TheMReport — News and strategies for the evolving mortgage marketplace.
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The latest Or ig i nat ion SERVICING Se r v ic i ng "We are seeing a trend of consumers being careful and disciplined about their use of existing credit while also being cautious about using new accounts they have opened." s e c on da r y m a r k e t a na ly t ic s —Trey Loughran, Equifax Subprime Credit Scores on the Decline Credit scores improve across the country as markets see employment gains. S ubprime credit scores are declining across the country with strong declines in a few rebounding markets, according to Atlanta-based Equifax, a leading credit reporting agency. "Consumer credit scores are improving in most major metropolitan areas," said Trey Loughran, president of Personal Solutions at Equifax. 60 | The M Report Designating credit scores below 620 as "subprime," Equifax found the number of subprime borrowers decreased 2.1 percent from the third quarter of 2011 to the third quarter of 2012. The 2.1 percent translates to about 1 million Americans who rose from the subprime category. "We are seeing a trend of consumers being careful and disciplined about their use of existing credit while also being cautious about using new accounts they have opened," Loughran said. Equifax observed the greatest improvements in markets where employment rates are strengthening. Population shifts are also impacting some markets, according to Equifax. Equifax also found "early housing-bust markets" are experiencing improving credit scores as time passes since the worst of the foreclosure crisis. These markets include San Francisco, Sacramento, San Diego, Los Angeles, Las Vegas, Phoenix, and Miami. The number of subprime borrowers in San Francisco declined 6.4 percent. In Sacramento, the number declined by 6.2 percent. San Diego and Los Angeles experienced identical declines of about 5.3 percent. Of the 25 metro areas Equifax measured, Chicago experienced the greatest decrease in subprime borrowers—about 9 percent. Chicago's rising employment rate is one major factor leading to this decline. The only metro on Equifax's list to experience an increase in the number of subprime credit scores is Houston. However, when population growth is taken into account, it is evident credit scores in Houston are improving as well. The percentage of subprime creditors in Houston declined 0.5 percent from the third quarter of 2011 to the third quarter of 2012. Private Insurance Volume Rises in December MICA member companies write $10.7 billion in new policies in December, but a fall in applications may mean lower volume to come. P rivate mortgage insurance activity saw a slight lift in December, according to Mortgage Insurance Companies of America's (MICA) monthly statistical report. The report includes data from Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, and Radian Guaranty Inc., all members of the trade association. The three companies wrote a combined $10.7 billion in primary new insurance on conventional loans in December, up from a reported $10.4 billion in November. It was the third highest monthly total for all of 2012, taking November's previous position under October ($11.5 billion) and August ($11.3 billion). Primary insurance in force was nearly $400.7 billion at the end of the year, with December marking the seventh consecutive month of increases. Applications for private mortgage insurance saw a second monthly slip in December, declining to 38,915 from 41,952 in November. August held the high record for 2012 applications (46,891), while January came in at the bottom (24,097). MICA members also reported a monthly decline in insurance certificates issued. The companies issued 36,543 policies in December, down from 39,220 the previous month. Again, August took the top spot in 2012 with 43,949 policies issued. January sat on the other end with 21,904. Meanwhile, primary insurance cures climbed to 20,048, resting above November (19,801) and slightly below October (20,068). Primary insurance defaults also increased, rising to 24,585 from November's 23,485. The ratio of cures to defaults at the end of December was 81.5 percent, MICA reported.