John S. Forlines, vice president and single-family chief risk officer for Fannie Mae, has announced the suspension of Republic Mortgage Insurance Company (RMIC) and Republic Mortgage Insurance Company of North Carolina (RMIC-NC) as approved mortgage insurers. An official statement from Forlines claimed that as of Sept. 30, 2010, RMIC fell below the minimum policyholders’ position required by the state of North Carolina. Under state law, the minimum policyholders’ position is not less than one 25th of the insurer’s aggregate insured risk outstanding, excluding reinsurance ceded and including reinsurance assumed.
RMIC received waivers from this requirement from its regulator, the North Carolina Department of Insurance (NC DOI), and thereby, was temporarily allowed to continue writing new business. The recent extension of the waiver granted by NC DOI expires Aug. 31, 2011, with no indication that any further extensions will be granted under RMIC’s current circumstances. Fannie Mae believes that NC DOI will prohibit RMIC from writing any new mortgage insurance (MI) policies in North Carolina on or after Sept. 1, 2011.
In response to the North Carolina DOI’s action, Fannie Mae has announced the suspension of both RMIC and its affiliate, Republic Mortgage Insurance Company of North Carolina (RMIC-NC), as approved mortgage insurers effective immediately, as provided by Fannie Mae’s Qualified Mortgage Insurer Approval Requirements, as well as per the terms of RMIC-NC’s limited approval. Fannie Mae will no longer purchase or securitize any mortgage loan insured by RMIC or RMIC-NC dated before May 1, 2011 or on or after Sept. 1, 2011.
Only RMIC- and RMIC-NC-insured mortgage loans that have note dates during the intervening period are eligible. This eligibility window is intended to provide a reasonable period for pipeline clearance. In addition, eligible mortgage loans must have pool issue dates on or before Nov. 1 for MBS, or have delivery dates on or before Nov. 30 for whole loans. This includes mortgage loans having either borrower-paid or lender-paid MI from RMIC or RMIC-NC.
Fannie Mae will continue to accept delivery of certain RMIC- and RMIC-NC-insured refinanced loans (RefiPlus, DU RefiPlus, and modified or refinanced balloons) for both mortgage-backed securities (MBS) and whole loan purchase, but only if continuation of the coverage is effected through modification of the existing mortgage insurance certificate.