A subsidiary of Radian Group Inc. that was recently created to enable the mortgage insurer to operate in states that won’t provide a waiver to its capital ratio has been approved by the Federal National Mortgage Association.
The Philadelphia-based company disclosed in November that it was seeking capital waivers in 12 states for operating subsidiary Radian Guaranty Inc.
At the time, Radian Guaranty’s capital ratio was around 21.4-to-one, and the ratio was expected to increase as mortgage insurance losses grew.
In an investor presentation, Radian Chief Financial Officer Bob Quint indicated that the company was attempting preserve liquidity at the holding company while continuing to write new business.
Quint explained that Radian was seeking the approval of Fannie Mae and Freddie Mac to operate Radian Mortgage Assurance in the states that didn’t allow a waiver.
On Tuesday, Fannie Mae said in Selling Guide Lender Letter LL-2012-03 that it had approved Radian Mortgage Assurance Inc. as a mortgage insurer for conventional loans in a limited number of states.
The secondary lender noted that the states might change over time.
“The insurer is responsible for compliance with its state limitations and will identify the appropriate insuring entity (Radian or RMAI) in each commitment and certificate that it issues,” the bulletin stated.
Until Fannie determines whether to assign separate delivery codes for each entity, lenders need to use the applicable mortgage insurance delivery code for Radian.
Mortgages insured by Radian Mortgage are eligible for whole-loan purchase or inclusion in mortgage-backed securities pools if they have note dates on or after Feb. 27.
