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Fitch: Delinquencies and Losses Are Up

July 17, 2008

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Fitch Special Report, 'Delinquencies and Losses Are Up

Fitch Ratings today said that the mortgage insurance industry's troubles are not over and may, in fact, get worse before they improve.

Fitch, as part of a special report released today that updates the agency's June 2007 special report on mortgage insurer delinquencies, uses data and analysis that extends mortgage insurance origination and performance trends with the benefit of a further year of loan-level data. For a number of key mortgage insurers last year was a year of rapid growth, and this 2007 vintage will increasingly account for losses in 2008 and 2009 that will stress the mortgage insurers' balance sheets over the intermediate term.

'The mortgage insurance industry underestimated both the scope and severity of the decline in residential mortgage markets that became increasingly acute in 2007,' Fitch said.

'Initial industry optimism over increased demand and better premiums in early 2007 reversed over the second half of the year, and by the early fourth quarter the industry was significantly tightening underwriting guidelines to limit damage from ongoing poor mortgage origination standards and the prospect of substantial and widespread housing price declines.'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Source: Fitch Ratings



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