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THE MARKET WANTS STIMULUS OR ELSE
THEN, THERE'S GOING TO BE A CORRECTION:
At least that's what happened in June 2020 after the complete stimulus rollout occurred according to this chart in early June 2020 after the run-up in prices.
"Buy on rumor sell on the news" still applies.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=Spx&x=53&y=15&time=8&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=20&uf=8&lf=268435456&lf2=65536&lf3=512&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
The takeaway is until we get covid-19 pandemic under control, which everyone remains hopeful will come soon, recovery is then possible.
BTY: This is pure speculation and should not be relied on.
FORBEARANCE IMPROVEMENTS CONTINUE DECLINING ACCORDING TO BLACK KNIGHT
Black Knight said the number of active plans dropped by 9,000 loans or 0.3 percent compared to the previous week. The total of active plans is only 1.5 percent below where it was in December, continuing a recent trend of slowing improvement.
"This further sets the stage for a great many plans to still be active when the first wave of forbearance plans begin to expire at the end of March, the Black Knight report says."
http://www.mortgagenewsdaily.com/01152021_covid_19_forbearance.asp
LAST YEAR MGIC REPORTED FOURTH QUARTER FINANCIAL RESULTS ON FEB 4, 2020
This year, they are reporting fourth quarter financial results on February 23, 2020.
By waiting, MGIC can digest the impact of the FHFA decision on the bankruptcy moratorium, which is currently scheduled to expire on January 31, 2021.
MGIC and RADIAN'S INSURANCE PORTFOLIO is largely composed of loans issussed by Fannie Mae and Freddie Mac, although they both have made great strides in diversifying their portfolio since "The Great Recession" of 2008.
As of December 31, 2020 MGIC has 57,710 loans that are delinquent. 62% of the delinquencies are in forbearance programs as far back as March 2020. Therefore, that combined with the foreclosure moratorium could have significant impact on whether those loans end up in foreclosure.
It's difficult to quantity the amount of "loan loss reserve and lae" required until they know what's going on with the foreclosure moratorium and, it's subsequent impact on Q4 2020 PROFIT OR LOSS.
It is prudent to wait and see if the FHFA extends the moratorium on foreclosures and if so, how long they will extend the moratorium.
The FHFA'S delay in announcing a decision on the foreclosure moratorium may have something to do with the new Biden administration, taking office next week.
MGIC INVESTMENT SCHEDULES Q4 2020 EARNINGS RESULTS LATER THAN NORMAL
MGIC scheduled Q4 2020 results release for February 23, 2021.
Some favorable moratoriums are scheduled to end January 31, 2021. Of particular concern is foreclosure moratorium:
https://www.google.com/amp/s/www.fool.com/amp/mortgages/2020/12/04/fhfa-extends-foreclosure-and-eviction-moratoriums/
https://mtg.mgic.com/news-releases/news-release-details/mgic-investment-corporation-schedules-4th-quarter-2020-earnings
GURUFOCUS SAYS MTG AND RDN ARE UNDERVALUED - JANUARY 6, 2021
"MGIC
MGIC Investment Corp. (MTG) was trading around $12.55 per share as of Tuesday. The Peter Lynch fair value gives the stock a price of $20.56, which suggests it is undervalued with a 39% margin of safety. Over the past 12 months, the stock has decreased 9.74%.
The mortgage insurance services provider has a market cap of $4.25 billion and an enterprise value of $5.11 billion."
https://www.gurufocus.com/news/1323693/5-undervalued-stocks-trading-below-peter-lynch-value
$mtg $12.75 ^ 0.47 (3.83%)
Volume: 8,444,998 @01/06/21 7:00:00 PM EST
NMI HOLDINGS ANNOUNCES DEFAULTS DECLINED IN DECEMBER AND Q4 2020
NMI HOLDINGS ANNOUNCED today that delinquencies continued lower sequentially on a monthly and a quarterly basis.
The fact that delinquencies continued lower during those periods is good news because, historically delinquencies on mortgages are more troubling during the final quarter of the year due to the holidays, as borrowers increase spending on household items and Christmas spending.
In addition, covid-19 has been a burden on household's in 2020, further dampening homeowner's ability to stay current on their mortgages.
On the other hand, borrower's pay up delinquencies during the first quarter of the year.
https://apnews.com/press-release/globe-newswire/business-government-business-and-finance-personal-insurance-financial-services-banking-and-credit-regulation-dfdff2784e3f1e0ca199129161a232b1
SHORT INTEREST DECLINES IN LATEST PERIOD ENDING DEC 14, -1.94% TO 33.20 MILLION
However, "days to cover" increases to 11.25 from 10 days. Short interest as of December 14, 2020 was 33.20 million(-1.94%), 9.96% percent of float. The 10 day average volume was 2.95 million.
SHORT INTEREST DAYS TO COVER JUMPS TO 10 FROM 6 DAYS FOR MGIC INVESTMENT CORP.
Short interest rose 16% in latest period to 10.16%(33.86 million) of outstanding shares at MGIC INVESTMENT CORPORATION compared to 5.4% in September 2020.
Part of the problem results from the fact that daily volume is just 3.32 million on average over the last 10 days complicating a reduction.
It appears from the considerable increase, that MTG has been held back from higher prices however, inorder for MTG to stagnate in place, short interest must continue increasing.
We await new data to focus into the quagmire.
Data source: WALL STREET JOURNAL, YAHOO FINANCE
MTG SHOULD BE BACK AT $13ish BY SPRING 2021
CURRENT BOOK VALUE IS 13.33. If you add Q4 2020 net income, we'll probably be sitting at $13.50+ book valuation.
MTG READY TO BREAK FROM LOW VOLATILITY AS BOLLINGER BANDS TIGHTEN
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&x=44&y=22&time=4&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=20&uf=8&lf=268435456&lf2=65536&lf3=131072&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
https://stocktwits.com/symbol/MTG
$mgt $12.64 ^ 0.22 (1.77%)
Volume: 3,221,802 @12/16/20 4:50:31 PM EST
MTG BREAKOUT FROM PENNANT 14 DAY CONSOLIDATION
I HAVE THE BREAKOUT AT $12.51.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&x=49&y=20&time=4&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=20&uf=8&lf=268435456&lf2=65536&lf3=131072&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
$mtg $12.08 v -0.38 (-3.05%)
Volume: 3,139,549 @12/11/20 7:00:00 PM EST
CALL OPTION ACTIVITY UP OVER 2600 THIS MORNING FOR MGIC INVESTMENT CORP
,,,,,,,,,,,,,,, Strike,,,Vol.,,Open
Mar 19, 2021 13.00 1263 1945
Jan 15, 2021 11.00 1256 4434
https://old.nasdaq.com/symbol/mtg/option-chain/most-active
SHORT INTEREST VERY HIGH AT 33.86MILLION BUYBACK COULD SENT MTG HIGHER
SHORT INTEREST (11/29/20)
Shares Sold Short 33.86 M
Change from Last 16.35%
Percent of Float 10.16%
SOURCE: look under "key stock data"
https://www.wsj.com/market-data/quotes/MTG
DELINQUENT INVENTORY AT MGIC CONTINUES DECLINING MONTHLY
Delinquent inventory has fallen from 64.4k to 59.2k in the Q4 quarter so far, as of November 30, 2020.
Expect higher profit for Q4 2020 to be higher than estimated delinquents decline.
https://mtg.mgic.com/news-releases/news-release-details/mgic-investment-corporation-releases-monthly-operating-32
FHFA EXTENDS FORCLOSURE MORATORIUM UNTIL JANUARY 31, 2021
Most loans insured by MGIC INVESTMENT CORPORATION and RADIAN GROUP are loans with the GSEs(FHFA).
"FHFA extends foreclosure and eviction moratorium to Jan. 31
FHFA said it will continue to monitor the effect of coronavirus and update its policies as needed
HOUSING WIRE
December 2, 2020, 3:04 pm
By Alex Roha
The Federal Housing Finance Agency extended its moratorium on foreclosures and evictions for borrowers with mortgages backed by Fannie Mae and Freddie Mac until Jan. 31.
This marks the fourth time the government agency has extended the moratorium, now another month past its most recent deadline of Dec. 31. According to FHFA director Mark Calabria, extending Fannie Mae and Freddie Mac’s foreclosure and eviction moratoriums through January 2021 keeps borrowers safe during the pandemic
“This extension gives peace of mind to the more than 28 million homeowners with an Enterprise-backed mortgage,” said Calabria.
Fannie and Freddie’s foreclosure moratorium applies to enterprise-backed, single-family mortgages only. However, the extension also applies to real estate owned (REO) evictions, which are properties that have been acquired by an enterprise through foreclosure or deed-in-lieu of foreclosure transactions."
THE S&P 500 DOUBLE BOTTOM CONTINUES BREAKOUT
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=Spx&x=47&y=12&time=6&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=20&uf=8&lf=268435456&lf2=16&lf3=512&type=4&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
SHORT INTEREST WAS PRIMARILY BOUGHT BELOW $9 SHARE SO PROBLEM HOW TO BUY AT $12
SHORT INTEREST IS UP 10 MILLION OVER LAST 3 MONTHS AND NOW STANDS 29 MILLION:
FROM EARLIER POST:
"As of September 15, 2020 short interest stood at 18.39 million versus 19.42 million as of August 31, 2020, that's a 1.03.million reduction.
Over the same time, MTG went from $9.20 to $9.35. MTG now stands at $8.57/share.
Look under data for MTG short interest statistics:
https://www.wsj.com/market-data/quotes/MTG
WHILE MTG"S PRICE HAS BEEN RISING SO HAS SHORT INTEREST TO 29MM(31.54%)
NOT SURE WHY SHORT INTEREST ROSE SO DRAMATICALLY.
See data tab to see details:
https://www.wsj.com/market-data/quotes/MTG
WEEKLY PERFORMANCE MTG, ESNT, NMIH, RDN AND S&P 500
On November 13, 2020 MGIC INVESTMENT CORPORATION joined the S&P MidCap 400
S&P Mid Cap 400 Index
https://www.marketwatch.com/investing/index/mid
Comparison MTG, RDN, NMIH, ESNT and S&P 500
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&x=52&y=13&time=3&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=7&compidx=SP500&comptemptext=Nmih%2C+esnt%2C+rdn&comp=Nmih%2C+esnt%2C+rdn&ma=1&maval=50&uf=0&lf=268435456&lf2=16&lf3=512&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
$mtg $11.81 ^ 0.18 (1.55%)
Volume: 2,858,277 @11/19/20 4:01:19 PM EST
UPDATE: MGIC(MTG) JOINS S&P MIDCAP 400 TODAY
https://www.spglobal.com/spdji/en/indices/equity/sp-400/#overview
Yesterday MTG saw extraordinary volume with 57.9 shares traded, as S&P MIDCAP 400 AND INDEX ETFs prepare to add it to it's composites.
The volatility in MTG will probably continue for a while as it settles into the index. MTG was previously part of the RUSSELL 2000.
THE WALL STREET JOURNAL yesterday published the latest short interest numbers for MGIC as of October 29. The short interest rose slightly by 6.39% to 22.12 million, which is now 15 days olds now.
Look under data to see the statistics:
https://www.wsj.com/market-data/quotes/MTG?mod=searchresults_companyquotes
UNDERVALUED STOCKS, LIKE MTG, NOW BECOME INVESTOR TARGETS WITH COVID-19 VACCINE ANNOUNCEMENTS
MTG PRICE/BOOK IS $.81 currently, while the NASDAQ INDEX PRICE/BOOK IS $3.63.
The covid-19 pandemic caused technology shares to takeoff, as companies invested in technology to allow workers to work off-site or, at home.
If, the U S Economy can return to normal and workers return to work, MGIC DELINQUENCY INVENTORY CAN ACCELERATE DOWNWARD, then operating profits can return to normal.
MGIC saw a another month of declines in delinquencies in October.
Bottomline, MGIC INVESTMENT has imbedded value, that will be released to shareholders.
$mtg $11.06 ^ 0.28 (2.60%)
Volume: 12,573,260 @11/09/20 7:00:00 PM EST
THE S&P 500 IS COMPLETING A DOUBLE BOTTOM PATTERN
Change the chart dynamic to three months to see the pattern...
https://www.marketwatch.com/investing/future/sp%20500%20futures
MGIC INVESTMENT COMPANY WILL SOON BE ADDED TO S&P 400 MIDCAP INDEX
Currently MTG is undervalued, priced at only $.77 price/book value based on today's closing price.
https://finance.yahoo.com/news/mgic-investment-halozyme-therapeutics-set-234000634.html
MGIC REACHES YEAR END BOOK VALUE IN 3RD QUARTER AT $13.33/SHARE
"Book value per common share outstanding increased by 7.4% from December 31, 2019 to $13.33 and increased by 11.7% from September 30, 2019"
MGIC BEATS ANALYST EARNING ESTIMATE BY $.08 CENTS: "Third Quarter 2020 Net Income of $130.8 million or $0.38 per Diluted Share
Third Quarter 2020 Adjusted Net Operating Income (Non-GAAP) of $149.9 million or $0.43 per Diluted Share"
https://mtg.mgic.com/news-releases/news-release-details/mgic-investment-corporation-reports-third-quarter-2020-results
$mtg $10.06 ^ 0.36 (3.71%)
Volume: 5,953,414 @10/30/20 4:41:48 PM EDT
PRICE/BOOK VALUATIONS OF PUREPLAY PMI COMPANIES AS OF TODAY
Price to book ratio as of today
MGIC . . . .81
RADIAN . . .89
ESSENT . .1.35
NMI HDGS .1.61
*
MGIC IS CURRENTLY PRICED AT $.81 CENTS PER DOLLAR.
CREDIT SUISSE has MGIC book value at $13.21 at 2020 FYE.
In light of the fact that MGIC had the highest capitalization of these companies as of June 30, 2020, that makes MTG even more of a bargain.
*Data obtained from Yahoo Finance: statistics
KEY TAKEAWAY BLACK KNIGHT ARTICLE: CLAIMS WILL DECLINE FOR MGIC WHEN THEY REPORT Q3 RESULTS
Paid loans declined in Q3 to 375 from 661 loans in Q2 according to monthly operating statements.
"The foreclosure inventory, loans in process of foreclosure, dropped by 6,000 and was down by 71,000 from a year earlier to 181,000.
In addition, foreclosure starts numbered only 4,500 during the month, nearly a 90 percent year-over-year decline. The CARES Act mandated a suspension of foreclosure activity, likely resulting in these low numbers."
LATE AND EARLY STAGE DELINQUENIES SHOW MARKED IMPROVEMENT IN SEPTEMBER - BLACK KNIGHT
MORTGAGE NEWS DAILY
Oct 26 2020, 9:21AM
JANN SWANSON
"Some Delinquency Rates are Declining to Pre-COVID Levels
The number of serious delinquencies dropped in September according to Black Knight. The 43,000 decline in the number of loans that were 90 or more days past due marked the first improvement in that statistic since the start of the pandemic. The change leaves 2.32 million homeowners seriously overdue on their mortgages but not in foreclosure, 1.88 million more than in September 2019.
Black Knight's "first look" at September's loan performance data showed an overall decline in most stages of delinquency more than six months after Congress enacted loss mitigation measures to deal with the economic disruption caused by the COVID-19 virus. Total delinquencies declined 3.10 percent from August although again they were 89.03 percent higher on an annual basis. There were 3.54 million mortgages that were 30 or more days past due but not in foreclosure, down 137,000 from August. The national delinquency rate was 6.66 percent compared to 6.88 percent the previous month.
Early-stage delinquencies continue to show strong improvement, with rolls from current to 30-days delinquent, as well as the number of borrowers less than 90 days delinquent, having returned to pre-pandemic levels
The foreclosure inventory, loans in process of foreclosure, dropped by 6,000 and was down by 71,000 from a year earlier to 181,000. In addition, foreclosure starts numbered only 4,500 during the month, nearly a 90 percent year-over-year decline. The CARES Act mandated a suspension of foreclosure activity, likely resulting in these low numbers.
Mortgage prepayments pulled back in August but resumed the recent high level of activity. September's single month mortality (SSM) rate jumped above 3 percent (3.04 percent) for the first time in more than 16 years. Black Knight said the high rate is fueled by record low rates and an elongated home buying season."
UPDATED 10 DAY CHART OF MTG, ESNT, NMIH AND RDN ADDING INFO ABOUT RADIAN ILN TRANSACTION
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&x=56&y=14&time=18&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=7&compidx=aaaaa%3A0&comptemptext=Nmih%2C+esnt%2C+rdn&comp=Nmih%2C+esnt%2C+rdn&ma=1&maval=50&uf=8&lf=268435456&lf2=16&lf3=512&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
Radian completed an ILN:
https://radian.com/news-and-knowledge/news?id=21046
NMI HOLDINGS completed an ILN backed by mortgage notes.
https://www.marketwatch.com/press-release/nmi-holdings-announces-242-million-insurance-linked-notes-transaction-2020-10-20-818414?mod=mw_quote_news_seemore
and, ESSENT secured additional credit facilities from banks.
https://www.marketwatch.com/press-release/essent-group-ltd-announces-amended-and-extended-625-million-credit-facility-2020-10-19?mod=mw_quote_news_seemore
However meanwhile, "MGIC INVESTMENT IS SWIMMING IN CAPITAL" already.
The strong capital base allows MGIC to Garner a higher rate of return by increasing it's "risk in force".
SEEKING ALPHA
MGIC Investment Is Swimming In Capital
Sep. 16, 2020 5:58 AM ETMGIC Investment Corporation (MTG)
Summary
MGIC is highly profitable, growing moderately and generating free capital.
MGIC SIX MONTH CASH FLOW:
"NET CASH FLOW FROM OPERATIONS JUMPED IN THE FIRST SIX MONTHS OF 2020 to $420 MILLION FROM $282 MILLION AS OF JUNE 30, 2019. (SEC 10Q JUNE 30, 2020 page 11)"
HOMEOWNERS EQUITY SOARS IN Q3 = CLAIMS DECLINE IN Q3 2020
According to Pat Sinks, Co-chairman MGIC INVESTMENT, a correlation between rising housing market in the U.S. and reduced claims has existed since 1957, the Genesis of the Private Mortgage Insurance industry.
"BY: JANN SWANSON
Mortgage News Daily
"Homeowner Profits Soared in Q3"
Oct 23 2020, 10:13AM
The contribution made to household wealth by homeownership is underlined in ATTOM Data Solutions' third-quarter U.S. Home Sales Report. The company said that a typical homeowner who sold a home during the quarter had a gain of $85,000. This was $10,000 more than that realized by sellers in the previous quarter and up from $66,000 in the third quarter of 2019.
This typical home-sale profit represented a 38.6 percent return on investment (ROI) compared to the original purchase price. The typical ROI in the previous quarter was 37.5 percent and it was 33.7 percent a year ago.
The report says that both the raw-profit and return-on-investment figures were the highest since the U.S. economy began recovering from the Great Recession in 2012. They represent a continued increase even as the Coronavirus pandemic has damaged the economy and led to spikes in unemployment throughout the country this year.
"Things remain in flux, given the significant uncertainty about when the pandemic might recede or what impact the recent resurgence could have in different areas of the country. But with mortgage rates at rock-bottom levels and declining supplies of homes for sale, conditions remain in place for continued strong prices and returns."
The profit margins (difference between purchase and sales prices) were up year-over-year in 89 of the 103 metropolitan areas tracked by ATTOM. (Areas were included if they had at least 1,000 single-family home and condo sales during the quarter.) The largest increases were in the midsection of the country - larger cities in Missouri, Ohio, and Indiana. St. Louis, for example, saw profits margin rise to 37.1 percent from 22.4 percent. In Columbus, Ohio they jumped from 37.1 percent to 51.6 percent.
The 14 areas that posted declines were in large coastal or tourist areas. The largest were in Honolulu (down from 43.9 percent to 35.1 percent) and San Francisco (down from 71.3 percent to 64.5 percent).
Rising profits are, of course, largely driven by price gains and, despite the economic fallout from the Coronavirus pandemic, prices did continue to climb nationwide. They tied with or set new peaks in 95 percent of the metro areas. The biggest year-over-year increases in median home prices came in the metro areas of Bridgeport (up 29.7 percent), Detroit (27.4 percent), New Haven, CT (20.1 percent), Birmingham (19.7 percent), and Indianapolis (19.3 percent).
Another factor in rising profits margins is the length of time the home is owned and homeowners who sold in the third quarter of 2020 had owned their homes an average of 8.13 years. This is up from 7.76 years in the second quarter and 7.91 a year earlier and is the longest average tenure since 2000.
Distressed home sales - including bank-owned (REO) sales, third-party foreclosure auction sales and short sales - accounted for 7.2 percent of all U.S. single-family home and condo sales in the third quarter of 2020, down from 8.1 percent in the prior quarter and 9.8 percent in the third quarter of 2019. The latest figure marks the lowest point since the third quarter of 2005 and is less than one-sixth of the peak level of 45.2 percent in first quarter of 2009.
All-cash purchases were only slightly higher than the previous quarter's 20.5 percent share, the lowest since 2007. The third quarter share, 21.6 percent of residential sales, was down from 24 percent a year earlier.
Institutional investors nationwide accounted for just 1.7 percent of all single-family home and condo sales in the third quarter of 2020, up from the 20-year low point of 1.6 percent in the second quarter of 2020, but down from 3.4 percent a year ago. Institutional investors were most active in Arizona, Georgia, and Nebraska, but shares in each case were below 4 percent.
Nationwide, buyers using Federal Housing Administration (FHA) loans accounted for 11.8 percent of all single-family home and condo purchases in the third quarter, down from 13 percent in the previous quarter and from 12.2 percent a year ago. The highest share of FHA buyers during the quarter were in three Texas cities, McAllen, Beaumont, and El Paso. Shares ranged from one-third of sales down to 26.3 percent."
A CLOSER LOOK REVEALS THAT NMI HOLDINGS HAS OUTPERFORMED MGIC BY 8%
THERE NO REASON FOR NMIH TO OUTPERFORM MTG OVER THE LAST 10 DAYS.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&x=56&y=14&time=18&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=7&compidx=aaaaa%3A0&comptemptext=Nmih%2C+esnt%2C+rdn&comp=Nmih%2C+esnt%2C+rdn&ma=1&maval=50&uf=8&lf=268435456&lf2=16&lf3=512&type=64&style=350&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
NMI HOLDINGS completed an ILN backed by mortgage notes.
https://www.marketwatch.com/press-release/nmi-holdings-announces-242-million-insurance-linked-notes-transaction-2020-10-20-818414?mod=mw_quote_news_seemore
and, ESSENT secured additional credit facilities from banks.
https://www.marketwatch.com/press-release/essent-group-ltd-announces-amended-and-extended-625-million-credit-facility-2020-10-19?mod=mw_quote_news_seemore
however, "MGIC INVESTMENT IS SWIMMING IN CAPITAL" already.
SEEKING ALPHA
MGIC Investment Is Swimming In Capital
Sep. 16, 2020 5:58 AM ETMGIC Investment Corporation (MTG)
This article is exclusive for subscribers
Summary
MGIC is highly profitable, growing moderately and generating free capital.
MGIC SIX MONTH CASH FLOW:
"NET CASH FLOW FROM OPERATIONS JUMPED IN THE FIRST SIX MONTHS OF 2020 to $420 MILLION FROM $282 MILLION AS OF JUNE 30, 2019. (SEC 10Q JUNE 30, 2020 page 11)"
CHART SHOWS DISPARITY BETWEEN TOP PMI PUREPLAY COMPANIES OVER LAST MONTH
Not sure why this scenario seems to play out, when MGIC might very well continue to be one of the strongest in the industry.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=MTG&time=4&startdate=1%2F4%2F1999&enddate=8%2F10%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=Nmih%2C+esnt%2C+rdn&comp=Nmih%2C+esnt%2C+rdn&ma=1&maval=50&uf=8&lf=268435456&lf2=16&lf3=512&type=64&style=350&size=2&x=51&y=18&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
MORTGAGE APPLICATIONS DECLINE FOR FOURTH STRAIGHT WEEK AFTER SIZZLING HOT SUMMER
Mortgage Applications Decrease in Latest MBA Weekly Survey
Oct 21, 2020
CONTACT
Adam DeSanctis
adesanctis@mba.org
(202) 557-2727
WASHINGTON, D.C. (October 21, 2020) - Mortgage applications decreased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending October 16, 2020.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 0.2 percent from the previous week and was 74 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 26 percent higher than the same week one year ago.
"Mortgage rates increased last week, with the 30-year fixed rate climbing 2 basis points to 3.02 percent - the highest since late September. Despite the uptick in rates, refinance activity held steady, with FHA refinance applications posting a 17.6 percent increase, helping to offset declines in the other loan types," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Homebuyer demand remains strong this fall, but purchase applications did decrease 2 percent, with both conventional and government purchase activity taking a step back. Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remained robust compared to a year ago, rising 26 percent and 74 percent, respectively."
"Why Morgan Stanley's Mike Wilson says 10% market correction is the most likely outcome near-term"
CNBC's Scott Wapner talks with Mike Wilson, chief U.S. equity strategist and chief investment officer for Morgan Stanley, to discuss why he forecasts a 10 percent market correction.
http://www.mortgagenewsdaily.com/video/archive/2020/10/21.aspx#957764
No doubt’ that crucial U.S. fiscal stimulus is coming, IMF managing director says
PUBLISHED THU, OCT 15 20201:59 PM EDTUPDATED THU, OCT 15 20204:09 PM EDT
Vicky McKeever
@VMCKEEVERCNBC
KEY POINTS
IMF Managing Director Kristalina Georgieva said U.S. fiscal stimulus would “provide a boost to certainty and certainty is something we do need in this crisis.”
She was speaking on CNBC’s Global Economic Debate panel on Thursday.
https://www.cnbc.com/2020/10/15/imf-no-doubt-that-crucial-us-fiscal-stimulus-is-coming.html
RENTAL HOUSING MARKET IN TROUBLE
MORTGAGE NEWS DAILY
BY: JANN SWANSON
Pandemic Throwing Millions into Rent, Mortgage, and Student Loan Peril
Oct 16 2020, 9:13AM
The pandemic is endangering the credit histories of at least 30 million Americans and possibly threatening the shelter status of many of them. The Mortgage Bankers Associations' (MBA's) Research Institute for Housing America (RIHA) said on Friday that over 6 million households missed making rent or mortgage payments in September and 26 million individuals did not make payments on their student loans.
The number of missed payments for rent and mortgage payments did decline slightly from the second quarter but 2.82 million households failed to pay their rent on time and in full in September while 3.37 million homeowners missed, delayed, or made a reduced mortgage payment. These numbers represent 8.5 percent of the renter population and 7.1 percent of homeowners. The share of student debt borrowers who missed a monthly payment has remained at 40 percent since May.
"Rent and mortgage payment collections improved over the summer as more people went back to work, but high unemployment continues to place hardships on millions of U.S. households. There is growing concern that absent a slowdown in the number of coronavirus cases and another round of much needed federal aid, millions of households in the coming months face the prospect of falling further behind," said Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. "With the current eviction moratorium expiring in January, the situation could be even more challenging for renters. Many renter households across the country could find themselves with no place to live and no means to repay missed payments."
Added Engelhardt, "The tens of millions of student debt borrowers behind on their payments also has future ramifications for the housing and mortgage markets. Borrowers ending up in default would see an adverse effect on their credit, in turn making it potentially more challenging for them to rent or qualify for a mortgage."
Delinquencies will remain above pre-pandemic levels for another 19 months - BLACK KNIGHT
"While this may seem to paint a bleak picture for the future, multiple mitigating factors could help to reduce any resulting foreclosure wave. First and foremost, while recovery has been slow and incremental, the bulk of homeowners who have come out of forbearance are currently performing on their mortgages. That's roughly a third of the 6.1 million homeowners who've been in forbearance at one time or another since the pandemic began. Of those no longer in forbearance but still past due, the vast majority -- some 267,000 -- are in active loss mitigation programs with their lenders. Just 54,000 loans at present represent significant risk – having left forbearance, are past due and not engaged in loss mitigation efforts. Seventy percent of those were already delinquent in February, before COVID became a factor. Furthermore, American homeowners now have the most equity available to them in history. Of those in forbearance, just 9% have less than 10% equity in their homes, which offers both borrowers and lenders multiple options in lieu of foreclosure."
https://investor.blackknightinc.com/investors/press-releases/press-release-details/2020/Black-Knight-At-Current-Rate-of-Improvement-Delinquencies-Will-Remain-Above-Pre-Pandemic-Levels-Until-2022-Loss-Mitigation-and-High-Levels-of-Equity-Help-Mitigate-Foreclosure-Risk/default.aspx
5% increase in serious delinquencies - those 90 or more days past due - which have now risen in each of the past five months
Black Knight
PRESS RELEASE DETAILS
BLACK KNIGHT'S FIRST LOOK: EARLY-STAGE DELINQUENCIES IMPROVE FURTHER, WHILE SERIOUSLY PAST-DUE LOANS RISE; RATE OF IMPROVEMENT SLOWS
September 23, 2020
DownloadPDF Format (Opens In New Window)
- The divergence between early-stage delinquencies and seriously past-due mortgages continues to widen as fewer delinquent loans cured to current status in August.
https://investor.blackknightinc.com/investors/press-releases/press-release-details/2020/Black-Knights-First-Look-Early-Stage-Delinquencies-Improve-Further-While-Seriously-Past-Due-Loans-Rise-Rate-of-Improvement-Slows/default.aspx
MORTGAGE APPS FALL IN SPITE OF RECORD LOW RATES
MORTGAGE NEWS DAILY
BY: JANN SWANSON
Mortgage Rates Hit Record Lows but Applications Fell Flat
Oct 14 2020, 8:44AM
The volume of mortgage applications dipped slightly last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, was down 0.7 percent on a seasonally adjusted basis during the week ended October 9 and was 1 percent lower on an unadjusted basis.
The Refinance Index slipped 0.3 percent from the previous week and was 44 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 65.6 percent of total applications from 65.4 percent the previous week.
The seasonally adjusted Purchase Index decreased 2 percent from one week earlier and 1 percent unadjusted. The Index was 24 percent higher than the same week one year ago, continuing a string of year-over-year gains that started during the week ended May 22.
$340 SAVINGS ON Q3 REDUCED DELINQUENCIES ADDED TO LOAN LOSS RESERVES IN Q3 2020
If MGIC MANAGEMENT adds savings to loan loss reserves per delinquencies, it equals $340 per delinquency in Q3.
A year ago as of June 30, 2019 MGIC'S average loan loss reserve per delinquency was $19,684, compared to $11,357 per delinquency at June 30, 2020. While the actual loan loss estimate for "Covid-19 related delinquencies" might indicate a lower eventual loss, conservative management of the default inventory will most likely cause management to continue adding reserves dollars until they reach approximately $20,000 per default.(SEC 10Q JUNE 30, 2020, PAGE 51)
By adding the $340 savings from the reduced delinquency of 4908 loans would boost reserves to $11,697.
Of course profits will not go up from Q2 2020.
ANALYSTS INCREASE MGIC Q3 ESTIMATE BY 1 CENT OVER THE LAST 30 DAYS
ANALYSTS increased the Q3 earnings estimate by 1 cents over the last 30 days as delinquencies declined and revenues are expected to remain stable for the third quarter.
However, earnings estimates have increased in the last 90 days to $.29 cents from $.23 cents, a $.06 cents increase over 90 days.(YAHOO FINANCE MGIC ANALYST TRENDS)
The reason for the cautious estimate probably stems from the fact that "loan loss reserves" remain low compared to a year ago.
A year ago as of June 30, 2019 MGIC'S average loan loss reserve per delinquency was $19,684, compared to $11,357 per delinquency at June 30, 2020. While the actual loan loss estimate for "Covid-19 related delinquencies" might indicate a lower eventual loss, conservative management of the default inventory will most likely cause management to continue adding reserves dollars until they reach approximately $20,000 per default.(SEC 10Q JUNE 30, 2020, PAGE 51)
No one knows how the under reserved condition will ultimately affect "Q3 Financial Results" for the PMI Companies. The good news is the Economic Background remains strong.
MGIC REDUCED DELINQUENCIES EQUAL TO $.16 CENTS/SHARE FOR Q3 2020
MGIC INVESTMENT COMPANY delinquencies declined by 4908 loans in Q3, which is equivalent to $.16/share or $54.5 million.
Depending on how management view loan losses on defaults, net operating profits could be higher than expected.
The only problem is some delinquencies are now moving into the "late stage" buckets and PMI COMPANIES REMAIN UNDER RESERVED IN THE EVENT THAT, SOME DELINQUENCIES ACTUALLY TURN INTO LOSSES, which they will...
https://mtg.mgic.com/news-releases/news-release-details/mgic-investment-corporation-schedules-3rd-quarter-2020-earnings
KBW RAISES MGIC TO OUTPERFORM
MGIC Investment Corp. (NYSE: MTG) was raised to Outperform from Market Perform at Keefe Bruyette & Woods. Shares closed up 0.8% at $9.93 ahead of the call, and they have a $12.43 consensus price target.
OCT. 7, 2020
SELLOFF IN PROGRESS BUY MTG AROUND $9.50
Market oversold at present.
CREDIT SUISSE HAS FYE TANGIBLE BOOK VALUE OF $13.21/SHARE FOR MTG
I FOLLOW CREDIT SUISSE BECAUSE, THEY HAVE TENDED TO BE CONSERVATIVE IN THEIR ESTIMATES OVER THE LAST TEN YEARS.
Their PE EST. is 6.6 on earnings of $1.26 for FY 2020.
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An Industry Leader
Our company has been serving the mortgage industry for more than 50 years. In today’s rapidly changing and challenging market, MGIC Investment Corporation (NYSE: MTG) remains committed to delivering superior shareholder returns by combining the best talent, analytics systems, products and processes.
MGIC Investment Corporation is headquartered in Milwaukee, Wisconsin, and is the parent company of Mortgage Guaranty Insurance Corporation (MGIC). Our strong history in the mortgage insurance industry allows us to offer mortgage insurance and risk management products and services to mortgage lenders as well as structured finance services to investors.
We're still the same MI company, doing the same quality business.
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