Delinquent mortgage borrowers with PMI staging fragile comeback

Some good news are starting to sneak into the devastated real estate market from far-off directions. They may not mean all that much in the conventional big picture that usually chews over topics like foreclosures, short sales, home price drops and mortgage lender failures. Nevertheless, many small time indicators often give hints about which way the housing market is heading. One of these gems is the private mortgage insurance, or PMI, default rate.

Mortgage Insurance Companies of America, or MICA, keeps tabs on this and just released its latest report. In short, the trade group explains that 80,758 homeowners with PMIs in February made good on mortgages they had been late on, while 68,675 dropped into default. Numerically speaking the difference really isn't all that much. But, for the first time in nearly four years the recoveries outpace the distressed kind and that's where the significance lies. Somehow more property owners were able to find the means to catch up with their delinquent mortgage payments despite the weak economy. That's at least what happened in February and stocks at PMI companies promptly gained a few dollars on the good news.

In January the figures were quite different. That time there were only 61,196 rescues, while defaults stood at 98,685, the spread clearly being rather wide. And to massage more perspective into the discussion, delinquencies have in fact outperformed rescues every month from March 2006 on. That is nearly four consecutive years of deteriorating conditions for PMI firms, consistently pounding their bottom lines.

It's obviously premature to declare that the mortgage and real estate markets are turning the corner on this statistic. One month doesn't a pattern make. Once the cures manage to put together a string of several months of positive results a more or less permanent shift can be tentatively declared. Then again, the discriminating housing observers will argue that a long streak - and long it was - has been broken and that's how trends begin changing direction. The point is valid. These stats, however, are likely to yo-yo for months before eventually settling on a steady and positive path. That's what everyone is looking for anyway.

Las Vegas home loan recipients predictably had more of the default filings than the other kind because being underwater here is a serious problem and unemployment is well into double digits, hovering at 13.9% at last count. These two major imbalances soundly affecting the real estate market hardly will inspire and allow people to make up for late mortgage payments and stay current. MICA's February numbers are national in nature. It's reasonable to assume from the weak Southern Nevada housing market that PMI defaults here will go on outpacing cures for several more months. Arizona, California and Florida, the rest of the gang of four, are likely to be wallowing in the same mud pit.