Freddie Mac on Tuesday approved a reactivated subsidiary of The PMI Group Inc., Walnut Creek, Calif., as an eligible mortgage insurer, sending the MI's stock soaring. PMI has effectively created a "good bank" MI unit which allows it to continue writing policies in states where there is a risk-to-capital ratio requirement or a minimum policyholder position requirement. The unit, which is called PMI Mortgage Assurance Co., or PMAC, has $28 million in capital. A PMI spokesman said the company has not determined when PMAC will be implemented. In trading, PMI's shares were up 17%. Several MI firms have used the "good bank" strategy to segregate out the risk inherit in their "legacy" coverage.
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