Freddie Mac seeks remediation plan from AIG unit
NEW YORK, Sept 25 (Reuters) - Freddie Mac, the second-largest provider of U.S. home loan funding, on Thursday said the mortgage insurance unit of American International Group Inc. (AIG.N) would submit a plan required to preserve its top-tier status after a rating downgrade.
Standard & Poor's recently downgraded Greensboro, North Carolina-based United Guaranty Residential Insurance Co. to "A-plus" from "AA-plus,"with a negative outlook, Freddie Mac (FRE.P) said, citing United Guaranty.
Under Freddie Mac guidelines, insurers when downgraded to below "AA-minus" have 45 days to submit plans to the company for restoring the minimum rating for "Type I" insurer status.
Mortgage insurance companies have come under increased stress as poor underwriting practices and the worst housing slump since the Great Depression increase claims. Freddie Mac in July denied an appeal of its suspension of a Triad Guaranty Inc. unit as an approved insurance counterparty, causing that company to wind down operations. (Reporting by Al Yoon; Editing by Theodore d'Afflisio)
