Mortgage insurance defaults increased for the sixth straight month to the highest level on record. The volume of new business, however, was mixed compared to the prior month and prior year.
During January, 127,338 policies were written for $22.2 billion, the Mortgage Insurance Companies of America reported today. Business fell from 143,602 policies for $25.8 billion in December but was higher than the 108,980 policies written for $16.1 billion in January 2007.
Last month's activity included 125,200 traditional policies for $21.7 billion and 2,138 bulk policies for $3.0 billion, the report said.
In its recent downgrade of Mortgage Guaranty Insurance Corp., PMI Mortgage Insurance Co. and Radian Guaranty Inc., Fitch Ratings indicated much of the subprime risk faced by the companies was acquired through bulk and modified pool business lines.
Applications for new policies during the latest month were 138,679, falling from 154,637 in December but better than 112,942 in January 2007.
Mortgage insurers had a total of $832.7 billion primary insurance in force on Jan. 31, the trade group noted.
Primary insurance defaults in January numbered 68,950, climbing for the sixth consecutive month to the highest level on record based on MICA data since 1989. Defaults were 64,384 in December and 52,528 a year earlier.
In its downgrade report, Fitch explained that declining loan performance has now spread from subprime loans to exotic products. While a majority of the mortgage insurance industry's policies in force are against conforming mortgages, the sector still has material exposure to nonprime loans with layered risks.
"A number of the major players in the industry will need to raise significant additional equity in the near future or risk having their ratings downgraded," Fitch stated.
In response to market turmoil, MGIC and PMI both recently tightened loan-to-values for loans they will insure.
Primary insurance cures were 35,468 last month, up from 34,813 during December and 31,616 in January 2007, today's report indicated.
MICA utilizes data submitted by members including AIG United Guaranty, Genworth Mortgage Insurance Corp., MGIC, PMI, Republic Mortgage Insurance Co. and Triad Guaranty Insurance Corp.