Insured Defaults Rise as Cure Rate Hits Historic Low
Defaults on mortgages backed by the nation's mortgage largest mortgage insurers reached a new high-water mark during January, according to data released Friday by the Mortgage Insurance Companies of America. Insured defaults reached 68,950 during the month, an increase of 31 percent from year-ago levels. Cure rates have been extremely problematic for primary mortgage insurers as the housing slump has progressed, as a growing number of troubled borrowers are finding their options in loss mitigiation limited -- or without a viable option at all. MICA reported that January's cure rate fell to 51.4 percent, the lowest monthly cure rate on record. The organization's data is available back into the mid 1990s, although monthly data is only avaliable beginning December 1999. Earlier research by Housing Wire found that cure rates below 60 percent are rarely, if ever, recorded. January marks the second straight month of a sub-60 percent cure rate; the industry's monthly cure rate has now been below 60 percent for three of the past four months -- the first time that's happened since the industry trade group began reporting monthly data on borrower defaults. Prior to 2007, the mortgage insurance industry had never recorded a cure rate below 79 percent. Last year, insurers reported an annual cure rate of just 66 percent. Insurers have been pulling back from underwriting new policies, as a result. The PMI Group, Inc. said earlier in February that it would require borrowers to put at least 3 percent equity into any mortgage where PMI was providing primary mortgage insurance on the loan. Thirty-two percent of the company's 2007 new business represented loans with an LTV over 97 percent, it said. For more information, visit http://www.privatemi.com.