CORRECTING and REPLACING PMI U.S. Market Risk Index Shows Hot Markets Continue to Cool, but Strong Economies Offset Price Deceleration

WALNUT CREEK, Calif.--(BUSINESS WIRE)--June 27, 2006--Please replace the release with the following corrected version due to corrections in the table.

The corrected release reads:

PMI U.S. MARKET RISK INDEX SHOWS HOT MARKETS CONTINUE TO COOL, BUT STRONG ECONOMIES OFFSET PRICE DECELERATION

Many of the nation's hottest housing markets are cooling, PMI Mortgage Insurance Co., the primary subsidiary of The PMI Group, Inc. (NYSE:PMI), reported today, but the continuing strength of the economy is balancing the risk of price declines. According to the PMI U.S. Market Risk Index, the average risk score for the nation's 50 largest metropolitan statistical areas (MSAs) increased one point from last quarter, with 25 MSAs seeing increases and 20 seeing decreases. A podcast summarizing the report is available at http://qrelease.com/podcast/pmi/.

"This quarter's data signals that in many areas the expansion of the housing balloon has slowed substantially," said Mark Milner, Chief Risk Officer of PMI Mortgage Insurance Co. "The Risk Index also shows that slowing price appreciation is balanced by underlying economic strength. In the absence of an unexpected economic shock, this makes a gradual cooling of the market the most likely outcome."

The U.S. Market Risk Index shows 13 MSAs continue to have risk scores above 500, meaning they face a 50 percent or greater risk of home price declines in the next two years. The average score for the riskiest markets was 573.

The average score for the top 50 MSAs increased to 288, a 70-point increase from a year ago. The biggest gains this quarter were not among MSAs at the top of the list but those in the middle. Newark, NJ and Miami, FL lead the pack with increases of 32 points each, bringing their Risk Index scores to 459 and 359, respectively.

While appreciation remains strong by historical standards, 34 markets experienced decelerating home prices, led by Las Vegas, NV where appreciation slowed to 14.5 percent, down from 30.1 percent a year ago. "We'd reached a point where prices had gotten too far away from economic fundamentals," Milner explained. "A return to a more normalized appreciation climate is a natural outcome." While appreciation is slowing in many markets, it is still positive in all of the nation's 50 largest markets. In half of the largest markets appreciation remains in the double digits.

In addition to the PMI U.S. Market Risk Index showing the risk of price declines, PMI's Spring Economic and Real Estate Trends (ERET) examines continuing affordability challenges in the face of a slowing market.

Looking at historical home price appreciation, Ph.D. Economist Charles A. Calhoun simulates future house price scenarios for four metropolitan areas, showing the range of possible outcomes and the likelihood that they will occur. This research supports PMI's view that despite some near-term risk homeownership is generally a good long-term, slow and steady approach to building wealth.

A second article looks at the new 40- and 50-year mortgages and finds that they carry lower monthly payments than traditional mortgages but still help borrowers build equity and avoid payment shocks, unlike some of the more risky products such as interest only and payment option loans.

"We continue to believe traditional mortgages are the best option for homeowners to protect their financial stability and home equity," Milner said. "But with increasing affordability challenges exacerbated by rising interest rates, many families cannot buy a home without an affordability product. Forty- and 50-year mortgages help families get into homes now and offer a safer alternative to interest only loans and payment option adjustable rate mortgages by eliminating the risks related to payment shock that are built into some products. While you build equity more slowly, you still build it. And we have seen that building equity and wealth through homeownership has served a lot of people well."

According to PMI's Affordability Index, a proprietary index that is one component of the U.S. Market Risk Index, affordability decreased in more than half of the 50 largest MSAs in the first quarter of 2006 as home prices continued to outstrip incomes. Eight MSAs have Affordability Index scores below 70, a threshold below which an area is particularly vulnerable to economic shock. With a score of 59.36, Fort Lauderdale, FL is the least affordable area among the 50 largest MSAs.

Of the top 50 MSAs all but four -- Detroit, MI, Warren, MI, Milwaukee, WI, and Cleveland, OH -- saw employment growth. Las Vegas led the nation in employment growth at 6.23 percent over the past year, followed closely by Phoenix, AZ at 6.02 percent.

Other U.S. Market Risk Index trends include:

-- Risk remains concentrated along the coasts. Of the 13 highest risk MSAs, eight are located in California and five are in the Northeast. San Diego, CA remains the riskiest area with a score of 599, or a 59.9 percent chance prices will decline within two years. Sacramento, CA joined the top five for the first time with a score of 585.

-- Six markets saw year-over-year appreciation above 20 percent, led by Phoenix at 31.1 percent, followed by Orlando, Fort Lauderdale, and Miami, all in FL, at 27.7 percent, 25.7 percent, and 24.7 percent, respectively. The Pacific census division, consisting of California, Oregon, and Washington, is the fastest appreciating division.

-- Among markets with the greatest risk of price declines, four have seen appreciation drop into the single digits. San Diego saw appreciation of 7.7 percent, Boston, MA, 5.7 percent, Providence, RI, 9.5 percent, and Cambridge, MA, 5.2 percent.

-- Of the 19 markets where affordability increased slightly due to slower price growth, five were in Texas and six were in the Midwest.

A complete copy of the latest PMI Economic and Real Estate Trends report, a podcast of results, and an appendix that provides Market Risk Index data for all US MSAs is available at http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications.

San Diego-Carlsbad-San             Warren-Troy-Farmington Hills,
 Marcos, CA                   599   MI  (MSAD)                    184
Nassau-Suffolk, NY  (MSAD)    589  Orlando-Kissimmee, FL          179
Boston-Quincy, MA  (MSAD)     588  Phoenix-Mesa-Scottsdale, AZ    175
Santa Ana-Anaheim-Irvine, CA       Atlanta-Sandy Springs-
  (MSAD)                      588   Marietta, GA                  165
Sacramento-Arden-Arcade-
 Roseville, CA                585  Denver-Aurora, CO              149
Riverside-San Bernardino-
 Ontario, CA                  583  Philadelphia, PA  (MSAD)       130
Oakland-Fremont-Hayward, CA        Chicago-Naperville-Joliet, IL
 (MSAD)                       582   (MSAD)                        127
Los Angeles-Long Beach-
 Glendale, CA  (MSAD)         575  St. Louis, MO-IL               112
Providence-New Bedford-Fall        Seattle-Bellevue-Everett, WA
 River, RI-MA                 568   (MSAD)                        109
San Francisco-San Mateo-           Portland-Vancouver-Beaverton,
 Redwood City, CA  (MSAD)     560   OR-WA                         108
San Jose-Sunnyvale-Santa           Milwaukee-Waukesha-West Allis,
 Clara, CA                    559   WI                            108
Cambridge-Newton-Framingham,
 MA  (MSAD)                   537  Kansas City, MO-KS             101
Edison, NJ  (MSAD)            536  Austin-Round Rock, TX           93
New York-White Plains-Wayne,       Charlotte-Gastonia-Concord,
 NY-NJ  (MSAD)                498   NC-SC                          87
Las Vegas-Paradise, NV        481  Houston-Sugar Land-Baytown, TX  83
                                   Dallas-Plano-Irving, TX
Newark-Union, NJ-PA  (MSAD)   459   (MSAD)                         80
Fort Lauderdale-Pompano
 Beach-Deerfield Beach, FL         Nashville-Davidson-
 (M                           441   Murfreesboro, TN               71
Washington-Arlington-
 Alexandria, DC-VA-MD-WV           Fort Worth-Arlington, TX
 (MSAD)                       431   (MSAD)                         69
Miami-Miami Beach-Kendall,
 FL  (MSAD)                   359  Cleveland-Elyria-Mentor, OH     68
Minneapolis-St. Paul-
 Bloomington, MN-WI           355  Columbus, OH                    65
Detroit-Livonia-Dearborn, MI
  (MSAD)                      337  San Antonio, TX                 65
                                   Cincinnati-Middletown, OH-KY-
Baltimore-Towson, MD          307   IN                             64
Tampa-St. Petersburg-
 Clearwater, FL               294  Memphis, TN-MS-AR               61
Average                       288  Indianapolis-Carmel, IN         58
Virginia Beach-Norfolk-
 Newport News, VA-NC          278  Pittsburgh, PA                  57

The PMI Market Risk Index is not tuned to evaluate the effect of catastrophic events such as Hurricane Katrina. As a result there is no score for the New Orleans-Metairie-Kenner MSA this quarter.

About PMI's Economic & Real Estate Trends (ERET) and US Market Risk Index

The PMI Economic and Real Estate Trends (ERET) containing the US 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 of a regional decline in home prices in the nation's 50 largest metropolitan statistical areas (MSAs) and metropolitan statistical area divisions (MSADs) over the next two years. The PMI US Market Risk Index is based on the House Price Index from the Office of Federal Housing Enterprise Oversight (OFHEO), labor market statistics from the Bureau of Labor Statistics, and the PMI affordability index, which uses local median household income, home price appreciation, and the price of a conventional mortgage to calculate the local share of mortgage payment to income relative to its baseline year of 1995.

The PMI US Market Risk Index scale ranges from one to 1,000 and translates to a percentage. For example, a score of 100 indicates a 10% chance of a decline in home prices over the next two years. A higher score indicates a higher likelihood of future home price declines. The PMI Risk Index scale is linear. In other words, an increase in risk index score of 100% (for example, from 100 to 200) indicates that the risk of home price decline has doubled. Conversely, a decline in risk index score by 50% (from 100 to 50) indicates that the risk of home price decline has declined by 50%. The Affordability Index score is linear against a baseline of 100 in 1995. For example, an AI score of 85 means that the median home in that area is 15 percent less affordable than it was in 1995.

About PMI Mortgage Insurance Co.

PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE:PMI), is a leading U.S. residential mortgage insurer, licensed in all 50 states, the District of Columbia, and Puerto Rico. Private mortgage insurance expands home ownership opportunities by enabling borrowers to buy homes with down payments of less than 20% and facilitates the sale of low down payment mortgages in the mortgage capital markets. PMI is incorporated in Arizona and headquartered in Walnut Creek, CA. For more information: www.pmigroup.com.

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 and any related discussion, and statements relating to the possible gradual cooling of the U.S. housing market as well as 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, the effects of Hurricanes Katrina and Rita or other natural disasters, 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 report on Form 10-K for the year ended December 31, 2005 and Form 10-Q for the quarter ended March 31, 2006.