Insured Defaults Up 37 Percent in March

Borrowers with mortgage insurance fell more than 60 days behind on their mortgage payments at an increased pace in March, with the number of primary insurance defaults up 37 percent last month relative to year-ago numbers. The Mortgage Insurance Companies of America, a trade group comprised of most of the major private mortgage insurers, said earlier this week that 58,131 defaults were recorded in March, up from 42,362 one year earlier. The number of defaults has fallen steadily from January’s high-water mark of 68,950, although industry experts say such an early-year trend is common. In 2007, the number primary insurance defaults fell 19.3 percent between January and March; this year, the number of defaults has fallen 15.9 percent since January. MICA does not seasonally-adjust its data. Cure rates have also improved steadily from January’s nadir of 51.4 percent rate, registering 87 percent in March. Nonetheless, the cure rate was still below the 92.3 percent recorded in March 2007; cure rates fell significantly after March of last year, and helped make 2007 the worst year on record for the number of cures relative to primary insurance defaults. Application activity dropped 16.3 percent from year-ago levels during March, with MICA members reporting 160,139 applications received during the month. “In the past month, cures – or borrowers once headed for foreclosure but now back on-track – have risen slightly, while at the same time there was a slight decrease in the number of new defaults due to seasonal variations,” said Suzanne C. Hutchinson, executive vice president of MICA. She also suggested that an increase in the raw number of cures — from 39,083 in March 2007 to 50,585 during the past month — was evidence that insurers were helping troubled borrowers maintain their homes. Experts that spoke with HW recommended caution against concluding much from the raw numbers. “Raw numbers aren’t as effective for trending,” said one analyst that spoke with HW. “Insurance in force has increased pretty dramatically from last year, so there are more loans in general to work with.” We’ll take that to mean that paying attention to the cure rate will be critical insight going forward. And on that front, our sources at various MI providers have been hopeful: 87 percent is a pretty good ratio. Given the slide that took place in cures after March of last year, however, what happens next is anyone’s guess. For more information, visit

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