Hedge funds roll dice again on mortgage insurance firms

TRD New York /
Sep.September 19, 2013 01:07 PM

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.

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


Related Articles

arrow_forward_ios
(iStock)

Home loans are getting bigger, even as application volume drops

Home loans are getting bigger, even as application volume drops
(iStock)

Party’s over? Applications for homes loans fall

Party’s over? Applications for homes loans fall
Federal Reserve Chair Jerome Powell (Getty, iStock)

TRD Insights: Why mortgage rates aren’t under 3% (yet)

TRD Insights: Why mortgage rates aren’t under 3% (yet)
Climate change is having an impact on the way borrowers and lenders think about mortgages. The traditional 30-year loan could diminish in popularity. (Getty)

Climate change is messing with 30-year mortgages

Climate change is messing with 30-year mortgages
Mortgage Banker Association’s weekly index shows another increase in purchase applications for home loans during the second week of June 2020 (iStock)

Mortgage applications to buy homes hit 11-year high

Mortgage applications to buy homes hit 11-year high
The share of U.S. residential mortgages in forbearance grew last week (iStock)

TRD Insights: Forbearance requests edge up in June

TRD Insights: Forbearance requests edge up in June
The share of U.S. residential mortgages in forbearance grew last week (iStock)

TRD INSIGHTS: These are the 4.3M homeowners now in forbearance

TRD INSIGHTS: These are the 4.3M homeowners now in forbearance
Homeowners in redlined areas gained less equity over the past 40 years, exacerbating the wealth gap for blacks (iStock)

Homeowners gained far less equity in formerly redlined areas: study

Homeowners gained far less equity in formerly redlined areas: study
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...