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To: Lazarus_Long who wrote (32531)	4/8/2008 1:21:58 AM
From: Elroy Jetson	Read Replies (2) \| Respond to of 217852

Mortgage insurance is an entirely separate deal from banks and government insurance for bank depositors. Publicly traded firms sell mortgage insurance to borrowers and also sell default insurance to investors on municipal bonds and collateralized mortgage bonds and debt swaps. The Muni bond business is very sound, and the business of selling mortgage insurance to borrowers is sound, although if the real estate down-turn is especially severe it will wipe out the shareholders in these firms. The problem business was selling default insurance to investors on collateralized mortgage bonds and credit swaps. There is a strong possibility that the premiums charged on these policies will be insufficient to pay off losses. These firms are prohibited from transferring assets between subsidiaries to contain the problem. When these bonds and swaps default, the insurance companies are obligated to pay only the currently due payments to the investors. So any default by the insurer will occur many years in the future. Whether the insured investors ultimately sustain a loss depends upon the overall loss rate on insured mortgage bonds and credit swaps. These investors are located around the world. .