Mortgage Insurers
A $1 billion partnership between two of the biggest mortgage insurers appears likely to be the next casualty of the collapse in the subprime mortgage market.
MGIC Investment Corp. and Radian Group Inc. each disclosed on Monday their investments in a subsidiary called Credit Based Asset Servicing and Securitization LLC have been “materially impaired.”
C-Bass, in which MGIC and Radian each have a 46 percent stake, invests in mortgage credit risk by buying home loans and funneling them into various types of investments like bonds or collateralized debt obligations.
As panicked investors flee risky mortgage debt, C-Bass’ lenders have demanded their money back. Through the first six months of the year, the partnership’s lenders forced $290 million in margin calls. In July, the lenders demanded $260 million.