Summer season, the U.S. mortgage insurers already feeling Donghan.
July 17, the U.S. mortgage insurance market in the first place MGIC (Mortgage Guaranty Insurance Co., NYSE: MTG) second-quarter loss of 9.79 million U.S. dollars (79 cents a share) a year earlier 7670000 Dollars of net profit (93 cents a share) shrink 228 percent. This is also the MGIC in 2008 for the loss, its first quarter net loss of 34.4 million U.S. dollars.
Prior to May, the United States another mortgage insurer Triad Guaranty Inc. (Nasdaq: TGIC) announced that the 2008 first quarter net loss of 1.5 million U.S. dollars.
In addition to MGIC and Triad Guaranty, active in the U.S. mortgage insurance industry also include PMI Group Inc. (PMI), Radian Group Inc (RDN), American International Group (AIG)'s mortgage insurance subsidiary of AIG United Guaranty, Genworth Financial, Old Republic International (ORI), and so on.
"In the past year, since (at least is due in part) the U.S. real estate market downturn, all of the above mortgage insurers have experienced a financial loss." July 22, the second-largest U.S. mortgage insurer PMI Muta, vice president of soup Bogut (Tom Taggart) in an interview with this paper said.
As the U.S. housing market continues to worsen, the mortgage insurance underwriting business is facing more claims burden.
MGIC payment rate increase
June 30, the U.S. mortgage insurer Association (MICA) announced in May this year in arrears total of 67,967 loans, compared to May 2007 of the 45,986 total, an increase of 48%.
Such as MGIC, PMI Mortgage insurers such, mainly for those who can not afford to pay 20 percent of buyers first payment services, the general loan institutions hope that these home buyers to purchase "mortgage insurance," because once they are unable to meet repayment obligations , The mortgage insurer will be responsible for the repayment of loans, the loan amount is usually 25% -35%.
Since last year, because the U.S. real estate market liquidity shortage, buyers have been difficult to re-financing activities, lending institutions can not be secured through the auction for the property to recover loans, mortgage insurers forced to make up for the lending institutions Zitaoyaobao Losses.
Against this background, the mortgage insurer facing a large number of default loans. International rating agency Fitch (Fitch Ratings) announced in early June MGIC and PMI lower rating, and warned that the next two years the mortgage insurance industry profits are still facing great pressure.
This prediction is slowly achieving.
MGIC latest, since 2001 the company faced Wei Yueshuai loans continued to rise.
Historical data show that from the beginning of the first half of 2007, MGIC loans Wei Yueshuai will show an upward trend of unilateralism, not including large loans, the loans every six months thereafter Wei Yueshuai were 3.95 percent, 4.99 percent in the second quarter of this year to 6.02 %. 2008 second quarter, the company encountered by non-loan ratio of 3.95 percent year-on-year to 6.02 percent; if including bulk loans, default ratio increased to 6.11 percent from 8.60 percent.
Accordingly, MGIC the payment rate from the 2007 second quarter from Douzeng. Before the second quarter of 2007 the payment rates were 60.8% and 76.7%, but the third quarter increased to 187.5 percent, and the end of 2007 reached a historic 400.6 percent. Entered 2008, MGIC the payment rate is still high, the first two quarters were 200.2 percent and 196.4 percent.
MGIC bear more and more insurance claims burden, making it available assets continue to be undermined.
February, MGIC was because of a lack of capital funds were downgraded by Fitch warned that financing had to issue stock to raise capital adequacy ratio. According to its by the end of March, the U.S. Securities and Exchange Commission (SEC) documents show that the company through the issuance of 4,290 million shares of common stock, access to finance 483 million U.S. dollars, and by issuing a yield of 9% in 2063 due to the conversion - Grade debt was 365 million U.S. dollars financing.
MGIC's chairman and chief executive officer of the mandrax Kete S (Curt S. Culver) in the second quarter earnings release, said the sluggish real estate market and weak economy, leading to loans Wei Yueshuai and redemption rate of loss To maintain a high level, these factors on the company's financial situation impacts.
"We expect loan Wei Yueshuai will be the end of this year or first quarter of next year has declined." Kete S to investors that the mandrax.
Do the most conservative of the participants
"MGIC will improve underwriting standards." Kete July 17 stressed.
Kete reiterated, MGIC in the past year has been "significant adjustment" of its underwriting type, which is a change in the second quarter of this year, Wall Street is no longer underwriting the bulk transactions, that is no longer packaged as securities for loans to provide insurance. He believes that this will help improve the quality of insurance, risk reduction.
Affected by this, MGIC quarter of the total new insurance business decreased significantly, the second quarter of the total new insurance for the 14 billion U.S. dollars, less than the first quarter of 19.1 billion U.S. dollars, also lower than 2007's 19 billion U.S. dollars over the same period.
In addition, the impact on the part of the larger real estate markets, such as in California and Florida, MGIC said it would raise operating standards, including requirements of a higher credit score, as well as the first payment to pay a higher proportion of these states in the urban areas, MGIC will no longer purchase the first payment of less than 5% of the total Fangkuan purchase of mortgage loans to provide insurance.
The next step, MGIC plans to raise premiums extraction ratio. From August this year, the company will be 10 percent down payment, the 30-year fixed-rate loans, the loan balance of the annual charge as the proportion of premiums from 0.67 percent to 0.75 percent.
Not only is MGIC, other mortgage insurers also adopted a number of methods to raise the threshold for coverage now, the mortgage insurers usually require buyers to pay at least 10 percent of the first payment, while the previous standard may require only 3-5 percent.
By the end of June, Triad Guaranty in New York and private equity firms Lightyear Capital LLC cooperation in the establishment of the new insurance company after the breakdown of the plan, announced to stop selling new policies, adopt a "mature termination" approach, namely, to pay all future claims up to the amount of all policies Maturity. In addition, its renunciation of the business in Canada. Radian Group at the beginning of this month announced the appointment of the new president of the mortgage insurance sector, aimed at reshaping the confidence of investors.
"PMI use a variety of tools to manage assets of the insurance risk. The most important risk is that the U.S. housing price index (US Home Price Risk Inde), the United States through the 381 region to investigate and help PMI Mortgage Insurance to assess the risks and reduce our In high risk areas of the business. "PMI vice president Tom introduced to this newspaper. However, he admitted that due to geographical factors, "We can not precisely forecast prices down the pace and extent."
However, some analysts worry that higher requirements may curb demand for housing purchases, delaying the recovery of the real estate market. However, the mortgage insurer, this is a long-term strategy for the necessary measure.
MGIC spokesman Mike Zimmerman (Michael Zimmerman) in the "Wall Street Journal" in an interview that the company lost business so far are do not want to continue underwriting business; real estate practitioners to the long-term goal of not just solvency, but also Focus on sustainability.
"Any approach to pricing changes or amendments are to meet high mortgage and housing-value ratio (loan-to-value) the requirements of borrowers, they continued to provide housing opportunities." PMI vice president Tom said.
July 17, the U.S. mortgage insurance market in the first place MGIC (Mortgage Guaranty Insurance Co., NYSE: MTG) second-quarter loss of 9.79 million U.S. dollars (79 cents a share) a year earlier 7670000 Dollars of net profit (93 cents a share) shrink 228 percent. This is also the MGIC in 2008 for the loss, its first quarter net loss of 34.4 million U.S. dollars.
Prior to May, the United States another mortgage insurer Triad Guaranty Inc. (Nasdaq: TGIC) announced that the 2008 first quarter net loss of 1.5 million U.S. dollars.
In addition to MGIC and Triad Guaranty, active in the U.S. mortgage insurance industry also include PMI Group Inc. (PMI), Radian Group Inc (RDN), American International Group (AIG)'s mortgage insurance subsidiary of AIG United Guaranty, Genworth Financial, Old Republic International (ORI), and so on.
"In the past year, since (at least is due in part) the U.S. real estate market downturn, all of the above mortgage insurers have experienced a financial loss." July 22, the second-largest U.S. mortgage insurer PMI Muta, vice president of soup Bogut (Tom Taggart) in an interview with this paper said.
As the U.S. housing market continues to worsen, the mortgage insurance underwriting business is facing more claims burden.
MGIC payment rate increase
June 30, the U.S. mortgage insurer Association (MICA) announced in May this year in arrears total of 67,967 loans, compared to May 2007 of the 45,986 total, an increase of 48%.
Such as MGIC, PMI Mortgage insurers such, mainly for those who can not afford to pay 20 percent of buyers first payment services, the general loan institutions hope that these home buyers to purchase "mortgage insurance," because once they are unable to meet repayment obligations , The mortgage insurer will be responsible for the repayment of loans, the loan amount is usually 25% -35%.
Since last year, because the U.S. real estate market liquidity shortage, buyers have been difficult to re-financing activities, lending institutions can not be secured through the auction for the property to recover loans, mortgage insurers forced to make up for the lending institutions Zitaoyaobao Losses.
Against this background, the mortgage insurer facing a large number of default loans. International rating agency Fitch (Fitch Ratings) announced in early June MGIC and PMI lower rating, and warned that the next two years the mortgage insurance industry profits are still facing great pressure.
This prediction is slowly achieving.
MGIC latest, since 2001 the company faced Wei Yueshuai loans continued to rise.
Historical data show that from the beginning of the first half of 2007, MGIC loans Wei Yueshuai will show an upward trend of unilateralism, not including large loans, the loans every six months thereafter Wei Yueshuai were 3.95 percent, 4.99 percent in the second quarter of this year to 6.02 %. 2008 second quarter, the company encountered by non-loan ratio of 3.95 percent year-on-year to 6.02 percent; if including bulk loans, default ratio increased to 6.11 percent from 8.60 percent.
Accordingly, MGIC the payment rate from the 2007 second quarter from Douzeng. Before the second quarter of 2007 the payment rates were 60.8% and 76.7%, but the third quarter increased to 187.5 percent, and the end of 2007 reached a historic 400.6 percent. Entered 2008, MGIC the payment rate is still high, the first two quarters were 200.2 percent and 196.4 percent.
MGIC bear more and more insurance claims burden, making it available assets continue to be undermined.
February, MGIC was because of a lack of capital funds were downgraded by Fitch warned that financing had to issue stock to raise capital adequacy ratio. According to its by the end of March, the U.S. Securities and Exchange Commission (SEC) documents show that the company through the issuance of 4,290 million shares of common stock, access to finance 483 million U.S. dollars, and by issuing a yield of 9% in 2063 due to the conversion - Grade debt was 365 million U.S. dollars financing.
MGIC's chairman and chief executive officer of the mandrax Kete S (Curt S. Culver) in the second quarter earnings release, said the sluggish real estate market and weak economy, leading to loans Wei Yueshuai and redemption rate of loss To maintain a high level, these factors on the company's financial situation impacts.
"We expect loan Wei Yueshuai will be the end of this year or first quarter of next year has declined." Kete S to investors that the mandrax.
Do the most conservative of the participants
"MGIC will improve underwriting standards." Kete July 17 stressed.
Kete reiterated, MGIC in the past year has been "significant adjustment" of its underwriting type, which is a change in the second quarter of this year, Wall Street is no longer underwriting the bulk transactions, that is no longer packaged as securities for loans to provide insurance. He believes that this will help improve the quality of insurance, risk reduction.
Affected by this, MGIC quarter of the total new insurance business decreased significantly, the second quarter of the total new insurance for the 14 billion U.S. dollars, less than the first quarter of 19.1 billion U.S. dollars, also lower than 2007's 19 billion U.S. dollars over the same period.
In addition, the impact on the part of the larger real estate markets, such as in California and Florida, MGIC said it would raise operating standards, including requirements of a higher credit score, as well as the first payment to pay a higher proportion of these states in the urban areas, MGIC will no longer purchase the first payment of less than 5% of the total Fangkuan purchase of mortgage loans to provide insurance.
The next step, MGIC plans to raise premiums extraction ratio. From August this year, the company will be 10 percent down payment, the 30-year fixed-rate loans, the loan balance of the annual charge as the proportion of premiums from 0.67 percent to 0.75 percent.
Not only is MGIC, other mortgage insurers also adopted a number of methods to raise the threshold for coverage now, the mortgage insurers usually require buyers to pay at least 10 percent of the first payment, while the previous standard may require only 3-5 percent.
By the end of June, Triad Guaranty in New York and private equity firms Lightyear Capital LLC cooperation in the establishment of the new insurance company after the breakdown of the plan, announced to stop selling new policies, adopt a "mature termination" approach, namely, to pay all future claims up to the amount of all policies Maturity. In addition, its renunciation of the business in Canada. Radian Group at the beginning of this month announced the appointment of the new president of the mortgage insurance sector, aimed at reshaping the confidence of investors.
"PMI use a variety of tools to manage assets of the insurance risk. The most important risk is that the U.S. housing price index (US Home Price Risk Inde), the United States through the 381 region to investigate and help PMI Mortgage Insurance to assess the risks and reduce our In high risk areas of the business. "PMI vice president Tom introduced to this newspaper. However, he admitted that due to geographical factors, "We can not precisely forecast prices down the pace and extent."
However, some analysts worry that higher requirements may curb demand for housing purchases, delaying the recovery of the real estate market. However, the mortgage insurer, this is a long-term strategy for the necessary measure.
MGIC spokesman Mike Zimmerman (Michael Zimmerman) in the "Wall Street Journal" in an interview that the company lost business so far are do not want to continue underwriting business; real estate practitioners to the long-term goal of not just solvency, but also Focus on sustainability.
"Any approach to pricing changes or amendments are to meet high mortgage and housing-value ratio (loan-to-value) the requirements of borrowers, they continued to provide housing opportunities." PMI vice president Tom said.
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