PMI Now Officially Bust, Which Means...

In case you missed the big news last week: PMI Mortgage Insurance has filed for bankruptcy protection. Its chances of emerging as a viable entity stand between slim and none. If you're looking for a silver lining here, it's this: its demise means more business for the nation's surviving MI firms, including United Guaranty, Genworth, Essent and the rest of the gang. It also means that any investor groups looking to enter the sector might have an easier time raising money. Why? Answer: because new coverage has a low risk of failure. Also, even though the future of Fannie Mae and Freddie Mac is undecided, chances are there will always be a need for some type of mortgage insurance. A note from The Garrett, Watts Report points out that when PMI was shut by state regulators it had a leverage ratio that exceeded 50. When Lehman Brothers failed in 2008 its leverage ratio was 31-to-1. TGWR notes that “most mortgage bankers get warehouse lines that limit them to 15-to-1.” And what FHA's ratio? The consulting firm says it's an eye-popping 423-to-1. “That's not a typo,” the firm says. “FHA insures $1.1 trillion of outstanding loans, and their reserves are only $2.6 billion”…