Issuance of private mortgage insurance policies fell by 7.6 percent in November compared to the month before, even as defaults continued to climb.

That’s according to the latest numbers from a trade association representing the private mortgage insurance industry, the Mortgage Insurance Companies of America (MICA).

Primary insurance defaults totaled 61,033 in November, MICA said, up 2.9 percent from October and a 34.6 percent increase from the 45,325 defaults recorded in November 2006.

Some 161,957 private mortgage insurance policies — which lenders typically require when borrowers make down payments of less then 20 percent on a home purchase — were issued in November. That’s down from the October total of 175,383, but represents a 55.8 percent increase from the same month a year ago, MICA reported.

The use of private mortgage insurance grew dramatically in 2007 as lenders cut back on the use of “piggyback” second mortgages, and a change in the tax code allowed some families to deduct their insurance payments.

MICA estimates that 1.99 million private mortgage insurance policies were issued in the 12 months ending in November 2007. That’s a 37.2 percent increase from the 1.45 million policies issued in the 12 months ending in November 2006.

Many mortgage lenders have stopped making second loans that allowed home buyers to avoid taking out private mortgage insurance.

But a change to the tax code allowed home buyers with incomes of $109,000 or less to deduct all or part of their private mortgage insurance premiums from their taxable income in 2007. The new deduction — which MICA estimates could save the typical family $350 a year — has been extended for three years under legislation signed into law Dec. 20.

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Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.

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