S&P Revises PMI Outlook to 'Negative'

The outlook for The PMI Group Inc., which owns 57% of Fairbanks Capital Corp., has been revised from stable to negative by Standard & Poor's following S&P's lowering of Fairbanks' residential subprime and residential special servicer rankings.The rating agency also affirmed the A-plus counterparty credit rating on PMI and its operating units. "The serious difficulties Fairbanks has encountered in servicing one of the largest portfolios of subprime mortgage loans and the possibility, though remote, that there might be material legal actions arising from these difficulties could affect [PMI]," said S&P credit analyst Donovan Fraser. S&P said Fairbanks operates independently of PMI, but that PMI's majority ownership, minority board representation, and size "could still expose it and its operating carriers to litigation."