Fannie Mae suspends PMI Group
Fannie Mae will not purchase or securitize any mortgage insured by a PMI Group (PMI) subsidiary after Sept. 16, according to a notice sent Monday in response to the Arizona Department of Insurance action last week. PMI's primary regulator, the Arizona insurance department, prohibited the company from writing any new business in any state Friday. However, pending commitments can be completed until Sept. 16. The Fannie Mae action rejects any PMI-insured loan dated before May 19 and Sept. 16. Fannie said the eligibility window was intended to provide "a reasonable period for pipeline clearance." Any pool containing PMI-insured loans within this window must be issued on or before Dec. 1. Whole loans must have delivery dates on or before Dec. 30. PMI is in trouble. It received a delisting warning from the New York Stock Exchange because its stock traded below $1 for 30 consecutive days. An analyst told HousingWire its previous market share will be "eaten up" by competitors because of the regulatory crackdowns. However, a spokesman for the company said PMI is at work drafting options to repair its financial condition. PMI will alert investors as soon as regulators approve a plan. In the second quarter, PMI reported a $134.8 million net loss, and even though that narrowed from one year ago, the company warned investors its policyholders' position was below the minimum level required by Arizona law and its risk-to-capital ratio exceeded the 25-to-1 threshold required by various other states. According to a financial filing earlier in the month, PMI said it exceeded this requirement in 16 states. "The company has undergone significant changes since 2007," PMI said. "Weaker than expected job creation and U.S. home prices continue to negatively affect the company's financial condition and results of operations." Write to Jon Prior. Follow him on Twitter @JonAPrior.