Failure to meet state requirements has the Federal National Mortgage Association suspending a mortgage insurance company.
In North Carolina, mortgage insurers are required to maintain a minimum policyholders’ position of no less than 1/25 of aggregate insured risk outstanding.
The requirement excludes reinsurance that has been ceded. But it includes all reinsurance that has been assumed.
Since September 2010, Republic Mortgage Insurance Co. has not met the minimum policyholders’ position required under state law, Fannie Mae said in Announcement SEL-2011-07 released Friday.
While the North Carolina Department of Insurance has granted waivers to Republic, the last extension ends on Aug. 31.
Fannie said that there is no indication that Republic will get any further extensions from the state based on its current position.
“It is Fannie Mae’s understanding that NC DOI will prohibit RMIC from writing any new mortgage insurance policies in North Carolina on or after Sept. 1,” the bulletin stated.
So the secondary lender has suspended Republic and affiliate Republic Mortgage Insurance Company of North Carolina. The suspension is immediate.
Only loans with policies dated between May 1 and Aug. 31 will be purchased or securitized by Fannie. The window of eligibility is considered to be a “reasonable period” to clear out the existing pipeline.
The pool issue dates for eligible Republic policies cannot go beyond Nov. 30 on whole loans — whether or not the mortgage insurance was borrower-paid or lender-paid.
Fannie said it will continue to accept delivery of refinances insured by either company on MBS and whole-loan purchases only if continuation of the coverage occurs through modification of the existing mortgage insurance certificate.
For the time being, mortgage servicers can continue to renew coverage with Republic.
