MGIC Investment, Radian Group stocks falls after FHFA director’s PMI comments

MGIC Investment (NYSE:MTG) shares fell 4% Tuesday, while Radian Group (NYSE:RDN) dropped 3.5% after Bill Pulte, director of the Federal Housing Finance Agency and chairman of Fannie Mae and Freddie Mac, posted comments on X regarding private mortgage insurance.

Pulte announced that Fannie Mae will adopt Freddie Mac’s policy of allowing lenders to proactively contact borrowers who may qualify to cancel their private mortgage insurance due to home value appreciation or loan paydown. Currently, Fannie Mae requires borrowers to initiate the request themselves, while Freddie Mac permits lenders to reach out to eligible borrowers.

In his post, Pulte stated that mortgage insurance companies generate substantial profits and called on them to provide savings to consumers where appropriate. The policy change would enable more homeowners to eliminate PMI payments once they have sufficient equity in their properties, potentially reducing demand for mortgage insurance coverage.

Private mortgage insurance is typically required for conventional home loans when borrowers make down payments of less than 20%. Borrowers can request cancellation once they reach 20% equity, though the process varies between Fannie Mae and Freddie Mac guidelines.

The announcement suggests increased regulatory scrutiny of the mortgage insurance industry and could lead to higher cancellation rates as lenders proactively notify borrowers of their eligibility to drop coverage. Both MGIC Investment and Radian Group are among the largest providers of private mortgage insurance in the United States.