Industry NewsMortgage

Private mortgage insurers lose ratings required by Fannie, Freddie

MGIC, Radian, PMI downgraded by Standard & Poor's

Worries about rising unemployment and falling home prices prompted Standard and Poor's analysts to downgrade the financial strength ratings of three companies that provide most of the private mortgage insurance for loans purchased by Fannie Mae and Freddie Mac. MGIC Investment Corp., Radian Group Inc. and PMI Group Inc. have 90 days to submit remediation plans to Fannie and Freddie to detail how they will restore their ratings to "AA-" or better. The financial strength rating of a fourth company, Old Republic International Corp., was downgraded by Standard & Poor's from "AA" to "AA-." Fannie and Freddie require mortgage insurers to be rated "AA-" or better by at least two rating agencies, and may prohibit mortgage insurers that have been downgraded below that level by one agency from engaging in certain practices, such as offering captive reinsurance. Although Standard & Poor's said all the insurers subjected to ratings act...