Fairbanks Settlement May Cost $55MM

In a quarterly earnings announcement, mortgage insurer PMI Group said a settlement with federal regulators to resolve loan servicing complaints at Fairbanks Capital Corp. is expected to cost shareholders $0.20 per share.PMI said that Fairbanks, which is partially owned by the mortgage insurer, has reached a proposed settlement with the Federal Trade Commission and the Department of Housing and Urban Development. PMI said Fairbanks' loss for the quarter was largely the result of aggregate pretax expenses of approximately $55 million in connection with the FTC/HUD proposed settlement, the related estimated costs of such a settlement, the estimated costs of potential settlements of certain class action lawsuits, and the estimated costs and fines relating to certain pending state regulatory actions. PMI said the terms of the proposed settlement of the FTC and HUD civil charges will require changes in Fairbanks' operations and the creation of a $40 million fund for the benefit of consumers allegedly harmed by Fairbanks.