On November 24, PMI Group Incorporated entered into bankruptcy filing after the mortgage insurer lost in the court case to undo the takeover by the Arizona regulators. The mortgage and insurance company that is based in Walnut Creek, California, listed its assets of $225 million and debts of $736 million in the Chapter 11 bankruptcy filing petition that was filed in the U.S. Bankruptcy Court in Wilmington, Delaware.
The Arizona Director of Insurance took control of the main unit of the PMI group last month, while directing claims to be paid at $.50 on the dollar because of huge losses on mortgage defaults that drained the company’s finances.
The Arizona regulators action and seeking receivership of MIC, has forced the PMI group into filing bankruptcy in order to maximize its value of the bankruptcy estate and the creditors. The Arizona Department of Insurance had previously told PMI to stop sales of any new policies and to stop paying interest payments on the $285 million of surplus notes.
Prior to the bankruptcy filing, the PMI Group insured mortgages, paying the lenders after a homeowner defaulted and a foreclosure failed to recover enough to pay the mortgage. The company has continued to lose money since the beginning of the real estate slump starting back in 2007. According to S&P/case Shiller index, home prices have dropped 31% since their peak in 2006.