This study advances the mortgage insurance pricing literature by providing theory and methods for incorporating both equity and ability to-pay theories (Jackson and Kasserman, 1980). We develop a new option-based model by adding the current loan-to-value and debt service ratios to the pricing...

This study provides the valuation of mortgage insurance (MI) considering upward and downward jumps in housing prices, which display separate distributions and probabilities of occurrence, and the mortgage insurer's default risk. The empirical results indicate that the asymmetric double...