Mortgage Insurance Applications Down In August

New applications for mortgage insurance dropped to the lowest level in over a year, while new mortgage defaults and cures of existing defaults also increased during the month, according to a mortgage insurance association.

Mortgage insurance applications are typically required for home buyers who make less than a 20% down payment on a home purchase. In August, the number of new applications dropped to the lowest level in more than a year, at 65,546 applications, down from 86,734 applications in July, and 206,457 applications in August 2007. Newly issued policies also fell, to 53,476 new policies with a total value of $10.2 billion from 70,588 written for a total of $12.3 billion in July, mirroring steadily declining home sales in the U.S. The group wrote no bulk policies on pools of mortgages in August.

Borrower action on overdue mortgages stepped up in August, with increases in both the number of insured home mortgages that went into default as well as an increase in the number of defaulted mortgages that cured, or were brought current.

In August, 41,783 defaulted mortgages were brought into compliance, up from 39,229 brought into compliance in July.

Defaults also rose, to 72,818, from 68,831 in July.

The figures for the month of August were released Tuesday by the Mortgage Insurance Companies of America, which represents the largest private mortgage insurers and reports on delinquencies of mortgages they cover.

Primary insurance in force was only slightly changed for the month, at $801.7 billion, from $801.6 billion in July.

Insurers represented by the figures are AIG United Guaranty, a unit of American International Group (AIG), Genworth Mortgage Insurance Corp., a unit of Genworth Financial (GNW), Mortgage Guaranty Insurance Corp. (MTG), PMI Mortgage Insurance Co. (PMI) and Republic Mortgage Insurance Co., a unit of Old Republic International Corp. (ORI).