Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Radian Group Gives False Hope to Banks

By

Comments spurring a rally, but on shaky ground.

PrintPRINT
Editor's Note: The following was posted on the Buzz & Banter in real-time at 1:20 pm. It is being shared here for the benefit of the Minyanville community.

For those wondering the reasons big rip in the big banks and PMI players, it's because of the comments Radian Group (RDN) made on its conference call this morning. The company said it saw a significant decrease in early default activity in its 2009 vintage mortgage business because of improved underwriting. Improved underwriting... imagine that!

The company also said its 2008 book is showing a turn (a.k.a. not having to pay out as much insurance for foreclosures). This shouldn't be too much of a surprise because its worst exposure was in 2005 through early 2008 subprime. That has already been flushed down the toilet. Hence it's benefiting from improved underwriting.

The extrapolation by the market is that the banks and other mortgage players with big mortgage exposure are not going to suffer as much in losses as have been modeled in. Given that back in 2007 RDN and its brethren had perhaps the most whistling past the graveyard, rose colored goggle wearing, Kool-Aid drinking attitude of any group of companies I have ever seen... I can't help but express a little skepticism about its comments translating into blue skies for housing loss mitigation. Maybe the company has finally found religion... who knows.

There was a lot of negative built into the PMI names and they can now likely raise capital to survive and fight another day.

This is also why AIG (AIG) is having a McRipper rally today. It has exposure in the PMI space and obviously to mortgages in general.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE