Nov 9 Mortgage insurer MGIC Investment Corp
said it would pay Freddie Mac $267.5 million
to settle a dispute that had threatened to stop it from writing
new insurance throughout the United States.
The company also reported a loss for the ninth straight
quarter, sending its shares down as much as 9 percent on Friday.
The settlement was a condition set by Freddie Mac, the
government-backed mortgage financier, to allow a new unit of
MGIC to underwrite mortgages in seven states.
MGIC had sold Freddie Mac a pool of policies, the valuation
of which became a bone of contention. The insurer filed a
lawsuit in May seeking to pay less than what Freddie Mac
believed the policies were worth.
The difference in the interpretations of the value of the
policies is about $535 million.
In August, MGIC's shares slumped to an all-time low and the
cost of insuring its debt soared when the settlement demands
were made public.
As part of the settlement, MGIC agreed to pay $100 million
when the deal is signed, and the remaining amount as monthly
payments over the next four years.
MGIC said it is waiting for Freddie Mac to approve its newly
capitalized unit to write insurance, before it signs the deal.
The insurer said it would contribute $100 million to the
mortgage insurance unit to make the payment to Freddie Mac once
the deal becomes effective.
MGIC posted a net loss of $246.9 million, or $1.22 per
share, compared with $165.2 million, or 82 cents per share, a
Shares of the company were down 4 percent at $1.62 on Friday
morning on the New York Stock Exchange.