S&P Lowers Ratings for 4 Mortgage Insurers

Amid rumored losses within the mortgage insurance business, Standard & Poor's has lowered the credit rating for four guarantors. The credit agency said most companies would not generate an underwriting profit until 2010, putting pressure on their capital.

"The downgrades reflect weaker than expected results for the fourth quarter of 2007 and the continued deterioration in key variables that influence claims for mortgage insurance," Standard & Poor's credit analyst James Brender said in a report.

The action by the rating agency means they fall below the level needed to do business with Fannie Mae and Freddie Mac, which buys mortgages. The mortgage insurers provide cover for banks and lenders in the event of a homeowner default. Such insurance is typically required

The affected companies and ratings include MGIC Investment Corporation (MTG: 10.90, -5.13%), The PMI Group, Inc. (PMI: 5.66, -8.27%), Radian Group Inc. (RDN: 5:14, -12.59%), and Old Republic International Corporation (ORI: 13.68, -2.91%).

PMI, Radian and MGIC now have 90 days to submit a remediation plan to both Fannie Mae and Freddie Mac.