Industry News

Radian gets backup for non-prime real estate loans

Mortgage insurer better positioned to manage risk

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Philadelphia-based Radian Group, a real estate loan insurer, has completed a transaction that will help it manage risk on non-prime mortgage loans, which generally go to people who are riskier because they don't qualify for prime loans under normal terms. Radian completed its second structured finance transaction with Smart Home Reinsurance 2005-1 Limited. The transaction was created and funded through the sale of $98.5 million of credit-linked notes backed by a $1.68 billion pool of Radian-insured Alt-A mortgage loans. The transaction better positions Radian to insure loans to people who don't qualify for prime loans under normal terms. The Smart Home transaction allows transfer of the risk to Smart Home, which gives Radian more capacity to work with other lenders in the non-prime market. Lenders now have a better ability to operate in the non-prime market, according to David Cheung, a Radian spokesman. "The non-prime segment of the mortgage insurance market is profitable, but i...