Author Topic: NMIH - NMI Holdings  (Read 349 times)

aglittell

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NMIH - NMI Holdings
« on: March 23, 2020, 12:16:38 PM »
NMIH is a private mortgage insurance provider w/ $90bln of policies in force, earning a 22% ROE last year. The stock has been slaughtered and is currently trading at .8x TBV, down from 2.5x TBV at the end of FY19.

Does anyone have any thoughts on how to price the risk of defaults in the privately insured mortgages? Fannie and Freddie have announced 1 year forbearance arrangements with their lenders to prevent mass defaults. However, the private mortgage insurers work with a diversified pool of lenders and to my knowledge, these lenders could still foreclose in the event of default, triggering massive liabilities for the private mortgage insurers.

This could be a very attractive entry point if the mass default of homeowners is prevented by gov intervention. If the airlines and other big businesses are getting bailed out while citizens are being delivered helicopter money, I expect homeowners to get relief on mortgages as well.

Appreciate any thoughts.
« Last Edit: March 23, 2020, 12:17:35 PM by Parsad »


abitofvalue

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Re: NMIH - NMI Holdings
« Reply #1 on: March 24, 2020, 09:51:46 PM »
NMIH is a private mortgage insurance provider w/ $90bln of policies in force, earning a 22% ROE last year. The stock has been slaughtered and is currently trading at .8x TBV, down from 2.5x TBV at the end of FY19.

Does anyone have any thoughts on how to price the risk of defaults in the privately insured mortgages? Fannie and Freddie have announced 1 year forbearance arrangements with their lenders to prevent mass defaults. However, the private mortgage insurers work with a diversified pool of lenders and to my knowledge, these lenders could still foreclose in the event of default, triggering massive liabilities for the private mortgage insurers.

This could be a very attractive entry point if the mass default of homeowners is prevented by gov intervention. If the airlines and other big businesses are getting bailed out while citizens are being delivered helicopter money, I expect homeowners to get relief on mortgages as well.

Appreciate any thoughts.

NMIH probably insures only Fannie / Freddie loans. highly highly doubt they are doing much in the non-agency private space given its a tiny portion of the market anyway.