Hedge funds roll dice again on mortgage insurance firms

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
Borrowers can now get a 30-year fixed-rate jumbo mortgage for $2 million at 2.65%. (iStock)
Jumbo mortgage lenders invade Fannie and Freddie’s turf
Jumbo mortgage lenders invade Fannie and Freddie’s turf
Exhausting other options, buyers flock to fixer-uppers
Exhausting other options, buyers flock to fixer-uppers
Exhausting other options, buyers flock to fixer-uppers
Better.com CEO Vishal Garg (Better.com, iStock)
Mortgage lender Better to go public via SPAC merger
Mortgage lender Better to go public via SPAC merger
(iStock)
Drop in home refinancing crimps mortgage firms’ profits
Drop in home refinancing crimps mortgage firms’ profits
From left: 909 Third Avenue, 79 Fifth Avenue, 240 West 37th Street and 27 East 62nd Street (VNO, Cercone Exterior Restoration, Google Maps)
These were the largest Manhattan real estate loans in April
These were the largest Manhattan real estate loans in April
Lenders are being stingy about granting home equity lines of credit. (iStock)
Home values are up, but just try getting a line of credit
Home values are up, but just try getting a line of credit
(Getty)
Mortgage applications resume decline after one-week surge
Mortgage applications resume decline after one-week surge
From left: Wells Fargo’s Charles Scharf, SL Green's Marc Holliday, Goldman Sachs’ David Solomon and One Vanderbilt (Getty)
Goldman Sachs, Wells Fargo leading $2.25B refi of One Vanderbilt
Goldman Sachs, Wells Fargo leading $2.25B refi of One Vanderbilt
arrow_forward_ios

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

Loading...