Arizona insurance regulators have seized control of a subsidiary of PMI Group, an international private mortgage insurance company. The seizure comes as the latest development in the ongoing struggle between regulatory authorities and the insurers involved in the 2008 mortgage crisis, which was a major factor in the recent economic recession. According to the Arizona Superior Court, regulators have full control of the company and will begin refunding 50% of claims beginning this week. PMI is the second mortgage insurer to be subject to such action in the U.S.
When state regulators took control, the company’s top executives were placed on indefinite leave. Regulators will begin refunding half of the money paid by policyholders, while the other half will be deferred to the state government. The seizure comes only two weeks after regulators ordered the insurer to stop selling policies in the state. Further investigations into the matter will be conducted in the coming months.
Consumers affected by the takeover are being offered guidance in finding new mortgage policies from competing insurers that are similar to those offered by PMI. For some homeowners, this will mean higher rates, but regulators expect any increase to be minimal.
The takeover may send ripples to Congress, which is currently embroiled in debate over what to do about the state of the nation’s housing and insurance systems. How the takeover will ultimately affect the industry is unclear.