Radian (RDN), PMI (PMI), MGIC Investment (MTG) Jump on QRM Deal

Shares of Radian Group, Inc. (NYSE:RDN), PMI Group, Inc. (NYSE:PMI) and MGIC Investment Corp. (NYSE:MTG) all finished higher Wednesday on news they had reached a deal with banking regulators on a definition of what a "qualified residential mortgage," or QRM, is.

Now a QRM will be defined as a loan which includes a 20 percent down payment on a loan considered less risky.

The significance of the agreement, which will still have to be agreed to by SEC, Federal Reserve, and FHFA, along with the FDIC and Office of the Comptroller, which have already approved of the deal, will be that those adhering to the new rules would be exempt from the Dodd-Frank rules, which require a bank to keep a minimum of 5 percent of a loan's risk on the balance sheet before packaging and selling the rest off.

This will result in a battle because of the historical importance of low-down payment mortgages in the banking industry.

Radian closed Wednesday at $7.03, gaining $0.33, or 4.93 percent. PMI closed at $2.95, up $0.08, or 2.79 percent. MGIC closed at $8.30, increasing $0.14, or 1.72 percent.