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PMI Fall 2008 Risk Index Indicates Rising

Foreclosures and Unemployment Intensifying Risk of
Future Home Price Declines
Housing Affordability Continues to Improve

WALNUT CREEK, Calif., Oct. 1 /PRNewswire/ -- PMI Mortgage Insurance Co., the primary

U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Fall 2008 U.S.

Market Risk Index(SM), which shows increases in foreclosures and unemployment have

significantly heightened the risk of future home price declines. PMI's U.S. Market Risk

Index(SM) ranks the nation's 50 largest metropolitan statistical areas (MSAs) according

to the likelihood that home prices will be lower in two years.

Risk scores translate directly into an estimated percentage risk that home prices will be

lower in two years. The Fall 2008 Risk Index is based on second-quarter Office of Federal

Housing Enterprise Oversight (OFHEO) data. A complete copy of the Fall 2008 PMI

Economic and Real Estate TrendsSM (ERET) report and an appendix that provides data

for all 381 U.S. MSAs is available at: http://www.pmi-us.com/eret.

The risk of future price declines rose by more than 10 percent in 16 of the nation's top

50 MSAs, primarily in areas of the country that experienced major increases in house

prices during the housing boom. Only two MSAs -- Cambridge-Newton-Framingham, MA

and Boston-Quincy, MA -- saw their risk decrease by more than one percent. Among the

top 50 MSAs, 17 ranked in the highest risk category and 16 of those were in California,

Florida, Nevada, and Arizona.

"The risk of future home price declines increased in 94 percent of all 381 MSAs in the

country this quarter," said David Berson, PMI's Chief Economist and Strategist. "The

majority of these increases aren't statistically significant, in many cases risk increased by
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percent or more -- in some states and MSAs where foreclosures and unemployment

increased significantly."

The highest risk of future price declines remains in Fort Lauderdale-Pompano Beach-

Deerfield Beach, FL (99.5 percent), Riverside-San Bernardino-Ontario, CA (99.5

percent), Orlando-Kissimmee, FL (99.4 percent), Miami-Miami Beach-Kendall, FL (99.3

percent), Tampa-St. Petersberg-Clearwater, FL (99 percent). The areas with the lowest

risk of price declines -- less than one percent -- are in Fort Worth-Arlington, TX, Dallas-

Plano-Irving, TX, Houston-Sugar Land-Baytown, TX and Pittsburgh, PA.

Housing affordability also failed to improve this quarter, according to PMI's proprietary

Affordability Index(SM), which measures how affordable homes are today in a given MSA

relative to a baseline of 1995. An Affordability Index score exceeding 100 indicates that

homes have become more affordable while a score below 100 means they are less

affordable.

Across the nation, 40 percent of the nation's 381 MSAs showed increased affordability;

while 60 percent of all MSAs experienced declines in affordability. Affordability remains

challenged in 14 of the 17 MSAs with risk scores in the highest risk ranks. Home prices in

these areas will need to fall further in order to move back in line with incomes before

there will be meaningful reductions in risk scores.

In addition to the PMI U.S. Market Risk Index showing the risk of price declines, PMI's

Fall 2008 ERET examines major changes in the mortgage origination trends as well as

the impact foreclosures and unemployment are having on home prices in the second

quarter of 2008.

PMI Fall 2008 PMI U.S. Market Risk Index

Rank MSA Score

1 Fort Lauderdale-Pompano Beach-Deerfield Beach; FL A 99.5

1 Riverside-San Bernardino-Ontario; CA 99.5

1 Orlando-Kissimmee; FL 99.4

1 Miami-Miami Beach-Kendall; FL 99.3

1 Tampa-St. Petersburg-Clearwater; FL 99.0

1 Las Vegas-Paradise; NV 98.5

LEXINGTON 1 Los Angeles-Long Beach-Glendale; CA 98.5

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1 Santa Ana-Anaheim-Irvine; CA 97.7

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1 Jacksonville; FL 97.5

1 Phoenix-Mesa-Scottsdale; AZ 96.3

1 Sacramento-Arden-Arcade-Roseville; CA 96.3

1 San Diego-Carlsbad-San Marcos; CA 95.9

1 Oakland-Fremont-Hayward; CA 94.4

1 San Jose-Sunnyvale-Santa Clara; CA 87.1

1 Providence-New Bedford-Fall River; RI-MA 72.4

1 San Francisco-San Mateo-Redwood City; CA 71.6

3 Edison-New Brunswick; NJ 35.1

3 Nassau-Suffolk; NY 29.4

3 Washington-Arlington-Alexandria; DC-VA-MD-WV 26.0

3 Virginia Beach-Norfolk-Newport News; VA-NC 25.4

4 Detroit-Livonia-Dearborn; MI 17.8

4 Minneapolis-St. Paul-Bloomington; MN-WI 14.8

4 Newark-Union; NJ-PA 14.4

4 Baltimore-Towson; MD 10.1

5 New York-White Plains-Wayne; NY-NJ 9.8

5 Boston-Quincy; MA 7.7

5 Warren-Troy-Farmington Hills; MI 7.3

5 Portland-Vancouver-Beaverton; OR-WA 6.4

5 Chicago-Naperville-Joliet; IL 6.3

5 Atlanta-Sandy Springs-Marietta; GA 3.5

5 Seattle-Bellevue-Everett; WA 2.3

5 Philadelphia; PA 2.1

5 Cambridge-Newton-Framingham; MA 1.6

5 Nashville-Davidson-Murfreesboro-Franklin; TN 1.6

5 Cleveland-Elyria-Mentor; OH 1.1

5 St. Louis, MO-IL <1

5 Milwaukee-Waukesha-West Allis; WI <1

5 Charlotte-Gastonia-Concord; NC-SC <1

5 Cincinnati-Middletown; OH-KY-IN <1

5 Denver-Aurora; CO <1

5 Columbus; OH <1

5 Austin-Round Rock; TX <1

LEXINGTON 5 Kansas City; MO-KS <1

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5 Indianapolis-Carmel; IN <1

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5 Memphis, TN-MS-AR <1

5 San Antonio; TX <1

Pittsburgh; PA <1

5 Houston-Sugar Land-Baytown; TX <1

5 Dallas-Plano-Irving; TX <1

5 Fort Worth-Arlington; TX <1

About PMI's Economic & Real Estate Trends(SM) (ERET) and U.S. Market Risk Index(SM)

The PMI Economic and Real Estate Trends (ERET) containing the U.S. Market Risk Index

is published quarterly by PMI Mortgage Insurance Co., a subsidiary of The PMI Group,

Inc. (NYSE: PMI). The Risk Index is a proprietary statistical model that measures

geographic house price risk by predicting the probability that home prices in the nation's

381 largest metropolitan statistical areas (MSAs) and metropolitan statistical area

divisions (MSADs) (as measured by the House Price Index from the Office of Federal

Housing Enterprise Oversight (OFHEO)) will be lower in two years. The PMI U.S. Market

Risk Index is based on data including the OFHEO House Price Index, labor market

statistics from the Bureau of Labor Statistics, and the PMI Affordability Index, which uses

local per capita household income, home price appreciation, and a blended mortgage

rate to calculate the local share of mortgage payment to income relative to its baseline

year of 1995. The PMI U.S. Market Risk Index scale ranges from one to 100 and

translates to a percentage. For example, a score of 50 indicates a 50 percent chance that

home prices will be lower in two years.

About PMI Mortgage Insurance Co.

PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc. (NYSE: PMI),

provides residential mortgage insurance to mortgage lenders, capital market

participants, and investors throughout the United States. PMI US is incorporated in

Arizona, headquartered in Walnut Creek, CA, and licensed in all 50 states, the District of

Columbia, Puerto Rico, Guam, and the Virgin Islands. By mitigating default risk,

residential mortgage insurance expands home ownership opportunities and assists

financial institutions in reducing the capital they are required to hold against low down

payment mortgages. PMI US is rated A+ by Standard and Poor's, Aa2 by Moody's, and A
LEXINGTON + by Fitch. For more information: http://www.pmi-us.com.
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Cautionary Statement: Statements in this press release that are not historical facts or

that relate to future plans, events or performance are 'forward-looking' statements

within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-

looking statements include, but are not limited to, PMI's U.S. Market Risk Index,

Affordability Index, and any related discussion, and statements relating to future

economic and housing market conditions. Forward-looking statements are subject to a

number of risks and uncertainties including, but not limited to, the following factors:

changes in economic conditions, economic recession or slowdowns, adverse changes in

consumer confidence, declining housing values, higher unemployment, deteriorating

borrower credit, changes in interest rates, or a combination of these factors. Readers are

cautioned that any statements with respect to future economic and housing market

conditions are based upon current economic conditions and, therefore, are inherently

uncertain and highly subject to the changes in the factors enumerated above. Other risk

and uncertainties are discussed in the Company's filings with the Securities and

Exchange Commission, including our reports on Form 10-K for the year ended December

31, 2007 and Form 10-Q's for the quarters ended March 31, 2008 and June 30, 2008.
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research SOURCE PMI Mortgage Insurance Co.

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