FHA mortgage insurance beats private market 25-fold: KBW
The Federal Housing Administration wrote $319 billion in new insurance in 2010, more than 25 times the $12.4 billion in new insurance written by the top five private companies over the last year. Investment bank Keefe, Bruyette & Woods analyzed the third quarter statistics at MGIC Investment Corp. (MTG), Genworth Financial (GNW), Old Republic (ORI), PMI Mortgage (PMI) and Radian Group (RDN). All five totaled $12.4 billion in new insurance in the 12 months through the third quarter of 2010. MGIC led the way with $3.4 billion in insurance, followed by Radian at $3.2 billion, Genworth at $2.7 billion, PMI at $2 billion and Old Republic's $1.09 billion in new insurance. All five now total $562 billion in total insurance in force. That's 39% below the $931 billion in mortgage insurance the FHA has in force, according to a actuarial review released Tuesday. In 2010, the FHA program insured 40% of all purchased mortgages, including 60% to African-Americans and Latinos. Mortgage insurance is required for loans with higher than 80% LTV. Only PMI, which increased new insurance by 70%, and Genworth, which increased by 35%, wrote more insurance than from a year ago. Old Republic's insurance fell 44% from a year ago, followed by the 24% drop at MGIC and a 6% dip for Radian. Such a large gap between the government's role in the housing market and private enterprises does concern FHA Commissioner David Steven, who told reporters Tuesday the federal agency's share of the market is even larger than he expected. "There is absolutely no question that FHA's role is larger than we expected it to be. We are in a most unique environment today. Without the FHA, the recovery would have clearly been delayed," Stevens said. Write to Jon Prior.