DOW JONES NEWSWIRES
Struggling mortgage insurer PMI Group Inc. (PMI) said the
Arizona regulators have ordered two of its units, including its
main unit PMI Mortgage Insurance Co., to stop issuing new mortgage
insurance commitments.
The company's stock had plunged earlier this month when it
warned of the possible shutdown. Shares tumbled 16% to 25 cents in
after-hours trading Friday.
Friday, the Arizona Department of Insurance put the two units
under supervision, a status that requires them to seek approval
before taking a variety of actions like lending funds or entering
reinsurance contracts.
PMI, which has reported billions in losses since the start of
the housing crisis, said its units will work with their customers,
the Arizona Department of Insurance, Freddie Mac (FMCC) and Fannie
Mae (FNMA) to facilitate a runoff. Runoff refers to the period an
insurer isn't writing new business but continues to pay claims and
collect premiums from existing customers.
Fannie Mae and Freddie Mac previously had approved a subsidiary
of the PMI Mortgage Insurance Co. unit as a limited, direct issuer
of mortgage guaranty insurance in certain states. Because of
restrictions in Fannie's approval, that subsidiary will no longer
issue mortgage-insurance policies in any states as a result of the
Arizona department's order, the company said.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com