MGIC Investment Corp., Milwaukee, had a net loss of $51.5 million for the third quarter, compared with a one-shot net profit of $26.4 million for the second quarter and a net loss of $518 million for the third quarter 2009.
In a conference call, Curt Culver, chairman and chief executive, blamed higher incurred losses for the financial loss. A note in the company's earning release states MGIC expects to have a fourth quarter loss exceeding what it's reporting for this past quarter.
During the call, Culver addressed the changes to the Federal Housing Administration program, noting that for certain loan-to-values and credit scores, with MGIC's tiered pricing program, monthly premium private MI is a better execution than FHA.
However, he did note that FHA allows for a 3.5% down payment, whereas MGIC only will go as low as 5%. So MGIC will have to make the case to consumers, he continued, that it is worth their while to put that extra 1.5% down.
As for the foreclosure crisis and resultant moratorium, Culver detailed the process for which a delinquent loan goes to a claim. Under the master policy, servicers must start the foreclosure process within four month and diligently pursue it (including mitigation efforts).
It is more of a timing issue and would not have any material impact on the company, he said.
When asked about how investor repurchase requests are affecting MGIC, Culver said generally it is MGIC that is finding the fraud or misrepresentation in the first place, starting the rescission process and informing the secondary market investor, whether it be a government-sponsored agency or private investor.
