Marc Guzman's West County Blog

Mortgage Insurance is essential to mortgage lending.  Most lenders will require mortgage insurance to protect themselves against default; this also allows many consumers to obtain loans with minimal down payment (3-5%).  The PMI Group is one of the biggest four mortgage insurance companies and earlier this year the Arizona Department of Insurance, PMI’s primary regulators, ordered PMI to cease issuing new insurance.  However, under the order PMI Group could issue new insurance through pending commitments.

But an order dated October 20th from the Arizona Superior Court authorized the Arizona Department of Insurance to take over the PMI Group.  They will now only pay 50% of all claims with the remainder deferred.  The PMI Group’s stock has plummeted with the housing crash and is now at less than $1; with the threat of being de-listed if it remains below the $1 for more than 30 consecutive days.  If the Arizona Department of Insurance chooses to liquidate the PMI Group, debt of about $735 Million may come due that the company does not have the capital to pay.