PMI

Inventories should keep shrinking, which is likely to drive higher returns on equity and reduce their loss ratios, a BTIG report said.

The inevitable cancellation of the takeover transaction by China Oceanwide means Genworth will be spinning out a portion of its U.S. mortgage insurance business.

But private mortgage insurers should not see significant impact on business if a 25 basis point reduction were to occur sometime after 2021, according to BTIG.

Federal Judge Kenneth Marra for a second time has granted the mortgage company summary judgment in the case brought by the bureau in 2017.

Meanwhile at Essent, more loans exited the inventory in January than in December.

Investor concerns about a 25 basis point reduction taking business from private insurers might be overblown, but a 50 bp cut could affect an additional 10%-15% of the low down payment market, KBW said.

For some, including National MI and Essent, the improvement is taking place faster than expected.

While the agreement with China Oceanwide still remains in place, there was no formal extension of the Dec. 31 deadline.

The company expects a good year ahead for mortgage insurers, assuming that rising employment, higher home prices and payment timing deferrals will help them to mitigate risk.

Lower cure rates and possible rises in foreclosures and claims could force these companies to raise capital next year, Fitch Ratings said.