Mortgage cos. reveal damage from housing crisis

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Investors bid up shares of mortgage lenders and insurers despite billions in losses from a sustained housing downturn in the U.S.

Shares of bond insurer MBIA Inc., and mortgage insurers PMI Group Inc. and Radian Group Inc., all rose Monday, though shares of lender IndyMac Bancorp Inc. tumbled nearly 11 percent after warning of a rough year ahead.

The Pasadena, Calif.-based lender lost $184.2 million, or $2.27 per share, during the first quarter. First-quarter losses included credit costs and losses of $249 million tied to a decline in the value of mortgage-backed bonds.

Mortgage lenders and insurers have been stung since the middle of 2007 by a deep slump in home sales, plunging home prices and a spike in mortgage defaults.

Credit standards have stiffened significantly because of rising defaults, meaning meager volume in the industry compared with the anything-goes housing boom that began around 2001. Mortgage insurers have been paying out more claims to cover a wave of defaults, while bond insurers have been forced to cut the value of debt backed by troubled mortgages.

Bond insurer MBIA Inc. posted a $2.41 billion loss, or $13.03 per share, during the first quarter because of deterioration in the credit markets. MBIA, which in recent months has been stung by the potential for spike in claims on bonds backed by mortgages, was forced to take $3.58 billion in write-downs on the derivative contracts its held during the first quarter.

MBIA said those unrealized losses do not reflect actual or anticipated losses at the company. MBIA, however, must mark the derivatives holdings at current market values.

That and a decline in new business led to the loss.

Yet MBIA shares rose 42 cents, or 4.5 percent, to $9.85.

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