Prior law required mortgage insurers to automatically stop transacting new business, if they failed to meet statutorily prescribed capital levels
PMI Mortgage Insurance (PMI) has stated that the enactment of California Senate Bill 291, could provide regulatory relief to PMI and other mortgage insurers, as well as support the recovery of housing markets in California and nationwide.
The measure is similar to legislation enacted by Arizona last month and North Carolina in July 2009.
The new law, which becomes effective on January 1, 2010, grants the insurance commissioner discretion to permit a mortgage guaranty insurer to continue to transact new business, if its capital falls below statutorily prescribed levels. Prior law required mortgage insurers to automatically stop transacting new business, if they failed to meet such statutorily prescribed capital levels.
This change provides the insurance commissioner added flexibility in assessing the strength of mortgage guaranty insurers that operate in California. Also, it aligns California with similar reforms recently enacted in other states that have mortgage guaranty statutes, including Arizona, Wisconsin and North Carolina.