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Defaults Continue to Outpace Cures in MI Sector

Private mortgage insurers did $252.1 billion of primary new insurance in 2006, down slightly from production in 2004 and 2005. The industry also reported that new defaults substantially outpaced cures during 2006.

Members of the Mortgage Insurance Cos. of America wrote $212.6 billion of primary new insurance last year. The trade group consists of six of the seven private mortgage insurance companies active in the U.S. The seventh company, Radian, resigned as a member of MICA during 2003.

Radian's 2006 year-end earnings statement said that company did $40.1 billion in primary new insurance.

The cure/default ratio for the year is 79.9%, with 415,101 cures and 519,834 defaults, according to MICA. February and March were the only months where the cure/default ratio was over 100%.

By type, mortgage insurers did $161.2 billion in traditional and $91.6 billion in bulk.

The industry did $267.6 billion in primary new insurance in 2005, of which $183.7 billion was traditional and $83.9 billion bulk, and $263.8 billion in 2004, of which $216.2 billion was traditional and $47.6 billion was bulk.

MICA's data show that December 2006 was the best month of the year by far because of the large amount of bulk insurance written during the month.

In fact, the $14.2 billion written in the bulk channel alone for December was more than any month written in the traditional channel during 2006 with the exception of August. With $13.1 billion coming through the traditional channel in December, the $27.3 billion tops June's $22.2 billion as 2006's best month. The worst month was January, when total volume was $13.6 billion.

Application volume for MICA members in 2006 was 1.5 million. The best month was December with 158,937, followed by June at 148,322. January once again was the worst month, with 95,131 applications received.

At the end of 2005, primary insurance-in-force totaled $668.4 billion, up from $615.1 billion one year prior.

Snapshot: MI Cures and Defaults for 2006

Total Cures 415,101

Total Defaults 519,834

Cure/Default Ratio 79.9%

Source: MICA (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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