I'm posting at the request of Gary Wait. Gary's out of the country for a while and doesn't have his usual computer access.
He wanted me to revive this thread for several reasons. He wanted me to suggest you go back through the previous posts and to say
I TOLD YOU SO!!!
Gary & some close others, called for MGIC to tumble quite a while back.
Gary wanted me to tell you he is about to bring it all together. Gary knows exactly what the ties are. A huge "BOMBSHELL" is about to drop!!! It is absolutely incredible!!!! Some serious criminal prosecution is about to become real. This is a promise!!
Enjoy the article.
Best to all!
MGIC profit falls nearly 50% in second quarter
Mortgage insurer blames loan defaults, housing
Posted: July 19, 2007
MGIC Investment Corp. blamed an onslaught of loan defaults and the nationwide housing slump Thursday for a nearly 50% drop in second-quarter profits. The Milwaukee mortgage insurer said net income fell to $76.7 million, or 93 cents a share, from $149.8 million, or $1.74, a year earlier.
The results were well below the average estimate of $1.38 a share projected by analysts in a Thomson Financial survey.
MGIC stock dipped 19 cents to $55.81 after the earnings report.
Losses rose 60.5% to $235.2 million from $146.5 million a year earlier, as the company's insured-loan delinquency rate climbed to 6.11%.
The worst problems are in California, Florida and the Midwest, said Curt S. Culver, chairman and chief executive officer of MGIC, in an earnings conference call.
"The remainder of the year will be difficult. We were hoping for $680 million in losses. Now it appears we'll have $750 million to $800 million," Culver said.
Damage from a host of unwise and unsustainable loans near the end of the nation's 2001-'05 housing boom is proving worse than expected, Culver said.
Worst of all are subprime loans written in 2006, which are defaulting at record-high rates, he said.
MGIC is exploring ways to avert losses tied to property foreclosures by encouraging lenders to arrange new repayment plans or a quick, out-of-court home sale, he said.
Borrower troubles overshadowed MGIC's gains: a 1.5% gain in revenue to $369 million from $363.5 million; a surge in new insurance written to $19 billion from $16.1 billion; and a gain in persistency - the percentage of policies retained a year later - to 72% from 64% in the same period last year.
A bigger wave of loan troubles is on the horizon, MGIC officials said.
They acknowledged that they underestimated how fast and hard the nation's housing downturn would hit, and how widespread the fallout from lending excesses would be.
"What we have going on are two things: increased severity and an increase in pure delinquencies," said Michael J. Zimmerman, the company's vice president of investor relations.
MGIC has prepared for higher losses in 2008.
The firm's balance sheet has almost $1.2 billion set aside in loss reserves.
"I don't think you'll see an improvement until '09," Zimmerman said.
"The losses will work through the system over the next few years," Culver predicted.
A more prudent mortgage atmosphere has emerged in recent months and likely will continue, he said, adding:
"That will be driving our revenue long term."
MGIC Investment Corp.
Figures in millions except for earnings per share. Percentages are based on unrounded sales and income figures.
From the July 20, 2007 editions of the Milwaukee Journal Sentinel
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