Foreclosure is expensive for lenders, mortgage insurers and investors.

Due to a sharply increased risk, most mortgage insurers will not write policies if the borrower's credit score is less than 575.

Mortgages on co-op studios are often rejected by private mortgage insurers because they represent a higher risk of default.

"Substitute insurance is not in the cards," the legal counsel for another leading mortgage insurer said.

The mortgage insurer will charge a premium for this coverage, which may be paid by either the borrower or the lender.

Coverages offered by mortgage insurers can vary from 20% to 50% and higher.

The moratorium has also raised concerns - which industry experts say are generally unwarranted - about the health of other mortgage insurers.

But industry experts say most other private mortgage insurers are also in the red or retreating from the market.

In retrospect, mortgage insurers should never have guaranteed such loans, many of which have since gone into default.

While private mortgage insurers work closely with lenders, relations between the two groups have sometimes been strained.