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HousingWire has an article thas spells out some bad news for banks.

Triad Guaranty (OTC:TGIC), a mortgage insurance company, has been ordered by its state regulator not to pay out more than 60% of the amount of any claim in order to preserve capital. The remaining 40% of the claim is paid via an IOU. Triad can make good on the IOU once its regulatory capital recovers. Given that Triad is in runoff mode, not writing new insurance, it’s hard to see how that could ever happen.

Triad has about $17 billion of insurance in force. The net result of the decreased payouts will be increased loss severity for the lenders that would look to Triad for payment.

This is probably not the last mortgage insurer who will run into these sorts of problems. The pillars of the temple continue to crumble.

Source: Triad Guaranty Ordered to Reduce Payments on Claims