Subprime delinquencies trend up The

Subprime delinquencies trend up The delinquency rate of Alt-A and subprime mortgage loans covered by the nation's biggest private mortgage insurer is approaching 20 percent, we learned today as Mortgage Guaranty Insurance Corp.'s parent company released its fourth quarter results.

Of the Alt-A and subprime loans insured by MGIC, 18.94 percent were in delinquency at year's end, compared to 18.3 percent at the end of 2005 and 16.49 percent in 2004.

Parent MGIC Investment Corp. reported profits are down 9.9 percent from last year to $564.7 million, but said the drop was mostly because the slowdown in the housing market is slowing down the generation of new policies.

Credit quality does not seem to be a cause for alarm, as prime loans account for 85.6 percent of the loans MGIC insures, up from 84.3 percent last year. MGIC has cut back its exposure to Alt-A loans, from 4.8 percent to 4.2 percent, and subprime loans are 4.2 percent of insured loans versus 4.8 percent in 2005.

If you look at the percentage of all loans MGIC insures that were delinquent at the end of the year, it's actually down a little from last year (6.13 percent versus 6.58 percent). But because the value of loans MGIC insures is still growing -- albeit not as quickly as during the boom years -- losses are up 11 percent from last year, to $613.6 million. MGIC now insures 1.3 million mortgages for $176.5 billion, compared to $170 billion of insurance in force at the end of last year.
--Matt Carter, Inman News

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