Troubled Freddie Mac and Fannie Mae send Radian shares to plummet

If the U.S. is not facing enough of a property crisis as it is, now shares in Radian Group Inc, the mortgage insurer plunged on Wednesday after more concerns about the mortgage giants Freddie Mac and Fannie Mae.

The shares were down 41 cents, or 10.3 percent, to $3.56 in trading in midday. This year shares are down by 66 percent.

Investors in Fannie Mae and Freddie Mac are nervous that the government-chartered mortgage companies will need a cash injection from the Treasury which could result in the shareholders equity being wiped out.

Freddie and Fannies trouble is just another huge knock on the already declining mortgage insurance industry as it could affect the number of mortgages banks are willing to originate. So of course the fewer loans that originates the fewer loans there are to insure.

Source: Forbes