Fannie Mae and Freddie Mac have suspended Republic Mortgage Insurance Company (RMIC) and Republic Mortgage Insurance Company of North Carolina as approved mortgage insurers.[IMAGE]
According to North Carolina law, mortgage insurers must maintain at least one twenty-fifth of their aggregate insured risk outstanding. The amount excludes reinsurance ceded and includes reinsurance assumed.
RMIC fell below this amount in September 2010 but was granted waivers from the North Carolina Department of Insurance.
A recent extension of the waiver is set to expire August 31, and Fannie Mae has seen no indication thus far that another extension will be granted.[COLUMN_BREAK]
In a statement July 29, Fannie Mae said, ""In response to NC DOI's action, Fannie Mae is suspending nationwide both RMIC and its affiliate, Republic Mortgage Insurance Company of North Carolina (RMIC-NC), as approved mortgage insurers effective immediately as provided by Fannie Mae's Qualified Mortgage Insurer Approval Requirements, as well as per the terms of RMIC-NC's limited approval.""
Freddie Mac issued a similar statement August 2: ""Effective immediately, we are suspending Republic Mortgage Insurance Co. and RMIC of North Carolina (collectively, ""RMIC"") as approved mortgage insurers.""
Neither GSE will purchase or securitize any RMIC- or RMIC-NC-insured loan dated before May, 2011 or after September 1, 2011.
The GSEs will accept RMIC- and RMIC NC-insured loans that have been refinanced if the existing mortgage insurance certificate is effected through the modification.
Fannie Mae has instructed servicers to continue to renew expired RMIC and RMIC-NC policies.
Likewise, Freddie Mac said, ""Freddie Mac Servicers do not need to take action on mortgages that have already been sold to us, whether at renewal of the insurance or otherwise.""
In addition to the suspension from the GSEs, Fitch downgraded RMIC's ratings this week from ""B"" to ""BB.""
The rating agency attributed the downgrade to weaker than expected second-quarter results from the insurer.