The pace of defaults among U.S. homeowners who have never fallen two months behind on mortgages backing so-called nonagency securities is increasing for the first time in a year, according to Amherst Securities Group LP.

First-time defaults rose to 1.1% of previously "always performing" mortgages based on payments due in September, from 1% the prior month, a report from the Austin, Texas, securities firm said.

The rate had been as high as 2.5% early last year, then declined even as the employment rate hovered near a 26-year high.

Though the recent rise probably relates in part to seasonal patterns, it also suggests that a return to drops in home prices may cause more homeowners to stop paying, Amherst analyst Laurie Goodman said.

"Negative equity is the single most important driver of defaults," Goodman said in a telephone interview, referring to borrowers who owe more than their properties are worth. "We've got to see what happens over the next few months."

Ben Bernanke, the chairman of the Federal Reserve Board, which last week announced plans to buy an additional $600 billion of Treasuries to bolster the economy, is among those concerned that such homeowners may fuel additional defaults.

"More than 20% of borrowers owe more than their home is worth, and an additional 33% have equity cushions of 10% or less, putting them at risk should house prices decline much further," Bernanke said on Oct. 25. "With housing markets still weak, high levels of mortgage distress may well persist for some time to come."

Home prices in 20 of the largest U.S. metropolitan areas declined 0.49% in July and August after the expiration of tax credits for buyers, according to the latest seasonally adjusted S&P/Case-Shiller index data.

Values are down almost 29% from their 2006 peak.

Outstanding mortgages backing bonds in the market for nonagency securities, which grew to as large as $2.3 trillion in 2007, have fallen to $1.4 trillion, or about 13% of the total U.S. home mortgage debt.

Such bonds lack guarantees from the government-supported Fannie Mae and Freddie Mac or the Government National Mortgage Association (known as Ginnie Mae). About $415 billion of the underlying loans are nonperforming, according to Amherst.

Mortgage delinquencies typically fall in the early and middle parts of a year and rise in later months, a seasonality stemming partly from income tax refunds, employment patterns and winter-holiday spending.

Last year first-time defaults on nonagency loans rose starting in August before declining again a few months later, Amherst data show.

Analysts at Morgan Stanley and Nomura Securities International Inc. said in reports that what's often called "credit burnout" will continue to limit first-time defaults as homeowners who still have not fallen delinquent remain stronger than those under pressure in the past.

A "small" amount of the drop over the past year has stemmed from the resetting of adjustable-rate mortgages to lower payments, Paul Nikodem and Sean Xie, the Nomura analysts, wrote in a Nov. 5 report.

For subprime loans the increase last month was "significantly more muted" than during similar times of the year in the past, the Morgan Stanley analysts, led by Vishwanath Tirupattur, wrote Monday in a report.

Rates at which alternative-A and prime-jumbo mortgages first turned delinquent continued declines, their report said, though the latter loans were at about the same level as a year ago after rising in the interim.

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