The largest mortgage reinsurance company, Mortgage Guaranty Insurance Corp., has decided to stop providing private mortgage insurance to condo owners in Florida starting June 1st. While others will continue to provide the service this is still fairly big news.
The company lost 1.4 billion in the 4th quarter last year and is trying to get out of those markets where it has a great exposure. The condo market for most parts of Florida are taking a beating with depreciation and foreclosures. The company has recognized they had to stop investing in it.
Of course, it crossed my mind why they finally figured it out now as we are nearing the bottom. Anyone watching the market in 2006 could have told you that condo prices were on the down swing and that mortgage insurance in the state of Florida was probably not the best business to be in. Now as we near the bottom they are getting out of writing new policies.
Mortgage Guaranty Insurance Corp., the largest-volume insurer, recently expanded its list of distressed markets along with a series of cutbacks on specific low-equity loans. As of June 1, MGIC will not insure condominium unit mortgages in the entire state of Florida. It also has abandoned cash-out refinancings.
Asked whether his firm might re-evaluate its declining markets restrictions in light of the abrupt changes at Fannie Mae and Freddie Mac, Michael J. Zimmerman, senior vice president-investor relations for MGIC, scotched hopes for any quick reversal. “We’re not contemplating any changes,” he said in a telephone interview. MGIC, which reported a $1.4 billion loss for the fourth quarter of 2007 and a $34 million loss for the first quarter of this year, has been hit hard by claims after foreclosures and extended delinquencies in once-booming housing markets. via the baltimoresun.com.
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