The select group of Fannie Mae- and Freddie Mac-approved mortgage insurers has just gotten larger.
National Mortgage Insurance Co., a new company based in Emeryville, Calif., announced Thursday that Fannie and Freddie have granted it approval as an eligible mortgage insurer. The government-sponsored entities plan to begin accepting loans insured by National MI in the second quarter.
National MI is a subsidiary of NMI Holdings, an insurer from Wisconsin. In April NMI raised $550 million to launch National MI.
National MI has applied for licensing in all 50 states and has so far been approved by 24, it said in the news release.
National MI will be one of seven private insurers approved by Fannie and Freddie, alongside Radian, MGIC, UGI, Essent, CMG and Genworth, a Fannie spokesman said. Genworth announced on Wednesday that it would separate its mortgage insurance unit from the rest of the company to reduce the risk of default.
These insurers could soon benefit from the Federal Housing Finance Agency's efforts to reduce Fannie and Freddie's mortgage credit risk. Last February, FHFA Director Edward DeMarco proposed to reduce Fannie and Freddie's exposure by expanding their use of private mortgage insurers, either through "deeper" coverage on individual loans or pool-level policies. Fannie and Freddie require credit support for conventional loans with loan-to-value ratios of 80% or higher.
National MI is led by founder Bradley Shuster and Chief Financial Officer Jay Sherwood. Shuster is the former president of the PMI Group's international mortgage insurance and strategic investments.
PMI was seized by Arizona state regulators in 2011. In August, Arizona regulators sued National MI's parent, NMI Holdings, and at least six of its employees, alleging that they stole information from PMI. The lawsuit "is not impeding National MI from moving forward," a company spokeswoman said.