SAN FRANCISCO – CUNA Mutual Group on Monday assured credit unions that its CMG Mortgage Insurance joint venture remains financially viable and able to pay claims, despite the financial woes at its joint venture partner PMI Group, which was taken over by state regulators in Arizona, where the company is incorporated.
“In addition to the company’s solid operating performance and financial strength, CMG MI continues to enjoy the strong support from its joint venture partner CUNA Mutual Group,” said Sean Dilweg, vice president of CUNA Mutual Group. “CMG MI will continue to benefit from CUNA Mutual’s management and financial strength as well as PMI’s ongoing operational services and expertise. The company is committed to serving credit unions over the long term.”
CUNA Mutual emphasized the biggest provider of mortgage insurance for credit union’s remains financially strong despite the action by the state insurance regulator, and that the company’s focus on credit unions’ mortgage insurance needs is unaffected. CMG, which is 50% owned by CUNA Mutual and 50% by PMI, has a share of approximately 60% of the credit union market for private mortgage insurance.
The Arizona Department of Insurance took over PMI and told the company to pay claims at 50 cents on the dollar after losses on mortgage defaults drained capital. The operation already was prohibited from selling new coverage after 16 straight quarterly losses.
PMI Mortgage is incorporated in Arizona but headquartered in Walnut Creek, Calif., a suburb of San Francisco. It sells insurance to homeowners who can’t make a down payment of at least 20%. If the borrower defaults and the home is worth less than the mortgage, the insurance pays the lender a percentage of its loss. Since the housing crisis began in 2007, the company has suffered billions of dollars in losses because of claims paid on foreclosed homes.
The company explained that CMG is a stand-alone corporate entity with its own capital and dedicated staffing from its shareholders, and asserted that Arizona’s regulatory action with PMI will have no impact on CMG MI’s operations and claims paying activities. “We remain dedicated to providing the same excellent service credit unions have grown to expect from our company,” Kim Shaul, senior vice president and co-general manager for CMG, said in a statement.
