Private Mortgage Insurance Company MGIC posts loss on C-Bass investment

MGIC Investment Corp. (MTG) Wednesday reported a third-quarter net loss of $372.5 million, or $4.60 a share, compared with net income of $130 million, or $1.55 a share the previous year. The company said its quarterly results included a $303 million write-down related to the impairment of its investment in Credit Based Asset Servicing and Securitization LLC, known as C-Bass, a joint venture owned by MGIC and Radian Group Inc. (RDN) Mortgage investor C-Bass was hit hard by the subprime slump and faced margin calls from its lenders. MGIC said “unless the cure rate and loss severity improves, the company does not foresee net income for the fourth quarter of 2007 and the full year 2008.” The CEO said the company is “well positioned” from a capital perspective.

MTG Daily Chart

It’s a good thing they are “well positioned” because they are going to have losses for at least another year.

Permits, Starts, Completions Plunge

On October 17, The Census Bureau released the Residential Construction Report for September.

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for September 2007.

BUILDING PERMITS

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,226,000. This is 7.3 percent below the revised August rate of 1,322,000 and is 25.9 percent below the revised September 2006 estimate of 1,654,000.

Single-family authorizations in September were at a rate of 868,000; this is 7.1 percent below the August figure of 934,000.

HOUSING STARTS

Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,191,000. This is 10.2 percent below the revised August estimate of 1,327,000 and is 30.8 percent below the revised September 2006 rate of 1,721,000.

Single-family housing starts in September were at a rate of 963,000; this is 1.7 percent below the August figure of 980,000.

HOUSING COMPLETIONS

Privately-owned housing completions in September were at a seasonally adjusted annual rate of 1,391,000. This is 8.2 percent below the revised August estimate of 1,516,000 and is 31.1 percent below the revised September 2006 rate of 2,019,000.

Single-family housing completions in September were at a rate of 1,095,000; this is 11.6 percent below the August figure of 1,239,000.

The Plunge Report

The word “plunge” does seem to be all over the news. Indeed, Minyanville Professor Kevin Depew is reporting Media Usage of Words “Plunge” and “Housing” In Same Headline Reaches 14-Year High in today’s “Five Things”.

Top Ten Soaring Things

Many of you are sick (and rightfully so) of seeing the word plunge and housing tied together. So let’s talk about things that are soaring.

  1. 10) Loan defaults in the Palm Beach area topped $1 billion over six months
  2. 9) Foreclosures hit record high in metro Atlanta
  3. 8) Long term PUTs in Countrywide (CFC), MGIC (MTG), Corus Bank (CORS), Toll Brothers (TOLL), Centex (CTX), Dominion (DHOM) , Bank United (BKUNA), Pulte (PHA), Radian Group (RDN) and WCI Communities (WCI)
  4. 7) Record 10,000+ Short Sales in Southern California
  5. 6) Bay Area home foreclosures triple in September
  6. 5) Massachusetts Foreclosure Auction Announcements Up 170 Percent After First Two Quarters
  7. 4) Scheduled foreclosure auctions jumped 247 percent in Los Angeles, 168 percent in Miami and 64 percent in New York City in the third quarter compared to third-quarter 2006
  8. 3) US mortgage delinquencies soar
  9. 2) Credit card default rate soars
  10. 1) Bay Area bank-owned properties rose more than tenfold to 1,017 compared with 95 at the same time last year.

You have to admit a 10-fold rise in bank REOs is rather impressive.

Bonus Dozen

Here are two more things that are soaring in graphical form courtesy of Credit Bubble Stocks.

Downey Financial Delinquent Loans

Downey Financial Nonperforming Assets

If Paulson is worried about bank balance sheets now (please see Paulson Media Blitz on Mortgage Backed Securities for a discussion) he and the Fed are likely to be in panic mode when consumer spending plunges and commercial real estate collapses in its wake. The Fed’s worst nightmare is rising REOs, collapsing real estate values, and falling demand for credit. All three are going to happen.

Mike Shedlock / Mish/