June 30 (Bloomberg) -- Newly delinquent homeowners outnumbered those who caught up on overdue payments for a 26th straight month in May, according to a trade group that tracks loans to people who put down less than 20 percent.

In the worst housing slump since the Great Depression, 67,967 homeowners with mortgage insurance fell at least 60 days behind on their loans, compared with 40,687 who got back on track, the Mortgage Insurance Companies of America reported today. Borrowers who take on debt of more than 80 percent of a home's value are often required to buy coverage that pays lenders if they default.

``There's no doubt that 2008 is going to continue to be a challenging year,'' said Michael Fraizer, chief executive officer of Genworth Financial Inc., the fourth-largest U.S. mortgage insurer, at a conference in London last week.

The results may add urgency to efforts by U.S. lenders to increase the pace of mortgage modifications amid criticism they haven't done enough to help owners keep homes. The housing slump has led to record losses for the insurers that supply the trade group's data. Each of the top seven U.S. mortgage insurers posted a loss on the business in at least two of the past three quarters.

Defaults, often a precursor to foreclosure, can't be compared with a year earlier because one lender changed the way it calculates figures in April, the Washington-based mortgage insurance group said, without identifying the company. Foreclosures rose 48 percent in May from a year earlier, according to data released by Irvine, California-based RealtyTrac Inc. earlier this month.

Share Declines

The biggest mortgage insurer, MGIC Investment Corp. declined by about 89 percent in 12 months in New York Stock Exchange composite trading. No. 2 PMI Group Inc. and No. 3 Radian Group Inc.plunged more than 95 percent. MGIC fell 88 cents, or 13 percent, to $6.11 at 4:03 p.m., while PMI dropped 40 cents, or 17 percent, to $1.95 and Radian gained 2 cents to $1.45. Genworth, which also sells life insurance, lost 18 cents to $17.81.

Insurers are tightening standards on mortgages they cover to stem further losses. The new requirements contributed to a 48 percent drop in the number of policies issued to new homeowners in May, compared with the same month a year earlier, according to the Mortgage Insurance Companies of America.

Triad Guaranty Inc., the seventh-largest insurer, became the first mortgage insurer to say it will stop selling new policies, after the collapse of talks this month with Lightyear Capital LLC to form a new company with Triad employees.

The Mortgage Insurance Companies of America data are drawn from six of the seven largest U.S. mortgage insurers, excluding non-member Radian, causing an understatement of the total number of defaults. In April, the unidentified lender that does business with the insurers switched to defining defaults as 60 days overdue rather than the 90 days it had previously reported.

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: June 30, 2008 16:14 EDT