California Loans News

Standard & Poor’s Ratings Services are examining mortgage insurance operations of seven companies for downgrade. Analyst Ron Joas said that the company’s move reflects “our view that macroeconomic conditions may have become more difficult for the mortgage insurers since we last conducted an extensive of the sector in April.” The ratings company expected mortgage insurers to have to sustain losses from 2010 to 2011. However, loss mitigation work for the respective companies is anticipated to be commenced in the second half before this year ends.

S&P said that the results from MGIC Investment Corp. and Old Republic International Corp. for the third quarter “may be indicative of an elongation of the loss cycle, and that mortgage insurers are experiencing a sharper and more rapid transition of delinquencies into prime books of business than we expected.”

The companies with mortgage insurers in risk for downgrade are Old Republic, Radian Group, Inc., Genworth Financial Inc., PMI Group Inc., CMG Mortgage Insurance Co., United Guaranty Residential Insurance Co. and the California Housing Loan Insurance Fund. MGIC was not included as the company’s mortgage insurer was downgraded last week.

The ratings company said that its review would examine the portfolios of the insurers. They would also focus on “trends of increased delinquencies among prime-rated borrowers and how company efforts might mitigate losses.” Mortgage insurers have also seen claims to continue increasing as home delinquencies and defaults on loans rise. The downgrades of at least one mark are possible if the ratings company would project losses would not return to expected levels “in the near future.”

Spokesperson for the California Housing Loan Insurance Fund said they are not “surprised, given the woes that the state’s housing market has endured over the past several years” with regards to the continuous real estate market deficiencies. Meanwhile, the shares of PMI and Radian have decreased by 13 percent and 4.5 percent respectively. Old Republic’s was down 1.1 percent and Genworth slipped by 1.7 percent.

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