NY -- Standard&Poor's CreditWire 1/21/1999 -- Standard&Poor's believes that Fannie Mae's reductions in its coverage requirements for mortgage insurance announced on Jan. 15, 1999 will have a modest short-term effect but a growing long-term effect on the mortgage insurance industry. These initiatives will contribute to lower premiums and, in the current extremely high-quality mortgage market, lower earnings. If credit conditions deteriorate significantly, however, the reductions will mitigate losses. Earnings should remain strong through 2000 even if there is a moderate worsening of the credit environment. Fannie Mae announced several changes in its requirements for mortgage insurance on most 30-year, fixed-rate, 'A' quality mortgages that are recommended for approval by its Desktop Underwriter automated loan processing system.
