Arizona Law Gives Mortgage Insurance Regulators More Discretion
[Update 1: Clarifies version of the bill signed into law] New legislation passed in Arizona eases restrictions on mortgage insurers and gives the state’s Department of Insurance authority to work with insurers who don’t meet the state’s minimum policyholder position (MPP). The law — HB 2008 — which takes effect in November, gives the department discretion to allow mortgage insurers to continue writing new business, even if the insurer doesn’t have the capital to meet the MPP. The bill also sets requirements for insurers’ MPP. Arizona is the 16th state to enact such legislation, and it's already causing at least one prominent mortgage insurers to consider the new role of insurance regulators. PMI Mortgage Insurance Co., an insurer that falls under the jurisdiction of the Arizona Department of Insurance, said it supports the bill because MPP is only one factor but should not be the sole determinant in evaluating mortgage insurers’ ability to write new business. PMI Mortgage Insurance said it will provide relief to insurers that are restructuring portfolios and rebuilding capital levels. “Broad support of this regulatory reform reflects the confidence in Arizona’s Department of Insurance as well as the current realities of the housing crisis and its impact on mortgage insurance companies,” said Steve Smith, chairman and CEO of the PMI Group, Inc. (PMI). “A guiding principal of the mortgage insurance industry is supporting sustainable homeownership and the ability to write new business is a critical factor in the recovery of the US housing market.” Write to Austin Kilgore.