Finally – some “leeway” for the housing market?
by Tom on December 4, 2009
in Market Musings, Mortgage Rates, mortgage insurance; pmi
This is, I think, good news. Let me explain….
- MGIC is one of the biggest private mortgage insurance companies in the country.
- They are facing very large losses and are running out of funds.
- As part of the restructuring, they are setting up a new subsidiary that will write new business.
- The state of Wisconsin (which I believe is where MGIC is headquartered) is being more lenient on their capital requirements until December of 2011 to essentially allow MGIC to keep writing new business.
If FHA is tightening up the rules, it is important to the health of the housing market that we have functioning PMI companies that will be able to help well qualified borrowers do a mortgage with less than 20% down.
The jobs report comes out in 45 minutes. I’ll have a report on it as soon as I have the info.
Tom Vanderwell
The Office of the Commissioner of Insurance (OCI) in Wisconsin waived until Dec. 31, 2011 a requirement that Mortgage Guaranty Insurance Corp. (MGIC) — subsidiary of MGIC Investment Corp. (MTG: 4.63 0.00%) — maintain a certain minimum regulatory capital to write new mortgage guaranty policies.It’s part of MGIC’s plan to continue to write new business partly through wholly-owned subsidiary MGIC Indemnity Corp. (MIC), which was recently capitalized by MGIC with $200m.
Technorati Tags: PMI, Mortgage Insurance, MGIC
This is a far smarter move on the part of the OCI than the Fed throwing TARP funds at the banks. Thanks for highlighting this story, Tom; your analysis of it seems spot on. Maybe the fed can learn from this and divert TARP funds to underwriting risk for the largest private insurers.
David,
Thanks for stopping by! I agree, that this is the smarter way to do it.
Hey – any chance you’ve gotten anything done with the idea we were “kicking around” earlier this week?
Tom