* To buy Clayton Holdings for $305 mln
* Delinquent loans fall by 38 pct in first quarter
* Shares up 3 pct in trading after the bell (Adds deal details, analyst' estimates, share movement)
May 6 (Reuters) - Radian Group Inc, the biggest U.S. private mortgage insurer, said it would buy loan review firm Clayton Holdings LLC for $305 million to boost its presence in the industry.
Shares of Radian, which also reported a profit compared with a loss a year earlier, rose 3 percent after the bell on Tuesday.
Clayton provides loan due diligence, transaction management and risk-based analytical services to the mortgage industry in the United States.
The deal, Radian's first major acquisition in seven years, is expected to modestly add to its earnings this year.
Radian's first-quarter results benefited from fewer homeowners defaulting on their loans in a recovering housing market.
Mortgage insurers such as Radian, MGIC Investment Corp and Genworth Financial Inc cover losses when homeowners default and foreclosures fail to recoup costs.
These companies have finally turned a corner after struggling for years with large claims on unpaid home loans after the housing bubble burst in 2008.
A recovery in the U.S. housing market, an increase in timely repayments and fewer defaults are helping mortgage insurers recover losses.
Radian's provision for losses, or funds set aside to cover defaults, fell 58 percent to $54.8 million in the first quarter March 31, compared with a year earlier.
The number of delinquent loans fell by more than a third during the period.
Rival MGIC reported its highest quarterly profit since 2007 in April, while Genworth reported a near-doubling in income from its long-term care insurance business.
Radian's net income was $202.8 million, or 94 cents per share, for the first quarter, compared with a loss of $187.5 million, or $1.30 per share, a year earlier.
Analysts on an average expected the company to earn 21 cents per share, according to Thomson Reuters I/B/E/S.
Philadelphia-based Radian's risk-to-capital ratio was 19.2 to 1 as of March 31.
Most U.S. states allow a maximum ratio of 25 to 1 after which the insurer must seek waivers in individual states to continue writing insurance. (Reporting by Neha Dimri in Bangalore; Editing by Joyjeet Das and Saumyadeb Chakrabarty)