Applying certain private mortgage insurance practices and requirements to FHA may not be as ideal as some proponents suggest because they do not fit in the business environment in which the FHA operates, according to a new study from the Government Accountability Office. Nonetheless, the regulatory framework for private mortgage insurers has features that could enhance the transparency of the FHA’s Mutual Mortgage Insurance Fund and Congress’ oversight of FHA’s operations, the study concluded. The GAO did the study at the request of ...
Recapitalization of RMIC Will Pave the Way for a Return to MI Market. Old Republic International (ORI) is planning to recapitalize its mortgage guaranty subsidiary, RMIC Companies, Inc., which could resume underwriting in early 2014. Old Republic plans to contribute up to $50 million of new capital and raise additional funds, which would allow RMIC and its subsidiaries to fully support existing policies, pay off deferred claim obligations, exit state supervision, and resume underwriting new business early next year. The cash infusion would require ...
Fairholme owns $3.5 billion (face value) of GSE junior preferred stock. After company chief Bruce Berkowitz sent his tender offer to FHFA and then went on CNBC to discuss the plan, you can bet that the price of GSE preferred probably increased a bit.
Will the banks that bought “junior” preferred stock in Fannie Mae and Freddie Mac prior to the housing bust ever be made whole? Will investors that purchased the preferred after that time eventually be rewarded for the gamble they took on such a highly speculative investment? Those two questions look a lot more interesting these days thanks to continued strong earnings from the two government-sponsored enterprises. According to filings with the Securities and Exchange Commission, Fannie and Freddie say...
The average guaranty fees charged by Fannie Mae and Freddie Mac on new business continued to climb during the third quarter, with a sizable slice going straight into the U.S. Treasury. Fannie reported that the average guaranty fee on new business was 58.7 basis points during the third quarter of 2013, up from 56.9 bps during the second quarter. Freddie continued to charge lower fees than its rival, 53.2 bps during the third quarter, up from 50.7 bps in the previous period. A year ago, Fannie’s average fee on new business was...
Old Republic International is planning to recapitalize its mortgage guaranty subsidiary, RMIC Companies, Inc., allowing the company to resume underwriting in early 2014, adding to the flow of new capital coming into the private mortgage insurance business. It is unclear how much money is needed to recapitalize RMIC, which is currently in a run-off mode, but Old Republic plans to contribute up to $50 million and raise additional funds in the capital markets to resurrect its MI subsidiaries. The company did not reply to requests for comment. Material increases in mortgage insurance claims and loss payments that began in 2007 gradually depleted...
The last time private MIs did more business than either the FHA or the VA was back in the first quarter of 2008. At that point, however, private MIs accounted for well over half of primary MI new business.
The STACR deal was structured so that Freddie Mac will take the first 30 basis points of losses on the transaction, followed by private investors, which bought debt notes on the following 300 basis points of potential losses.
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