The private mortgage insurance industry, driven toward irrelevance during the first two years of the housing market collapse, is staging a quiet comeback in 2011. A new Inside Mortgage Finance ranking and analysis reveals that private MI activity in the third quarter rebounded to its strongest market share in three years, and accounted for 24.2 percent of new primary mortgage insurance written. While FHA volume dropped 6.2 percent from the second quarter, private MIs provided coverage for $22.01 billion in new mortgages, a gain of 38.6 percent. The increase in private MI activity outstripped...(Includes three data charts)

Fannie Mae and Freddie Mac reported similarly sour earnings results for the third quarter with both government-sponsored enterprises expressing concern about their growing risk exposure to struggling private mortgage insurance companies. Freddie noted in its 10-Q filing that “the financial condition of certain of our mortgage insurers continued to deteriorate” during the July-September period. Fannie sounded a similar alarm in its own earnings statement. “The already weak financial condition of many of our mortgage insurer counterparties deteriorated at...(Includes one data chart)

Despite buying back some $5.4 billion in mortgages during the third quarter of 2011, mortgage lenders made only a small dent in the huge number of unresolved disputes with Fannie Mae and Freddie Mac over representations and warranties. According to third-quarter financial reports from the government-sponsored enterprises, Fannie and Freddie still had a whopping $12.2 billion of outstanding repurchase claims as of the end of September. That was down only slightly from the $12.7 billion in unresolved buybacks at the midway point in the year. The GSEs reported that seller-servicers...(Includes one data chart)

Old Republic International Corp. intends to re-enter the mortgage insurance business with a revamped business risk model, fresh capital and a new subsidiary if it obtains approval from state regulators and its two major policyholders, Fannie Mae and Freddie Mac. The Chicago-based company, which also operates general and title insurance segments, still maintains a long-term strategic interest in mortgage insurance despite the negative trends in the sector, according to company executives during a recent conference call with analysts and investors. “But at this point, we have little, if any, idea as to the...

Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...

Home mortgage production volume increased by 20.4 percent during the third quarter of 2011 as record-low mortgage interest rates sparked a new wave of refinancing activity. An estimated $325.0 billion in new residential mortgages were originated during the third quarter, according to a new Inside Mortgage Finance ranking and analysis. While that was up solidly from the previous three-month period, it still ranked as the second lowest quarter since the mortgage market collapsed at the end of 2008. Through the nine-month mark in 2011, total production for the year was still down 16.7 percent from...(Includes two data charts)

Private mortgage insurer PMI Group Inc. is assessing its options, including a possible restructuring, after state regulators seized its main unit, PMI Mortgage Insurance Co., last week. Headquartered in Walnut Creek, CA, but incorporated in Arizona, the company was seized by Christina Urias, director of the Arizona Department of Insurance, two months after it was placed under regulatory supervision following a recent “rapid increase in losses that has adversely affected its solvency and that of its affiliates.” On its website, PMI Group informed its clients that Urias has obtained an order “directing full and exclusive...

The U.S. Senate voted late last week to approve an amendment to a federal spending bill that was offered by Sens. Bob Menendez, D-NJ, and Johnny Isakson, R-GA, to reinstate the higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30. Those limits dropped to $625,500 in a number of high-cost markets on Oct. 1, and would be restored to $729,750 through December 2013 under the Menendez/Isakson amendment. The National Association of Home Builders was pleased.

After negotiating with a potential buyer, Bank of America gave up trying to sell its correspondent business and will simply shut the program down by the end of the year, leaving a huge potential hole in the market. The rumored bidder, NationStar Mortgage, reportedly wanted a higher price than BofA was willing to pay to take the correspondent unit off the bank’s hands. “After a comprehensive review of market opportunities, Bank of America will close its correspondent lending channel by the end of 2011, following an orderly transition with clients,” the company said in a written statement. BofA, which had already...

A ruling by a federal district court in Richmond awarding more than $40 million to a mortgage lender for covered losses should compel private mortgage insurers to be more circumspect about their MI agreements, according to industry attorneys. American International Group, parent company of United Guaranty Residential Insurance Co. of North Carolina, is appealing the court’s ruling that it pay SunTrust Mortgage more than $34.0 million for covered losses, $6.0 million in stipulated interest and about $5.4 million in legal fees and costs. Joseph Norton, AIG spokesman, said the insurer has appealed the decision to the...