I recently ran across an article which mentioned the private mortgage insurer, MGIC. I hadn't thought about the company in years. Not since shorting it in the wake of the financial crisis and watching it pleasantly sink from about $38 to $24 before bailing out. Only to regret my impatience later when it went nearly to zero. At the time, although I was a major doomsayer, I did not foresee the complete collapse of the housing market.
Later, when the full scale of the disaster became evident, I was given to making pronouncements like: "There is no way the mortgage insurers can survive. Their liabilities are insurmountable." And then just the other day, I was reminded of these thoughts after not thinking about the private mortgage insurance industry for several years. My first reaction was "how are these mortgage insurers still in business?" Some quick research revealed that not all of them are. PMI, one of the major players, was seized and is now apparently a historical note. But MGIC and Radian, two other big insurers, have survived. The following article attempts to detail how this miracle could be:
I'm still not convinced but, that being said, if MGIC and Radian have survived the last four years, then it seems to me there are two possibilities. One, they are getting ready to die, as PMI did last year. Or two, they can survive anything and may very well run up if the housing market recovers to some degree. In no way shape or form do I believe the housing market will make a significant recovery any time soon (I'll save my reasons supporting this assertion for another day). However, the mortgage insurers would benefit from even a minor recovery in the housing market. The article above details how MGIC is in much better position than Radian. Some of the commenters believe otherwise. In any event, if these two are still around, they may survive until the sun shines again...