The private mortgage insurance industry moved into dangerous territory this week as the survival of MI firms increasingly became dependent on some sort of federal bailout. Three of the MI industry’s biggest players Radian, MGIC and PMI continued to face sagging stock prices that hovered at dangerously low levels. PMI, which just released worse than expected fourth quarter results this week, watched its share price trade around 50 cents in morning trading today.
Private MI observers contend that the industry will have a very difficult time surviving unless it gets some sort of bailout and soon. While the Obama administration is not anxious to bail out any new industries –particularly those in the insurance area– a collapse of the MI industry would force more mortgage business to FHA and could trigger huge losses at Fannie Mae and Freddie Mac.
