PMI Group Inc., the second-largest U.S. mortgage insurer, posted its first quarterly loss since its 1995 public offering as borrowers were unable to keep up with higher payments after their ``teaser'' rates expired. The company fell 10 percent in New York trading and a rating firm downgraded its debt.
U.S. home foreclosures doubled in September from a year earlier as subprime homeowners struggled with payments, according to RealtyTrac Inc. MGIC Investment Corp, the largest mortgage insurer, also reported its first quarterly loss this month and predicted it won't be profitable in 2008. Mortgage insurers help reimburse home lenders when borrowers don't pay.
``The mortgage insurance industry at large is heading directly into the meat of the most challenging year or two in its history,'' said Seth Glasser, a credit analyst at Barclays Capital Inc. in a note to investors. He reiterated his ``underweight'' rating for PMI.
``The speed and the depth of the deterioration we saw in the third quarter, and in particular the month of September, was greater than we had expected,'' Smith said. Borrowers in California, Florida, Michigan, Indiana, Ohio and Illinois defaulted at rates exceeding the rest of the country, he said.
Anyone who is even thinking about calling a bottom in housing right now is just not paying attention to the underlying facts.