In the wake of the subprime meltdown, the risk of traditional mortgage insurance portfolios has been largely ignored. But as huge losses in these more mainstream products hit mortgage insurers, they have also started to work their way into an even more obscure corner of the financial services sector: mortgage reinsurance captives. Once highly profitable, mortgage captives have also started to feel the pinch of the downturn in the housing market. This may not be all bad. For these losses may lend substantial weight to the enduring value of these reinsurance structures that in recent years have come under attack by critics. That is if lender captives can figure out a profitable course across the changing regulatory and underwriting terrain. Mortgage reinsurance captives allowed lenders to tap into an alternative source of income by assuming a portion of the mortgage insurance risk written by primary mortgage insurers on mortgage loans originated with loan-to-value ratios of more than 80%.