Title, mortgage insurers cut costs, but not to you

In all phases of the mortgage industry this week your hear the mortgage blues, from the people who make the loans to the people who insure them, the news was bad — and most of them expect it to get worse. Title insurers say they could not cut costs fast enough in August and September to keep up with the plummeting market. Cut costs for us, the borrower? Not at all. For these people a slower market means less revenue, so cutting costs means layoffs. Insurance reimburses a homeowner or a lender if there is an error in the deed transferring property.

Then we have the three stooges – MGIC, Radian, and C-BASS. The market turned quickly for mortgage insurer MGIC Investment Corp. as well, as the rising delinquencies forced the company to pay out more in claims in the third quarter. MGIC said it expects to lose money through 2008 because it estimates it will pay billions in claims. MGIC Investment already posted a loss of $372.5 million in the third quarter.

If mortgage insurers and title insurers cannot trust the market I guarantee these people are looking at outsourcing to India, the Philippines or Malaysia. The world has grown smaller through telecommunications and mortgage servicers already set the example. Cost cutting equates to pink slips, ‘you’re fired’, or in the case of the three stooges, perhaps “if you are willing to relocate to India and accept a large pay cut you can keep your job.”