Arizona regulators have taken over a big mortgage insurer and put restrictions on its claims payments, the latest indication that the housing bust is not finished taking casualties—and that lenders and investors are likely to suffer more losses.That's what you get for insuring people who put nothing down.
PMI Group Inc.'s mortgage-insurance unit had been paying about $1.5 billion a year in claims to reimburse lenders and mortgage investors such as Fannie Mae, Freddie Mac and Wells Fargo & Co. for some of their losses when homeowners default.
Now, the insurer will pay just 50% of claims in cash, and the remainder will be deferred, the company said in a posting on its website. ...
PMI was the third-biggest private-sector mortgage insurer as measured by insurance in force at the end of June, according to Inside Mortgage Finance, a trade publication. PMI joins Triad Guaranty Inc., a much smaller rival, in facing regulatory restrictions on payments since the mortgage meltdown began.
The Arizona Department of Insurance, which regulates the insurer because it initially was licensed in the state, now has "full and exclusive power of management and control of PMI," according to an Oct. 20 order posted on PMI's website.
Monday, October 24, 2011
Regulators seize PMI Group!