MGIC subsidiary satisfies conditions for Freddie Mac approval
MGIC Investment Corporation ($6.32 0.16%) will transfer $100 million to its subsidiary Mortgage Guaranty Insurance Corporation on Dec. 3. All other conditions required by Freddie Mac to continue the government-sponsored enterprises approval of MGIC Indemnity Corporation (MIC) as a limited mortgage insurer are satisfied through Dec. 31 2013.
MIC is also an approved mortgage issuer for Fannie Mae.
Under a previously agreement to settle the pool insurance dispute between MGIC, Freddie Mac and the Federal Housing Finance Agency, MGIC will pay Freddie Mac $267.5 million.
On Dec. 11, $100 million is set to be paid and the remaining payment will be disbursed in 48 installments beginning Jan. 2, 2013.
"I am very pleased that the implementation of our plan, designed over three years ago, to write new business through a combination of MGIC and MIC, can continue to be implemented. I want to express my thanks to our business partners at Freddie Mac and Fannie Mae, to the FHFA, and to MGIC's principal regulator, the Wisconsin OCI, for its efforts in concluding this matter," said chairman and CEO Curt Culver of MGIC Investment and MGIC.
He added, "I appreciate the trust that our customers continue to place in MGIC for their mortgage insurance solutions and want to thank them for their business."
The Office of the Commissioner of Insurance of the State of Wisconsin issued an order on Nov. 29 establishing a procedure for MIC to pay a dividend to MGIC if two events occurred "an OCI exam determines MGIC is reasonably likely to be unable to honor its claim obligations during the five years after the exam, or MGIC fails to honor its claim obligations for claims that it in good faith believes are valid."
On Nov. 30, Freddie Mac gave conditional approval to MIC to write new business in any jurisdiction in which MGIC is unable to write new business because the company did not meet any specific state regulatory capital requirements for mortgage insurers.
In a press release, the company said, "[U]nder the applicable Fannie Mae conditions, MIC is not eligible to write business in Wisconsin, and if MGIC cannot write business in Wisconsin, MIC is not eligible to write business in any jurisdiction."
Currently, MIC is writing business in eight jurisdictions including Florida, Idaho, Missouri and Ohio.
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