Are MGIC’s days to default numbered?

Reporting its sixth straight loss, the private mortgage insurer MGIC Investment Corp. (MGIC) announced it has gotten waivers from Fannie MaeA government-sponsored entity operating in the secondary mortgage market. to continue writing mortgage insurance policies.

MGIC has suffered repeated losses covering mortgage lender risks of loss on foreclosure, inching closer to joining the ill-fated group of other beleaguered private mortgage insurers, including Radian Group Inc. (RGI), PMIDefault mortgage insurance provided by private insurers for conventional loans with loan-to-value ratios higher than 80%. Group Inc. and Triad Guaranty Inc.  PMIDefault mortgage insurance provided by private insurers for conventional loans with loan-to-value ratios higher than 80%. and Triad Guaranty Inc. have been ordered to stop writing policies, but MGIC plans to continue business.  MGIC’s losses will soon place its risk-to-capital ratio beyond the 25-to-1 ratio allowed by state regulators in Wisconsin, where the insurer is headquartered.

The ratio of borrowers reinstating loan payments to those remaining in default has grown more disparate, from a 95-to-100 ratio in 2010, to an 87-to-100 ratio as of November 2011. While MGIC reported a fourth quarter net loss of $135.3 million compared to last year’s $186.7 million loss, policy sales have also decreased 2.8 percent and the rate of borrower default continues to drain the company’s resources.