NEW YORK (TheStreet) -- Shares of MGIC Investment Corp. (MTG) are plunging -14.50% to $7.90 in pre-market trading on Friday after the mortgage-insurer said the Federal Housing Finance Agency's newly-proposed standards for the industry would mean its available assets would be "materially less" than the minimum requirements.
MGIC said the FHFA's proposal, which would require insurers backing mortgages owned or guaranteed by Fannie Mae (FNMA) and Freddie Mac (FMCC) to hold liquid assets of at least 5.6% of their risk exposure, is "far in excess" of what's needed to reduce industry risk, according to Marketwatch.
Separately, Goldman Sachs (GS) removed MGIC Investment from the "conviction buy" list due to increased uncertainty from the release of the FHFA's proposed private mortgage insurer eligibility requirements, yet maintained its "Buy" rating on the company.
TheStreet Ratings team rates MGIC INVESTMENT CORP/WI as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MGIC INVESTMENT CORP/WI (MTG) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that revenues have generally been declining."