Mortgage Insurers See Borrower Defaults Jump

Mortgage insurers saw defaults on mortgages they insure soar in September, as the number of applications received by insurers tanked. The data is the latest to show that the nation’s housing mess has yet to correct itself. According to the Mortgage Insurance Companies of America, a trade organization, 76,776 primary insurance defaults were recorded among member companies in September, up from 72,818 one month earlier and well above the 54,699 recorded in Sept. 2007.

The jump in defaults is significant for two reasons: first, MICA’s data no longer includes data from Triad Guaranty Insurance Corp., which has put its portfolio into runoff; secondly, it’s not as if Sept. 2007 was the housing market’s heyday. The number of defaults recorded in September is the highest this year.

Against this sort of rising tide, the number of cures actually fell from 41,783 in August to 41,400 in Sept., pushing the cure rate to just 53.9 percent, it’s lowest level since a 53.7 percent cure rate was recorded in April, and the fifth sub-60 percent cure rate recorded in the past six months.

As we’ve discussed in prior coverage and research, monthly cure rates below 60 percent were rarely, if ever, recorded by mortgage insurers prior to the emergence of the current housing crisis.

Despite the defaults, MICA drew focus to a total of $801,346.9 million in primary insurance in force for the month of Sept., roughly flat with the previous two months; against this positive sort of stability, however, the number of applications received for new MI tanked, as did the about of primary insurance written.

MICA members reported that just 62,209 applications were received in Sept., below the 65,546 received in August and well below the 168,073 in applications form one year ago (although, recall, the year-ago numbers included Triad). Primary new insurance fell below $10 billion for the first time since … well, pretty much since ever: in Sept., members reported just $8.2 billion in new insurance written.

MICA’s data covers reports from AIG United Guaranty, Genworth Mortgage Insurance Corp., Mortgage Guaranty Insurance Corp., PMI Mortgage Insurance Co., and Republic Mortgage Insurance Co.

Read the full data report here >>

For more information, visit http://www.privatemi.com.

Write to Paul Jackson at paul.jackson@housingwire.com.