California regulators were granted an April 6th court hearing by the Superior Court regarding the liquidation of troubled TMIC Insurance Co., which has been operating under state conservatorship for two years.

Carey Fletcher, a spokeswoman for California's insurance commissioner, said Monday the state still hopes an alternative to liquidation can be worked out before the court hearing.The problems of TMIC, formerly known as Ticor Mortgage Insurance Co., stem

from the $1.4 billion default of Equity Programs Investment Corp., or EPIC, a Virginia-based land syndicator that had acquired 20,000 properties for tax- shelters partnerships.

TMIC, one of the nation's five largest mortgage insurers, had insured about 45 percent of the EPIC properties.

TMIC's problems have steadily deepened over the past two years, and state Insurance Commissioner Roxani Gillespie said a new actuarial study completed last week indicated TMIC's liabilities exceeded assets by $169 million as of Dec. 31.

That compares with a negative $57 million a year earlier.

Making matters worse, the study estimated that TMIC faces a future gap of $254 million between liabilities and assets.

However, Ms. Fletcher said the insurance commissioner remains hopeful an alternative to liquidation can be worked out before an April 6 court hearing set for the state's request.

This gives them time to see if something else can be put together, Ms. Fletcher said. One is always hopeful.

Further talks are planned between state regulators, other mortgage insurers, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac).

State regulators met last Monday in Chicago with representatives of 13 major mortgage insurers, Fannie Mae and Freddie Mac in an effort to find a way to keep TMIC's mortgage insurance in force or establish a new company to assume the insurance.

The biggest effect of a TMIC liquidation would be felt by Fannie Mae and Freddie Mac. The two agencies bought TMIC-insured mortgages, then sold them as elements of securities on which the agencies guaranteed interest and principal payments.

Last week, Fannie Mae said about 1.5 percent, or $3 billion, of the conventional mortgage loans in its portfolio and its outstanding mortgage- backed securities are insured by TMIC. The amount includes those related to EPIC, Fannie Mae said.

Late last month, state regulators halted payments on 6,600 TMIC properties on which $485 million in principal remained due. Deeds to those properties have been offered to lenders in lieu of foreclosure.

In all, TMIC has issued mortgage insurance on $1.6 billion in loans.

Because it typically insures about 25 percent of the value of a mortgage, TMIC has a risk of about $400 million.