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US insured mortgage defaults up 37% in March

US insured mortgage defaults up 37% in March
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First Published: Thu, May 01 2008. 12 41 AM IST
Updated: Thu, May 01 2008. 12 41 AM IST
Reuters
New York: Defaults on privately insured US mortgages rose 37.2% in March, as a growing number of homeowners failed to keep up with loan payments.
The Mortgage Insurance Cos of America said on Wednesday that 58,131 insured borrowers were at least 60 days late on payments in March. That is up from 42,362 a year earlier, but down 4.6 percent from February’s 60,911.
The March figures marked the first time in four straight months defaults had not exceeded 60,000.
The number of mortgage holders who are late on payments is key because this is often a precursor to foreclosure.
Private mortgage insurance lets people buy homes with down payments of less than 20% and guarantees lenders will be repaid even if borrowers default.
Lenders nationwide have been tightening their underwriting standards, forcing prospective homeowners either to put more money down, to find new means to borrow, to buy less costly homes or defer purchases altogether.
Last month, Radian Group Inc, a large mortgage insurer that is not included in the MICA statistics, said its main unit would no longer insure home loans where borrowers cannot document income or assets, citing the loans’ “poor performance.”
Such loans are often known as “liar loans” because they can allow borrowers to overstate their financial health.
The number of traditional mortgage insurance policies issued was 138,782 in March, up 2.5% from a year earlier, Washington, DC-based MICA said.
The amount written was $20.3 billion, up 27.7% from a year earlier.
The latest data shows that the United States is still in the grips of the mortgage crisis that has been rocking financial markets since last year, but MICA said there are signs more homeowners are getting back on track.
“In the past month, cures -- or borrowers once headed for foreclosure but now back on track -- have risen slightly,” said Suzanne Hutchinson, an executive vice president at the trade group.
In March, there were 50,585 cures reported, a 5.5% increase from February and 42.6% over the number of cures in January, when defaults rose to a record high.
MICA compiles its data from information provided by six of the seven largest US mortgage insurance providers: American International Group Inc’s United Guaranty Corp, Genworth Financial Inc, MGIC Investment Corp, Old Republic International Corp, PMI Group Inc and Triad Guaranty Inc.
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First Published: Thu, May 01 2008. 12 41 AM IST