Borrowers who caught up on overdue mortgages outnumbered people who became newly delinquent on insured home loans for the first time in almost four years, according to data released Wednesday by the Mortgage Insurance Companies of America.
In February, 68,675 homeowners with privately insured mortgages fell into default, compared with 80,758 who got back on track, the Washington trade group said. The last time it reported that recoveries exceeded defaults was in March 2006.
Shares in MGIC Investment Corp., the biggest U.S. mortgage insurer, and No. 2 Radian Group Inc. have surged this year as the economy recovers and the Obama administration works with the nation's biggest banks to prevent foreclosures.
Radian, of Philadelphia, has reported three straight annual losses, but said in February that delinquencies were slowing and may fall this year.
"The government modification programs are starting to have an impact," said Matthew Howlett, an analyst with Macquarie Group Ltd. Recoveries outpacing new defaults "signals a turning point" for mortgage insurers, he said. "It's enormous."
MGIC shares were up 7.5%, to $10.89 at midday Wednesday and Radian shares advanced 5.8%, to $15.45.
The Treasury Department reported on March 12 that lenders in the Home Affordable Modification Program led by Bank of America Corp. and JPMorgan Chase & Co. had successfully converted 168,708 trial plans into permanent loan revisions through February, up from 116,297 a month earlier.
Mortgage insurers, which pay lenders when foreclosure fails to recoup costs, have suffered from a surge in claims as borrowers struggle to meet payments or refinance debts. About 2.82 million U.S. homeowners lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said in January.
"We know there has been a slowdown in new defaults," Radian's chief financial officer, C. Robert Quint, said in February during a conference call with analysts and investors. "I actually expect it to be flat and slightly down throughout the year."