Radian Group Inc. filed SEC Form 8-K: Creation of a Direct Financial Obligation, Entry into a Material Definitive Agreement
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On April 30, 2025, Radian Group Inc. (the “Company”) entered into a Guaranty (the “Parent Guaranty”) in favor of Everbank Bank, N.A. (“Everbank”) to guaranty the obligations of the Company’s subsidiary Radian Mortgage Capital LLC ( “RMC”) in connection with a $125 million mortgage loan repurchase facility that RMC entered into with Everbank, as more fully described below (the “Mortgage Financing Facility”). The Company expects this Mortgage Financing Facility will be used to finance RMC’s acquisition of residential mortgage loans from correspondent lenders and held by RMC for direct sale to mortgage investors or distribution in the capital markets through securitization.
RMC’s obligations under the Master Repurchase Agreement
On April 30, 2025, RMC entered into the Mortgage Financing Facility pursuant to a Master Repurchase Agreement (the “Master Repurchase Agreement”) among Everbank, RMC and the Company, pursuant to which RMC may from time to time sell to Everbank, and later repurchase, certain residential mortgage loan assets. The Master Repurchase Agreement will expire on April 29, 2026, unless the agreement is extended or terminated earlier.
The Mortgage Financing Facility is uncommitted, and Everbank is under no obligation to fund the purchase of any residential mortgage loan assets under this facility. In the event Everbank advances funds under the Mortgage Financing Facility, the amount of such advances generally will be calculated as a percentage of the unpaid principal balance or market value of the residential mortgage loan assets, which percentage will depend on the credit characteristics of the loans being purchased. The interest rate on any outstanding balance under the Master Repurchase Agreement that RMC would be required to pay to Everbank is customary for this type of transaction, and is equal to the sum of (1) a pricing spread and (2) SOFR for each business day the whole loan asset is held by Everbank until the day that the whole loan asset is repurchased by RMC.
The Master Repurchase Agreement contains provisions that provide Everbank with certain rights in the event of a decline in the market value of the purchased residential mortgage loan assets. Under these provisions, Everbank may require RMC to transfer cash or additional eligible residential mortgage loan assets with an aggregate market value that is equal to the difference between the value of the residential mortgage loan assets then subject to the Master Repurchase Agreement and a minimum threshold amount.
In addition, the Master Repurchase Agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross-defaults, insolvency and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include (in some cases after grace and cure periods) the acceleration of the amounts outstanding under the Master Repurchase Agreement and Everbank’s right to liquidate residential mortgage loan assets then subject to the Master Repurchase Agreement.
In connection with this facility, RMC is also required to pay certain customary fees to Everbank to reimburse Everbank for certain costs and expenses incurred in connection with Everbank’s management and ongoing administration of the Master Repurchase Agreement and its review of the residential mortgage loan assets subject to the Master Repurchase Agreement.
The Company’s obligations under the Parent Guaranty
The obligations of RMC under the Master Repurchase Agreement are fully guaranteed by the Company pursuant to the Parent Guaranty executed contemporaneously with the Master Repurchase Agreement. Pursuant to the Parent Guaranty, the Company is subject to negative and affirmative covenants customary for this type of financing transaction, including, among others, limitations on the incurrence of debt and restrictions on certain transactions with affiliates, payments and investments. The Parent Guaranty also contains various financial covenants with which the Company must comply, including covenants related to (a) the total adjusted capital of the Company’s primary mortgage insurance subsidiary, Radian Guaranty Inc., (b) the Company’s minimum consolidated net worth and (c) the Company’s maximum Debt-to-Total Capitalization Ratio that are generally consistent with the comparable covenants in the Company’s previously disclosed revolving credit facility, dated as of December 7, 2021, with Royal Bank of Canada, as Administrative Agent and certain other lenders. In addition, pursuant to Parent Guaranty, the Company is required to maintain a minimum of $25 million in available liquid assets.
The foregoing summary is not a complete description of the Master Repurchase Agreement or the Parent Guaranty. The descriptions of these agreements are qualified in their entirety by reference to the full text of the agreements which are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.
The Master Repurchase Agreement is attached hereto as Exhibit 10.1, and the Parent Guaranty is attached hereto as Exhibit 10.2.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by Item 2.03 contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| Exhibit 10.1 | Master Repurchase Agreement, dated April 30, 2025, among Everbank Bank N.A., a national association (“Buyer”), Radian Group Inc., a Delaware corporation (“Guarantor”) and Radian Mortgage Capital LLC, a Delaware limited liability company | |
| Exhibit 10.2 | Guaranty dated as of April 30, 2025, made by Guarantor, in favor of Buyer | |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURE
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 hereunto duly authorized.
| Date: May 5, 2025 | RADIAN GROUP INC. | |||||
| By: | /s/ Liane Browne | |||||
| Name: | Liane Browne | |||||
| Title: | Senior Vice President | |||||