NEW YORK (Reuters) - Defaults on privately insured mortgages rose 34.7 percent in November to the highest level on record, reflecting the inability of a growing number of homeowners to keep current on their loan payments.
Data released Monday by the Mortgage Insurance Cos. of America showed that 61,300 insured borrowers were at least 60 days late on payments in November. That is up from 45,325 a year earlier, and up 2.9 percent from 59,308 in October.
The number had not topped 60,000 in a month since data was first tabulated in 2001. Late payments are often a precursor to foreclosure.
Mortgage insurers such as MGIC Investment Corp (MTG.N), PMI Group Inc PMI.N and Radian Group Inc (RDN.N) lost money in the third quarter as more homeowners fell behind on payments. Shares of each lost well over half their value this year.
Private mortgage insurance enables people to buy homes with down payments of less than 20 percent. The insurance guarantees that lenders will be repaid even if borrowers default.
Jeff Lubar, a spokesman for Washington, D.C.-based MICA, said mortgage insurance has grown more popular as lenders tighten underwriting standards. More lenders are focusing on home loans that investors will readily buy.
The number of traditional policies issued totaled 153,865 in November, up 66.7 percent from a year earlier, MICA said. For January to November, the number of new policies written rose 42.3 percent from a year earlier, it said.
“Even though you’re seeing an increase in the default rates, you’re also seeing an increase in the number of policies issued,” Lubar said. “There has been a flight to quality, as exotic loans fall out of favor.”
MICA compiles its data from information provided by six large mortgage insurance providers, including MGIC, PMI, American International Group Inc (AIG.N), Genworth Financial Inc (GNW.N), Old Republic International Corp (ORI.N) and Triad Guaranty Inc TGIC.O. Radian is not included.
Reporting by Jonathan Stempel; Editing by Steve Orlofsky