According to data released today by the Mortgage Insurance Companies of America, the number of insured borrowers more than 60 days late on their mortgage rose to 59,308 last month, a 28 percent increase from the same period a year ago.
That number was an 8.4 percent increase from September, and marked the highest level of defaults on insured home loans since August 2001.
Rising defaults have also led to a surge in foreclosures, which caused the top two mortgage insurers, MGIC Investment Corp. and PMI Group Inc., to report their first quarterly losses as public companies last month.
Despite the rise in the number of claims, Association members issued 173,949 policies to homeowners last month, a 76 percent increase from October 2006.
Mortgage lenders require private mortgage insurance on loans where there is less than a 20 percent down payment, protecting them in the event of default or foreclosure.
Member companies include AIG United Guaranty, Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co., Republic Mortgage Insurance Company and Triad Guaranty Insurance Corporation.
Mortgage insurance companies have been slammed this year, but saw gains Friday as mortgage-related stocks benefited from news of the upcoming release of a universal loan modification plan.
PMI Group closed up $1.58, or 13.56%, to $13.23, Genworth was up $1.66, or 6.75%, to $26.24, and AIG shares ended the day up 80 cents, or 1.40% to $58.13.
Earlier this week, MGIC Investment Corp. said it was raising prices on about 50% of its products, specifically those in which borrowers put less than 5% down.
Other leading mortgage insurers are expected to follow suit.
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