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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 6, 1998
THE PMI GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13664 94-3199675
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
601 MONTGOMERY STREET, SAN FRANCISCO, CALIFORNIA 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (415) 788-7878
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On October 6, 1998, it was announced that the House approved an
appropriations bill (H.R. 4194) for the Veteran Affairs ("VA") and Department of
Housing and Urban Development ("HUD") with provisions that would increase the
maximum individual loan amount that the Federal Housing Association ("FHA") can
insure to $197,620 and simplify the downpayment formula. Currently, the maximum
individual loan amount that the FHA can insure is $170,362. The streamlined
downpayment formula for FHA loans would eliminate tiered minimum cash investment
requirements and establish maximum loan-to-values based on loan size and closing
costs, making FHA insurance more competitive with private mortgage insurance in
areas with higher home prices.
The appropriations bill would also amend the charter for the Federal Home
Loan Mortgage Corporation ("Freddie Mac") to allow it to use any method of
default loss protection that is financially equal or superior, on an individual
or pooled basis, to the protection provided by private mortgage insurance
companies, provided that, if the Director of the Office of Federal Housing
Enterprise Oversight subsequently finds that such default loss protection
determined by Freddie Mac does not provide such equal or superior protection,
Freddie Mac shall provide such additional default loss protection for such
mortgage, as approved by the Director of the Office of Federal Housing
Enterprise Oversight, necessary to provide such equal or superior protection.
Currently, Freddie Mac can purchase loans with down payments of less than 20%,
only if the loans are insured or use other limited methods to protect against
default.
The TPG Group, Inc. ("Company") conducts its residential mortgage insurance
business through its wholly-owned subsidiaries, including PMI Mortgage Insurance
Co. ("PMI"). Private mortgage insurers, including PMI, compete directly with
federal and state governmental and quasi-governmental agencies, principally the
FHA and, to a lesser degree, the VA. Although management believes that it is
too early to ascertain the impact of any final FHA provisions included in
appropriations bill H.R. 4194, any change in legislation which affects the
ability of FHA, Freddie Mac, or the VA to offer a substitute for mortgage
insurance or increase their statutory lending limits or other expansion of
eligibility for the FHA and VA would likely have an adverse affect on the
competitive position of PMI and consequently could materially and adversely
affect the Company's financial condition and results of operations. Management
is in the process of assessing the impact of such potential changes in
legislation.
Item 7. Financial statements, Pro Forma Financial Information and Exhibits
None
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The PMI Group, Inc.
(Registrant)
October 8, 1998 By: /s/ John M. Lorenzen, Jr.
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John M. Lorenzen, Jr.
Executive Vice President,
Chief Financial Officer
