Aid for mortgage insurers eyed: regulator

WASHINGTON (Reuters) - Officials are conducting a review of the mortgage insurance industry to determine the present health and future viability of the specialty finance firms battered by the housing downturn, a U.S. regulator said on Wednesday.

At the end of the government reviews, officials may decide to aid the companies with reinsurance of future losses or a fresh injection of capital, the director of the Federal Housing Finance Agency told the Reuters Global Financial Regulation Summit in Washington.

"We do think that there might be a way to provide some capital to these companies or, potentially, reinsurance as a way to help them back in the marketplace," said James Lockhart.

"It's somewhat analogous to what they did for AIG and Citi under a guarantee-type program," he said. "It might not be reinsurance, as such, ... it would be some sort of guarantee mechanism for potential losses."

Lockhart said that he and other officials have been hearing from the mortgage insurance companies and their state regulators.

"We have been meeting with them to discuss issues and try to get a better handle on the capital," he said.

Officials from the U.S. Treasury Department are helping develop a policy on how to deal with the troubled mortgage insurers.

While Lockhart has long argued that mortgage insurers need a boost, Treasury officials have been more circumspect.

An administration official said on Wednesday the Treasury Department is analyzing ways it could resolve problems in the mortgage insurance industry battered by mounting foreclosure losses.

"No decisions have been made about whether to take any particular steps," the official added.