MBIA Seeks To Exclude Coverage Of More Mortgages: CFO
By Lavonne Kuykendall, Of DOW JONES NEWSWIRES
-(Dow Jones)- With no end in sight to losses in MBIA Inc.'s (MBI) business of
insuring securities backed by mortgages, the company is increasing its efforts
to get lenders to make good on loans it says should be excluded from coverage.
MBIA said during an earnings conference call Tuesday morning it is owed more
than $1.2 billion on its second-mortgage coverage alone, which could ease some
financial stress - if it can collect the money.
Investors weren't impressed, though, and bid down MBIA's share price by 15.8%
recently, to $4.04, after MBIA reported a third-quarter loss of $727.8 million,
or $3.50 a share, after the close of trading Monday. "We are not out of the
woods at this point," C. Edward Chaplin, MBIA's president and chief financial
officer, said during the call. "But at least we have a better appreciation of
the total area of the woods that we are in."
The company said it would owe more in claims than previously expected on its
troubled portfolio of second-lien mortgages and said it had transferred
servicing of approximately $3.7 billion of troubled loans to a new servicer in
hopes of improving the loans' performance.
In addition, it's redoubling its efforts to examine individual loans for those
that don't belong in the securities and is pressing the lenders to replace the
loans or reimburse MBIA, Chaplin said.
So far, MBIA has identified around $1.2 billion in second-mortgage loans that
it wants lenders to replace and expects its ultimate recovery to be "very much
greater," Chaplin said. The company could be in for a fight, as lenders have not
readily agreed to make good on the loans. Chaplin estimated it could take two or
three years to play out, but that the lenders have the funds to cover the loans
MBIA has identified so far.
-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141;
lavonne.kuykendall@dowjones.com
(END) Dow Jones Newswires
11-10-091110ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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