Uh oh for banks!

In a report published this month, Moody's Investors Service Inc. said that private mortgage insurers had rejected 20% to 25% of claims in recent quarters, compared with a long-term average of about 7%.

What this means is that loans that lenders have on their books which have defaulted and have not been written down because the lenders feels secure in the value because they have purchased mortgage insurance from an insurer like MGIC are really not properly valued. If the rejections are upheld, the lenders are going to have to write down more loans.