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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

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majority of these increases aren't statistically significant, in many cases risk increased by less than ten percent, but risk did increase by a significant amount -- as much as 30

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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 BeachDeerfield 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, DallasPlano-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

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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

1

Los Angeles-Long Beach-Glendale; CA

98.5

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

5

Kansas City; MO-KS

<1

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

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payment mortgages. PMI US is rated A+ by Standard and Poor's, Aa2 by Moody's, and A + 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 forwardlooking 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

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

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