PMI will begin paying only 50% of claims starting on Monday. These are claims filed by banks over homeowners who have defaulted on their mortgages. This means the big banks such as BOA, Wells Fargo, JP Morgan, etc who expected to be paid 100% on these risky loans because the homeowners were forced to purchase mortgage insurance, will now be reimbursed 50 cents on the dollar. Talk about a haircut and a shock to the banksters.
(Reuters) - The main subsidiary of mortgage insurer PMI Group Inc has been seized by Arizona insurance regulators, and will begin paying only 50 percent of claims starting on Monday, PMI Group said on Saturday.
The remaining amount of each claim will be deferred, the company said on its website.
Under a court order obtained by Arizona regulators, "the Arizona Department of Insurance now has full possession, management and control of PMI," the company said in a brief statement.
The seizure of Arizona-based PMI Mortgage Insurance Co comes two months after two PMI units were ordered to stop writing new business due to their failure to meet capital requirements.
PMI, like other U.S. mortgage insurers, has suffered throughout the housing downturn and has extremely high risk-to-capital ratios, causing many to question its survival.
PMI stock, which had traded at nearly $50 a share before the housing meltdown in 2007, closed at 31 cents a share on Friday.