Radian Guaranty Inc., the mortgage insurance subsidiary of Radian Group
Inc., today commented on the proposed Private Mortgage Insurer
Eligibility Requirements (PMIERs) developed by Fannie Mae and Freddie
Mac (GSEs) and issued by the Federal Housing Finance Agency (FHFA),
which were released earlier today. The proposed PMIERs are intended to
provide revised requirements that the GSEs will impose on private
mortgage insurers (MIs), including Radian Guaranty, to remain eligible
insurers of loans purchased by the GSEs.
"Radian fully supports the need for strong counterparties to Fannie Mae
and Freddie Mac, and the need for well-defined standards against which
private mortgage insurers should be measured," said Radian Guaranty
President Teresa Bryce Bazemore. "We believe appropriately structured
PMIERs will better position our industry to continue serving its
critical role in the housing finance market, including providing worthy
borrowers with access to homeownership."
The proposed PMIERs reflect limited initial input from Radian. The
company will provide additional commentary to the FHFA on several areas
of the proposed PMIERs during the public comment period, which is
expected to end on Monday, September 8, 2014. Among these areas, Radian
will note that the proposed capital requirements are more onerous than
Radian's historical default experience suggests would be needed to
withstand a severe stress event.
The company's comments will also outline how the proposed PMIERs are
inconsistent with the FHFA's stated goal of expanding access to mortgage
credit and reducing taxpayer risk by increasing the role of private
capital in the mortgage market.
Bazemore added, "We look forward to continuing our dialogue with the
FHFA and the GSEs as they gather input on the PMIERs. We are proud of
our strong working relationship that was also in place as Radian met all
of its obligations during the greatest economic stress in our company's
history, paid more than $5 billion in claims, and strengthened our
capital levels to support continued low downpayment lending."
Radian will host a conference call at 6:00 p.m. Eastern time today to
discuss the proposed PMIERs and their potential impact on the company.
Details for the conference call may be found below; the proposed PMIERs
and additional information may be found on Radian's website at www.radian.biz/pmiers.
TIMEFRAME AND EXPECTATION FOR COMPLIANCE
After the public comment period ends, the FHFA is expected to review and
consider input before publishing the final PMIERs. All aspects of the
PMIERs are expected to become effective 180 days after their final
publication. Approved insurers will be given an extended transition
period of up to two years from the final publication date to be in
compliance with the financial requirements of the PMIERs. Based upon an
estimated final publication date of the end of 2014, Radian expects a
transition period through January 1, 2017.
Radian remains an eligible mortgage insurer with the GSEs and expects to
be able to fully comply with the PMIERs within the transition period.
The company has
Radian Asset received approval from the New York Department of Financial
Services to pay an extraordinary dividend to Radian Guaranty of $150
million. Radian Asset expects to request an additional dividend in 2015.
Radian Chief Executive Officer S.A. Ibrahim added, "We are confident
that Radian will be able to comply with the proposed PMIERs within the
transition period. Based on our holding company cash position and other
potential options, we do not expect compliance with the PMIERs to
require Radian to raise external capital."
Ibrahim continued, "We do believe that these proposed requirements, if
not modified, have the potential to increase the cost of borrowing for
future homebuyers, and could also restrict access to credit. This may
impact many low- to moderate-income, deserving borrowers, including
certain minority groups, who are particularly vulnerable today based on
lower credit scores and limited savings for a downpayment."
Radian will discuss the proposed PMIERs in a call today, starting at
6:00 p.m. Eastern time. The conference call will be broadcast live over
the Internet at http://www.radian.biz/page?name=Webcasts
or at www.radian.biz.
The call may also be accessed by dialing 800-230-1093 inside the U.S.,
or 612-288-0329 for international callers, using passcode 331702 or by
A replay of the webcast will be available on the Radian website
approximately two hours after the live broadcast ends for a period of
one year. A replay of the conference call will be available
approximately two hours after the call ends for a period of thirty days,
using the following dial-in numbers and passcode: 800-475-6701 inside
the U.S., or 320-365-3844 for international callers, passcode 331702.
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides
private mortgage insurance and related risk mitigation products and
services to mortgage lenders nationwide through its principal operating
subsidiary, Radian Guaranty Inc. These services help promote and
preserve homeownership opportunities for omebuyers, while protecting
lenders from default-related losses on residential first mortgages and
facilitating the sale of low-downpayment mortgages in the secondary
market. Additional information may be found at www.radian.biz.
All statements in this press release that address events, developments
or results that we expect or anticipate may occur in the future are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934 and the United States ("U.S.") Private Securities Litigation Reform
Act of 1995. In most cases, forward-looking statements may be identified
by words such as "anticipate," "may," "will," "could," "should,"
"would," "expect," "intend," "plan," "goal," "contemplate," "believe,"
"estimate," "predict," "project," "potential," "continue," "seek,"
"strategy," "future," "likely" or the negative or other variations on
these words and other similar expressions. These statements, which may
include, without limitation, projections regarding our future
performance and financial condition, are made on the basis of
management's current views and assumptions with respect to future
events. Any forward-looking statement is not a guarantee of future
performance and actual results could differ materially from those
contained in the forward-looking statement. These statements speak only
as of the date they were made, and we undertake no obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. We operate in a changing
environment. New risks emerge from time to time and it is not possible
for us to predict all risks that may affect us. The forward-looking
statements, as well as our prospects as a whole, are subject to risks
and uncertainties that could cause actual results to differ materially
from those set forth in the forward-looking statements including:
For more information regarding these risks and uncertainties as well as
certain additional risks that we face, you should refer to the Risk
Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K
for the year ended December 31, 2013 and in our subsequent reports and
registration statements filed from time to time with the U.S. Securities
and Exchange Commission. We caution you not to place undue reliance on
these forward-looking statements, which are current only as of the date
on which we issued this press release. We do not intend to, and we
disclaim any duty or obligation to, update or revise any forward-looking
statements to reflect new information or future events or for any other
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