Mortgage insurer Radian Group (RDN) may be required to hold additional capital if regulators tweak existing insurance laws, the company warned in its latest filing with the Securities and Exchange Commission.
Radian also noted that Fannie Mae and Freddie Mac continue to discuss the possibility of revising their mortgage insurer eligibility requirements, and the outcome of those deliberations could harm the insurer’s business in the future.
If the GSEs adopt more stringent guidelines for mortgage insurance, Radian says it “could lose (its) eligibility status with the GSEs,” which might prompt Freddie Mac and Fannie Mae to pull away from acquiring Radian-insured loans.
Furthermore, the National Association of Insurance Commissioners is reconsidering the minimum capital and surplus requirements for mortgage insurers, which would impact the Mortgage Guaranty Insurers Model Act, Radian said.
If this were to occur, Radian could face tighter capital requirements in states that adopt the Model Act. This in effect would force Radian to increase its capital requirements.