Mortgage insurance companies adversely affected by the Office of Federal Housing Enterprise Oversight's (OFHEO) new risk-based capital rule are bracing themselves for the worst case scenario, but are at the same time optimistic that OFHEO may reconsider the capital differential that now exists between triple-A and double-A-rated mortgage insurance companies.

As OFHEO's new rule stands, parties would be required to hold more capital against mortgages insured by double-A insurers than triple-A insurers, a distinction that wasn't made. This puts the double-A-rated insurers at a serious business disadvantage in the agency mortgage market.

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