Genworth eases some rules for homebuyers’ coverage

Steadier housing markets across much of the country are leading Genworth Financial Inc. to ease some rules for writing the coverage buyers need to get into a home.

In nearly 200 markets in 45 states, Henrico County-based Genworth has gone back to issuing mortgage insurance for homebuyers making 5 percent down payments, the company disclosed. Mortgage insurance, which homebuyers pay for, repays banks if homeowners stop paying their mortgage.

Genworth had been selling the insurance only to people making down payments of 10 percent of more.

Meanwhile, Chairman and CEO Michael D. Fraizer said yesterday that the insurance giant will be putting $2.5 billion to $3.5 billion in cash back into a now-steadier market for corporate bonds. "That's a lot of earning power," Fraizer said.

Genworth earns roughly 0.25 percent on the money now, but as it moves those funds into the bond market over the next several months, it could average returns of 5 percent.

Genworth's large cash holdings are a result of a capital-building program it started as financial markets melted last year. The latest step in that program took place during the third quarter, when it raised $622 million through one of the largest sales of stock to hit Wall Street recently.

At the same time it beefed up its balance sheet, Genworth moved to cut losses in its mortgage insurance operation, shrugging off Wall Street calls to bail from the business.

Genworth's stepped-up effort to help homeowners stay in their homes, mainly by negotiating refinancings, saved the company $224 million in payments it would otherwise have had to make to lenders just in the past three months.

Genworth expects that by year's end, the program will have saved $775 million to $825 million.

Genworth sees prospects for growth in mortgage insurance.

Recent insurance-premium rate increases, tighter standards and a decline in average home-sales prices have put its mortgage insurance business on better footing, allowing a return to what had long been the normal pattern of issuing coverage for people with 5 percent down payments in many places.

"We have seen markets stabilize," Fraizer said.

The claims coming in now are mainly a product of still-high unemployment, as opposed to the flood earlier from subprime loans that often exceeded the value of the homes they were financing, he said.

Contact David Ress at (804) 649-6051 or dress @timesdispatch.com.