search

The Real Deal Logo

Trending

Lawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421a“Investing before the ‘all clear’ sign”: Jon Gray on Blackstone’s $10B apartment deal“Investing before the ‘all clear’ sign”: Jon Gray on Blackstone’s $10B apartment dealMacerich faces “imminent” default on $300M Santa Monica Place loanMacerich faces “imminent” default on $300M Santa Monica Place loanDavid Werner strikes $115M deal to snap up 100 Wall Street at big discountDavid Werner strikes $115M deal to snap up 100 Wall Street at big discount
New York

Hedge funds roll dice again on mortgage insurance firms

Hedge funds and big banks are investing millions into the U.S. mortgage-insurance industry, which nearly died out during the downturn.

During the housing bust, the industry collectively racked up $21 billion in debt, and three firms went out of business. Now, firms such as Goldman Sachs and hedge fund Paulson & Company are taking another look at the sector — which provides some $710 billion of coverage to mortgage investors and lenders in the U.S., and also covers individual borrowers.

Sign Up for the undefined Newsletter

New York-based Paulson has stakes in insurance firm Genworth Financial – which saw a 62 percent rise in share price this year – and Radian Group, a credit enhancement company. Radian’s share price increased 133 percent this year; likewise, mortgage insurer MGIC Investment Corporation saw its stock price jump 189 percent.

“Many investors, after having been on the sidelines, viewed the housing recovery as real this time,” Radian CEO S.A. Ibrahim said.

Homebuyers whose mortgage down payments are less than 20 percent are required to take out this coverage. In the event of a foreclosure, the insurer takes the first loss. [WSJ] — Mark Maurer

Tags
Goldman SachsHedge FundsMortgages