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 The market turned quickly for mortgage insurer MGIC Investment Corp. as well, as the rising delinquencies forced the company to pay out more in claims in the third quarter. MGIC said it expects to lose money through 2008 because it estimates it will pay billions in claims. MGIC Investment already posted a loss of $372.5 million in the third quarter.
And Countrywide Financial Corp., the nation's largest mortgage lender, said it lost $1.2 billion over the summer, as the amount of money it set aside to cover losses from loans gone bad skyrocketed.
Angelo Mozilo, the chairman and chief executive of Countrywide, said the changes in the mortgage market over the summer were "unprecedented," and the company is eliminating nearly all but the safest loans from its product menu. It is also in the midst of cutting 12,000 jobs.
For potential mortgage borrowers, the comments paint a sobering picture of the difficulty in getting a new home loan in the coming months.
"If your credit scores are low, your access to mortgage money has all but vanished," said Dan Green, a certified mortgage planning specialist and author of TheMortgageReports.com.
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 Strong credit scores are the main factor driving mortgage lending today, but borrowers also need proof of employment and money in the bank to obtain a loan. Traditional prime mortgages are still readily available, but the supply of other mortgage types is severely constricted, Green said.
Nearly one in five subprime borrowers was at least two months' payments behind in July, while one in 20 alt-A borrowers fell in the same category, according First American LoanPerformance. Subprime loans are made to people with poor credit history, while alt-A loans are mostly made to people with limited documentation.
With the market in a nosedive, mortgage originators are likely to continue to play it safe for the foreseeable future as they try to avoid losing more money. That means fewer people will qualify for loans.
The tightening of underwriting standards will play a role in the steady drop in mortgage originations in 2008. The trade group Mortgage Bankers Association projects a 31 percent decline in mortgage origination volume between 2006 and 2008.
[Associated Press;
By STEPHEN BERNARD]
Copyright 2007 The Associated Press. All rights reserved. This
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