Posted on 17 Feb 2009
Moody's Investors Service downgraded six companies that sell protection to home lenders, including MGIC Investment Corp. and PMI Group Inc.
MGIC, the largest U.S. mortgage insurer, lost the most in early morning trading after the downgrade, followed by PMI. Both companies declined more than 75 percent in the past 12 months.
Mortgage insurers have faced increasing losses over the past year as a record number of homeowners proved unable to keep up with payments. Moody’s also cut the rating of mortgage insurance operations at No. 3 Radian Group Inc., American International Group Inc., Genworth Financial Inc. and Old Republic International Corp.
“The business model of mortgage insurance has deteriorated as losses have mounted and as the future of the U.S. mortgage finance market has been clouded,” Moody’s said in its statement Feb. 13 on the MGIC cut.