Provident Funding Associates, the nation’s ninth largest residential originator, has told its correspondent sellers that it will no longer accept mortgage insurance from the troubled MGIC Corp.
In a memo sent to lenders Thursday the nonbank funder said it “will not purchase any loans containing mortgage insurance issued by MGIC with a note date after August 15th, 2012.”
It added: “Current correspondent pipeline loans with mortgage insurance issued by MGIC will be provisionally accepted...Additionally, all loans containing MGIC mortgage insurance must be purchased by Provident Funding no later than Sept. 15, 2012.”
A spokeswoman for MGIC had no comment Friday morning. After posting a large 2Q loss, MGIC’s shares are now trading under $1.
The privately held Provident is based in Burlingame, Calif., and has been growing its correspondent purchases significantly the past few quarters, according to figures compiled by National Mortgage News and the Quarterly Data Report.
