PMI Mortgage Insurance Co. has been ordered to stop writing new business.
In a letter to its customers on Friday, the Walnut Creek, Calif.-based company said regulators have ordered it to stop writing new policies after Aug. 19.
PMI Mortgage Assurance Co. must also stop doing business.
On pending commitments already in place, policies can be written until Sept. 16.
“We regret that we were not able to grant you a more favorable notice period,” Friday’s message stated. “However, we were uncertain until yesterday how long the notice period would be, and we were not in a position to communicate with you earlier.”
Parent The PMI Group Inc. warned of the impending shutdown in a Securities and Exchange filing earlier this month.
Among alternatives being considered by PMI is an attempt to move production to a separately capitalized mortgage guaranty insurance subsidiary — an alternative actively being pursued with its primary regulator, the Arizona Department of Insurance, as well as with Fannie Mae and Freddie Mac and their regulator, the Federal Housing Finance Agency.
“Since the mortgage crisis began, it is unfortunate for the mortgage industry to now witness the third mortgage insurance company to cease writing new business,” the customer message stated. “As a company completely dependent on private capital, we have had to stabilize our company through extensive internal and external capital initiatives.
“It is our sincere hope that private capital will again prevail to strengthen this industry.”
Triad Guaranty Insurance Corp. stopped issuing new mortgage insurance policies in July 2008.
PMI was founded in 1972 by Preston Martin.