New York - Borrowers who caught up on overdue mortgages outnumbered people who became newly delinquent on insured home loans for the first time in almost four years. PMI Group led mortgage insurers higher in New York trading.
In February, 68,675 homeowners with privately insured mortgages fell into default, compared with 80,758 who got back on track, a report yesterday from the Washington-based Mortgage Insurance Companies of America said. In January, the trade group reported 98,685 new defaults and 61,195 cures. It last reported that recoveries exceeded defaults in March 2006.
“The significance is substantial, it’s enormous,’’ said Matthew Howlett, an analyst with Macquarie Group. Recoveries outpacing new defaults “signals a turning point’’ for mortgage insurers, he said.
MGIC Investment Corp., the biggest US mortgage insurer, number two Radian Group, and number three PMI are facing fewer claims as the economy recovers and the Obama administration works with the nation’s biggest banks to prevent foreclosures. Philadelphia-based Radian, which has reported three straight annual losses, said in February that delinquencies were slowing and may fall this year.
PMI, based in Walnut Creek, Calif., rose 88 cents to $5.42 in New York Stock Exchange composite trading. MGIC rose 84 cents to $10.97 while Radian advanced $1.03 to $15.64.
The Treasury Department reported on March 12 that lenders in the Home Affordable Modification Program led by Bank of America Corp. and JPMorgan Chase & Co. successfully converted 168,708 trial plans into permanent loan revisions through February, up from 116,297 a month earlier.
Mortgage insurers, which pay lenders when foreclosure fails to recoup costs, have suffered from a surge in claims as borrowers struggle to meet payments or refinance debts.
About 2.82 million US homeowners lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said in January.
Bloomberg News April 1, 2010
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