Mortgage insurer MGIC Investment Corp is looking at a huge write-off of a $1.03  billion investment in Credit-Based Asset Servicing and Securitization LLC (C-BASS). The company reported yesterday that its investment in C-BASS has become materially impaired, meaning the value has dropped very significantly.

MGIC has a direct investment in C-BASS of $516 million. MGIC is also in the process of acquiring Radian Group Inc., which also has an investment of $518 million in C-BASS.  C-BASS was created in 1996 by MGIC and some other companies, but has more recently been owned by C-BASS management, MGIC, and Radian.

This development is said to be related to the problems in subprime lending, which began having serious problems in February. The problems have been escalating since then, and the number of mortgage lenders filing bankruptcy or going out of business seems to be rising.