MILWAUKEE, Wis. (
saw its shares spike on Tuesday amid heavy trading after the mortgage insurance provider drastically narrowed its quarterly losses, beating expectations.
MGIC posted net third-quarter losses of $51.5 million, or 26 cents per share, compared with year-earlier losses of $517.8 million, or $4.17 loss per share. Analysts' consensus call was for a loss of $92.1 million, or 65 cents per share.
MGIC shares jumped 6.4% to $10.18 at midday. More than 6.5 million shares were in play less than half way through the day's session, compared with their average daily trading volume of 4.5 million shares.
The insurance provider said it expects to incur wider losses in the current quarter, and, in a cover-all-bases form of guidance, said it expects to return to profitability in fiscal 2010 but could not assure when, or if, this will occur.
Quarterly revenue of $382.3 million managed to beat expectations by $100,000 despite declining 7.5%.
Net premiums written for the quarter were $279.0 million, compared with $278.3 million for the same period last year.
New insurance written in the third quarter was $3.5 billion, compared to $4.6 billion in the third quarter of 2009. The Home Affordable Refinance Program (HARP) accounted for $831 million of insurance that is not included in the new insurance written total for the quarter because these transactions were treated as a modification of the coverage on existing insurance in force.
At Sept. 30, the percentage of loans that were delinquent, excluding bulk loans, was 15.1%, compared with 15.5% at the end of last year and 14% at the end of third quarter of 2009. Including bulk loans, the percentage of loans that were delinquent at the end of the recent quarter 17.7%, compared with 18.4% on Dec. 31, 2009, and 16.9% on Sept. 30, 2009.
MGIC is a provider of private mortgage insurance coverage with $196.9 billion primary insurance in force covering 1.3 million mortgages at the end of the recent quarter.
Among the other publicly traded mortgage insurers,
shares traded 1.6% higher and
( PMI) jumped 4.7%.
Just as the subprime mortgage troubles expanded into a total housing market downfall, the latest scandal in the home loan industry is expanding into a nationwide political firing line aimed -- once again -- toward the banks due to
Stifel Nicolaus analyst Chris Mutascio noted last week that while the call for a nationwide foreclosure moratorium is "growing in seemingly every political circle in recent days," it is undecided if the banks should take full blame.
"Is this just political rhetoric from politicians once again blaming the banks for all the ills upon us or are there some merits to it? We are not sure we really know the answer to that question yet, but let's keep one thing in mind during the debate. If there is any way a bank can keep a borrower in his/her home, it behooves the bank to do so from an economic perspective, in our view," the Stifel note said.
"Many homeowners are waiting for the elections next month hoping that more certainty about taxes, bank regulations and other factors will give Americans confidence to move forward with important monetary decisions," Alan Rosenbaum, president of Guardhill Financial, a New York-based mortgage banker and brokerage company, told
"The lower interest rates on mortgages have spurred refinancing and purchase activity, though not currently as much as hoped for," he said, adding that "the government states that they want to keep rates low so that homeowners will buy and refinance to spur the economy, but they continue to keep underwriting guidelines too strict for most Americans to qualify for a mortgage."
-- Written by Miriam Marcus Reimer in New York.
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