Mortgage Defaults on the Rise Again

Mortgage defaults (or missed payments) were up 30% in September 2007 compared to September 2006 according to Mortgage Insurance Companies of America.

Mortgage defaults increasing isn’t a short term problem.  Fannie Mae Chief Executive Officer Daniel Mudd said the slump will last beyond 2008, increasing credit losses.

“These defaults are a lagging indicator, so they’re probably going to get worse from here,” according to Michael Darda, economist at equity trading firm MKM Partners LP.

Mortgage Insurance companies, which reimburse lenders when borrowers default on a mortgage have seen their stocks plummet.  MGIC Investment corp, the largest U.S. mortgage insurer saw its stock drop in half.  PMI Group, the second largest, lost more than 30% of its value.