A deal reached by Radian Guaranty Inc. limits its exposure on home loans that are guaranteed or owned by the Federal Home Loan Mortgage Corp. and cuts its delinquency rate by around 119 basis points.
The Philadelphia-based company announced Thursday an agreement with Freddie Mac on 25,760 first mortgages that were delinquent as of Dec. 31, 2011.
Radian said the agreement covers the future treatment of these loans including claim payments, loss mitigation activity and insurance coverage.
It also eliminates the mortgage insurance company’s claim exposure on 9,756 loans that were delinquent and 4,586 loans that were re-performing as of July 31.
Radian’s total exposure on the loans covered in the agreement is capped at $840 million — including $255 paid as part of the agreement, $370 million previously paid, $205 million deposited in a collateral account to cover loss mitigation activity and $10 million of insurance rescissions, claim denials or claim curtailments that had become final.
“One of our top priorities for our mortgage insurance business is to actively reduce our legacy exposure,” Radian Chief Executive Officer S.A. Ibrahim said in the announcement. “This agreement is an important step in resolving our remaining legacy risk, and reduces our total number of primary delinquent loans by 12.6 percent.”
The mortgage insurer reported 77,142 delinquent policies as of July 31, suggesting that around 9,720 policies will come off the total — leaving the estimated delinquency rate at around 8.28 percent versus the estimated 9.47 percent rate before the deal was struck.
