Life Insurance Companies Offering Mortgages
You wouldn't think of life insurance companies as an option for mortgage lending, but times are changing. According to the New York Times article "Insurers See An Opening in Commercial Mortgages" by Julie Satow, the commercial mortgage market has been volatile and this is allowing life insurers to take advantage of this market and become stronger lenders.
The mortgage industry has been plagued with weak investor interest, wary lenders and continuous warnings from rating agencies about the high risks associated with mortgage lending. This gave life insurers a unique opportunity to participate more than usual in mortgage lending. In the second quarter of 2011, the life insurance industry underwrote about $15.7 billion in new commercial mortgages. This is the largest volume since it's been measured by the American Council of Life Insurers. Reputable companies such as Unum Life Insurance are venturing into mortgage loans quickly.
This happens to be a doubling in the volume of mortgages sold in the first quarter and about 26 increase over the second highest number ever recorded. With the economy still struggling, many Wall Street banks, which usually are the main underwriters, have calmed activity giving life insurers more of an opportunity. Lawrence J. Longua, a clinical associate at the Schack Institute of Real Estate at New York University says life insurance companies are pretty much the only game in town. Life insurance companies are notoriously conservative, favoring higher quality borrowers, and this could be their secret to success during these risky times. High risk loans are one of the main reasons our economy was rocked to begin with.