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Mortgage insurers slip after new capital rules proposed

  • A check of the mortgage insurers the morning after the FHFA released the proposed Private Mortgage Insurer Eligibility Requirements (PMIERs) finds Radian (RDN) lower by 2.8%, MGIC (MTG) by 2.6%, and no action in Genworth (GNW), Essent Group (ESNT), and NMI Holdings (NMIH). The revised PMIERs would require higher capital standards on the mortgage insurers Fannie Mae (FNMA) and Freddie Mac (FMCC) do business with.
  • The new rules are open for comment until September 8, and Radian expects to give the FHFA an earful, including noting the new capital requirements "are more onerous than the company's historical default experience suggests would be needed to withstand a severe stress event." The proposed PMIERs, says Radian, are also not consistent with the FHFA's goal of expanding access to mortgage credit by boosting the role of private capital in the mortgage market.
  • Radian also notes it is likely to be January 2017 before compliance with any new rules would be required.
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