On the road...
"MGIC Investment Corp., the largest U.S. mortgage insurer, said it is scaling back coverage in 18 states, including all of California and Florida, to reduce losses on loans to the riskiest borrowers.
"MGIC will also limit protection to homebuyers with the lowest credit scores and whose loans account for the highest percentage of the property's total value, the Milwaukee-based company said today in a regulatory filing. The changes will become effective on March 3.
"Mortgage insurers, which reimburse lenders when borrowers don't repay debts, have been pummeled by the worst housing slump in 25 years. MGIC posted its first-ever loss in last year's third quarter and cut its dividend by 90 percent. Florida had the second-highest foreclosure rate in December after Nevada, where MGIC is also scaling back. California ranked fourth, according to RealtyTrac."
In short, the Fed can cut rates in an attempt to pump money into the banking system and the economy. But if lenders tighten standards and companies like MGIC step back from insuring certain mortgages in certain locales, the impact from Fed cuts on Main Street borrowers will be muted.