California regulators expect to seek court permission today to liquidate TMIC Insurance, the all but moribund mortgage insurance unit of Ticor, a major Los Angeles-based financial services company.
Insurance Commissioner Roxani M. Gillespie said Thursday that the court papers will be filed today and that a court hearing on the request has been set for April 6 in Los Angeles County Superior Court. The hearing will explore alternatives to liquidating the struggling company. She said she has none to offer.
TMIC's financial condition has deteriorated sharply since the state stepped in nearly two years ago in an effort to rehabilitate the company that was dragged down by a real estate investment scheme that went bankrupt in 1985.
Just last month, Gillespie suspended payment of further claims, saying that TMIC no longer has enough assets to cover its obligations. She also ordered a fresh assessment to determine just how far in the hole the mortgage insurer had dropped.
FOR THE RECORD
Los Angeles Times Saturday February 20, 1988 Home Edition Business Part 4 Page 2 Column 4 Financial Desk 1 inches; 29 words Type of Material: Correction
TMIC Insurance's liabilities exceeded its assets by $169 million at the end of last year, up from $57 million at the end of 1986. Due to an editing error, the latter figure was misstated in Friday's editions.
The results showed a severely deteriorating net worth. She said the deficit grew $57 million at the end of 1986 to $169 million at the end of last year.
That reflected a continuing loss of business as mortgage holders took advantage of lower interest rates to refinance the good loans insured by TMIC, reducing premium income at a time when the company is writing no new business.
Gillespie said TMIC is short $254 million that it needs to pay claims, and that liability excludes $95 million in claims arising from the 1985 failure of the Virginia-based real estate tax shelter scheme, Equity Programs Investment Corp., that brought on the company's fall.
Equity Programs, better known by its acronym EPIC, defaulted in August, 1985, on $1.4 billion in mortgage loans for 20,000 homes, mostly in the Southwest. TMIC insured 46% of those mortgages. Since Gillespie's suspension of claims payments, lenders reportedly have filed notice of default on the 6,600 loans TMIC insured.
Gillespie said that "a lot of conversations" about a new rehabilitation plan are continuing among the major creditors involved, including the Federal Home Loan Mortgage Corp., or Freddie Mac, and the Federal National Mortgage Assn., known as Fannie Mae. "I have asked them to submit something in writing," Gillespie said in an interview, "but I haven't received anything."
The April 6 hearing date gives creditors time "to see if they can put together a plan," she said. "We can't stay in limbo. These liabilities have to be met. You can't stay with one shoe on and one shoe off."
Ticor, a privately held company, and its title-insurance subsidiary are unaffected by TMIC's difficulties. To put distance between its failed unit and its healthy title-insurance business, the parent in 1985 renamed Ticor Mortgage Insurance Co. as TMIC Insurance.