Fannie Mae (FNMA)

[NobodyFromNowhere]

Path Forward and Recap in The Works
The biggest problem for the PMI industry is very open and has been clear since 2006. There is little to no capital. The new FHFA regulations are attempting to make PMI companies increase capital standards, but it is really just making them pull back and get out of the business. RDN tried to sell itself, but there were no buyers. The new capital standards basically cut their earnings in half. Given that fact, no private equity firms were interested because they like to buy value that they can lever up, increase EPS, and sell in 3 to 5 years with compound annual 20%+ returns. That's impossible when a company is under Operation Stranglehold by regulators who say, okay, now you have to double your capital, and maybe more, depends on how we feel. This fact also keeps venture firms from creating greenfield companies; too much capital for too little return and too much regulatory and market uncertainty.

The path forward will never be more private MBS insurance. It may be MBS that have no Fannie / Freddie guaranty, but of course, we all know that that requires much higher interest rates which cascades a whole nother domino show.