Insured Defaults Rise 38 Percent in February

Borrowers falling more than 60 days behind on their mortgages continued to rise when compared to year-ago levels in February, rising 38 percent to 60,911 for the month, according to statistics released Monday by the Mortgage Insurance Companies of America.

February’s default activity did drop 11 percent compared to January’s recorded 68,950, however, a trend that industry experts that spoke with HW attributed to seasonality — last year, for example, the monthly drop in defaults between January and February was just over 16 percent. MICA, an industry trade association for mortgage insurers, does not adjust its monthly data for seasonality.

A similar monthly surge in cures helped improve the monthly cure rate to 78.7 percent in February — the first time the ratio of cures to borrower defaults had reached above the 70 percent mark since last April. MICA reported that 47,933 loans had been cured in April, up from 35,468 in January.

Low cure rates have plagued industry participants as the housing crisis has continued unabated, forcing more borrowers into default and generating substantial losses for some of the industry’s largest insurers. And while the monthly data is highly variable, some industry participants expressed hope.

“Maybe this is the start of an improvement in cure rates,” said one source, a representative at a large mortgage insurer. “Part of me thinks it’s a blip, but one can always hope that we’re getting some traction there.”

One large mortgage insurer, PMI Mortgage Insurance Co., isn’t waiting: it said last week that it had formed its own foreclosure prevention team, as part of an effort to work more directly with servicers in order to manage its insured risk.

Both applications and new policies underwritten during the month of February fell, as major insurers have taken steps recently to tighten eligibility criteria for mortgage insurance. Last week, Radian Guaranty, Inc. said it would completely eliminate new insurance for all stated-income and stated-asset morgages.

MICA reported that he number of borrowers using private mortgage insurance in January was 127,338, 11.3 percent lower than the December total of 143,602. Applications fell as well, with the number of apps received in January by MICA members at 138,679, 10.3 percent less than the 154,637 received in December.

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