Mortgage Defaults Continue to Rise, MI Firms Say

A surge in residential mortgage defaults continued during October, according to a trade organization representing private mortgage insurers. More than 80,000 defaults were recorded during the month, the highest such total in at least 12 months, said the Mortgage Insurance Companies of America Monday, in its monthly report. Against 80,071 reported primary insurance defaults, the industry recorded 43,211 cures, generating a 54.0 percent cure rate for October. That total is slightly better than the 53.9 percent cure rate recorded during Sept., but below the 56.1 percent rate recorded one year ago; before the nation’s housing crisis set in, the MI industry had rarely ever recorded a cure rate below 60 percent for any given month. October’s total now means MICA members have posted sub-60 percent cure rates for 7 months this year, and the past four months in a row. MICA highlighted continued strength in the total dollar amount of insurance in force in its press statement announcing the numbers. MICA’s members reported a total of $800,880.5 million in primary insurance in force for the month of Oct.; that compares to $801,346.9 million one month earlier. Numerous individual insurers, however, have said in earnings calls with analysts that such high persistency rates tend to reflect the difficulty many insured borrowers — including troubled borrowers — are having in refinancing their way into another mortgage. While persistency remains high, new policies aren’t exactly flooding in the front door. MICA members reported that just 42,167 borrowers used private mortgage insurance to buy or refinance a home in October, down from 49,544 in Sept. and well off the 173,949 certificated issued one year earlier. Likewise, the dollar volume of primary new insurance written on newly originated conventional mortgage loans totaled $7,737.3 million in Oct., well below the $25,349.0 recorded in Oct. 2007. MICA’s statistics include data AIG United Guaranty, Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co., and Republic Mortgage Insurance Company. For more information, visit http://www.privatemi.com. Write to Paul Jackson at paul.jackson@housingwire.com.