Mortgage insurer subsidiary seized by regulators (AP)

PHOENIX – Insurance regulators in Arizona have seized the main subsidiary of private mortgage insurer PMI Group Inc., which will begin paying claims at just 50 percent.

The seizure follows heavy losses at PMI since the housing market bubble burst. Two months ago, state regulators ordered the Arizona-based subsidiary, PMI Mortgage Insurance Co., to stop selling new policies after it came under scrutiny because it didn't have enough money on hand to meet the requirements of regulations in that state.

A statement on PMI's website says a court order, signed by an Arizona Superior Court judge on Thursday, gives Arizona's Department of Insurance full possession and control of the subsidiary. Beginning Monday, PMI says claims will be paid at just 50 percent, in lieu of a moratorium on claim payments. Meanwhile, PMI said it will "continue to support our customers' ongoing policy servicing needs, and loss mitigation programs."

Private mortgage insurance protects lenders from losses if a homeowner defaults and the lender doesn't recoup costs through foreclosure. The insurance costs the borrower a monthly fee, typically a set percentage of the total mortgage loan. Like other mortgage insurers, PMI has been able to sell profitable policies in recent years, but the gains from those sales hasn't outpaced losses from policies sold before the housing market collapsed. As flagging home prices have strapped borrowers, the company has had to pay more claims.

The company's shares have traded below $1 apiece since late July, closing on Friday at 31 cents apiece. PMI shares topped $50 in 2007. Since then, the Walnut Creek, Calif. company has posted more than $3.5 billion in losses due to claims paid out on foreclosed homes. That includes a loss of nearly $135 million for the second quarter. PMI hasn't yet reported third-quarter results.

PMI's CEO, L. Stephen Smith, told analysts in early August that that company has seen a sharp rise in the number of previously denied claims that banks appealed and were able to get reinstated by producing better documents to back up them up.

Smith said then that his company was working with a financial adviser to search for ways to raise capital.

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Higher rates of depression linked to mortgage woes-study (Reuters)

(Reuters) – Adults who have fallen behind on mortgage payments exhibited higher rates of depression and are skipping meals and medications because they cannot pay the bills, a study published on Thursday found.

More than 20 percent of adults over age 50 who were delinquent on a mortgage developed elevated depression symptoms compared to 3 percent of non-delinquent peers, the study published in the American Journal of Public Health found.

The study tracked a sample of older homeowners who were more than two months behind on mortgage payments for two years to evaluate their health status.

In addition to showing signs of depression, adults facing mortgage default or foreclosure were also more likely to have trouble paying for food and medication, research showed.

The inability to pay for food and medicine also could lead to health consequences for spouses and children.

These short-term problems will likely contribute to more serious long-term adverse health effects, researchers said.

"It's not just about money," said Carolyn Cannuscio, a study co-author and University of Pennsylvania researcher.

"It's about human lives and human health and it's about how our society is going to recover from this major disruption to the places we call home," she said.

Researchers worry health disparities will grow particularly among Hispanic and African-American homeowners as a result of the housing crisis.

Cannuscio said both groups were already disadvantaged in terms of health before the real estate meltdown.

Adults facing foreclosure are likely to experience a host of other health problems, Cannuscio said.

A related study from a similar group of authors showed a majority of adults facing default or foreclosure in Nevada, California, Florida and Arizona were plagued by high rates of fatigue, back pain, nausea and trouble sleeping, she said.

In a separate survey of mortgage counselors, nearly 70 percent said many of their clients were depressed or lacked hope.

Nearly a third of those counselors said they had worked with someone in the last month who had contemplated suicide or self harm.

(Reporting by Lauren Keiper; Editing by David Bailey)

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Mortgage rates for the past 52 weeks, at a glance (AP)

The average rate on the 30-year fixed mortgage rose sharply this week after falling below 4 percent for the first time in history, Freddie Mac said Thursday. Here's a look at rates for fixed and adjustable mortgages over the past 52 weeks.

Current week's average Last week's average 52-week high 52-week low

30-year fixed 4.12 3.94 5.05 3.94

15-year fixed 3.37 3.26 4.29 3.26

5-year adjustable 3.06 2.96 3.92 2.96

1-year adjustable 2.90 2.95 3.43 2.81

All values are in percentage points.

Source: Freddie Mac Primary Mortgage Market Survey.

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