LOS ANGELES - Better performance of mortgage insurers this year is a credit positive for state housing finance agency single family whole loan programs that rely on mortgage insurers to protect against mortgage defaults, Moody’s Investors Service said Friday.
Several private U.S. mortgage insurers, including Genworth Mortgage Insurance Corp., Mortgage Guaranty Insurance Corp, Radian Mortgage Assurance Corp., and United Guaranty Residential Insurance Co., have reported higher operating income in the first quarter of 2013 than the first quarter of 2012.
In addition, the adjusted pre-tax operating income across Moody’s rated private mortgage insurers increased by more than 120% this quarter from the first quarter last year. The increase is mainly a result of the improving U.S. housing market, lower losses from delinquencies and foreclosures, and runoff of pre-2008 loans.
“The improvement in the performance of mortgage insurers is credit positive for HFAs with whole loan programs because better financial performance improves the prospects for continued claims payments by mortgage insurers on delinquent loans within the portfolio,” Bill Fitzpatrick, vice president and senior credit officer at Moody’s, said in a report. “The importance to each HFA program depends on their varying levels of exposure to each mortgage insurer.”
Sector-wide, private mortgage insurers now insure about 23% of mortgage principal in the single family whole loan programs that Moody’s rates, which represents a decline from 26% as of December 2009. The most significant providers are MGIC, which insures 8.3% of mortgage principal, and Genworth, which insures 7.2%.
Overall, 15 HFAs have a program with 20% or more of mortgage principal in the aggregate insured by a private mortgage insurer.