranteed the lenders investment at the original sale price or appraised value.
Claims against mortgage insurers were huge factors contributing to [[AIG]]'s and [[Fannie Mae]]'s insolvency.
==Public mortgage insurance==
==Public mortgage insurance==